Handbook on the Politics of International Development 1839101903, 9781839101908

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HANDBOOK ON THE POLITICS OF INTERNATIONAL DEVELOPMENT

ELGAR HANDBOOKS IN DEVELOPMENT The Elgar Handbooks in Development series is a collection of works edited by leading international scholars within the field. The series provides an overview of recent research in all aspects of Development Studies, thereby forming an exhaustive guide to the field. These Handbooks aim to be prestigious, high quality works of lasting significance, discussing research areas including the politics of international development, the global economic impacts of development, and the challenges faced by those driving development, on both a national and international scale. Each Handbook will consist of original contributions by leading authors that aim both to expand current debates within the field, and to indicate how research in Development Studies may progress in the future. This series will form an essential reference point for all students of Development Studies. Titles in the series include: Research Handbook on Democracy and Development Edited by Gordon Crawford and Abdul-Gafaru Abdulai Handbook of Communication and Development Edited by Srinivas Raj Melkote and Arvind Singhal Handbook of Development Policy Edited by Habib Zafarullah and Ahmed Shafiqul Huque Handbook on the Politics of International Development Edited by Melisa Deciancio, Pablo Nemiña and Diana Tussie

Handbook on the Politics of International Development Edited by

Melisa Deciancio Senior Fellow Researcher, University of Münster, Germany and Fellow Researcher, National Scientific and Technical Research Council at the Department of International Relations, FLACSO Argentina, Argentina

Pablo Nemiña Full Researcher, National Scientific and Technical Research Council and National University of San Martín and Associate Researcher, Department of International Relations, FLACSO Argentina, Argentina

Diana Tussie Head, Department of International Relations, FLACSO Argentina and Emeritus Fellow Researcher, National Scientific and Technical Research Council, Argentina

ELGAR HANDBOOKS IN DEVELOPMENT

Cheltenham, UK • Northampton, MA, USA

© Melisa Deciancio, Pablo Nemiña and Diana Tussie 2022

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2022932703 This book is available electronically in the Political Science and Public Policy subject collection http://dx.doi.org/10.4337/9781839101915

ISBN 978 1 83910 190 8 (cased) ISBN 978 1 83910 191 5 (eBook)

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Contents

List of contributorsviii Acknowledgementsxii Introduction to Handbook on the Politics of International Development1 Melisa Deciancio, Pablo Nemiña and Diana Tussie PART I

THE CONCEPT AND POLITICS OF DEVELOPMENT: PARADIGMATIC DEBATES

1

International development in a historical context José Antonio Ocampo

15

2

Democracy and development: the case of foreign direct investment John Marangos and Eirini Triarchi

31

3

The politics of the developmental state Giuseppe Gabusi

46

4

The politics of decolonizing development Rosalba Icaza and Rolando Vázquez

62

5

The politics of developmental regionalism Helen E. S. Nesadurai

75

PART II

DEVELOPMENT AND CONTESTED GLOBALIZATION

6

The global governance of development Axel Marx and Kari Otteburn

7

The China model of development as solidarity Xi Lin

107

8

The politics of crime, law and development in historical perspective Tom Chodor and Jarrett Blaustein

118

9

Reviewing the GVC approach and its international institutionalization: a critical perspective Víctor Ramiro Fernández and Manuel Facundo Trevignani

10

The politics of international monetary relations Oscar Ugarteche

v

91

131 148

vi  Handbook on the politics of international development 11

The politics of south–south cooperation Bernabé Malacalza

168

12

Civil society and the politics of development Daniela Irrera

183

13

The development compact Milindo Chakrabarti

197

PART III THE POLITICS OF DEVELOPMENT AGENDAS 14

The global political economy of development finance: myths and new realities in Latin American development finance Ernesto Vivares and Leonardo E. Stanley

15

Development and climate: a tale of two crises Peter Newell

231

16

The politics of food Thiago Lima and Andrea Santos Baca

243

17

The politics of the global gender agenda: a pathway to empowerment María del Pilar López-Uribe, María Alejandra Chávez, María Paula Neira Ahumada and Paulina Pastrana

257

18

The politics of global health Christiane Struckmann

286

19

The politics of international migration Fabiola Mieres

301

20

The politics of the sustainable development goals Bruce Currie-Alder

315

21

Bioeconomy governance and (sustainable) development Melisa Deciancio, Karen M. Siegel, Daniel Kefeli, Guilherme de Queiroz Stein and Thomas Dietz

329

22

Aid for Trade and development Juliana Peixoto Batista and Vanesa Knoop

346

218

PART IV GLOBAL ACTORS IN THE POLITICS OF DEVELOPMENT 23

The World Bank and the politics of development João Márcio Mendes Pereira

360

24

The politics of the International Monetary Fund Timon Forster, Thomas H. Stubbs and Alexander E. Kentikelenis

376

25

The politics of development in the WTO, or there and back again … Amrita Narlikar

392

Contents  vii 26

The United Nations and the politics of development Andrés Rivarola Puntigliano

405

27

From ‘club of the rich’ to ‘globalization à la carte’? Is the OECD becoming a global player? Judith Clifton and Daniel Díaz-Fuentes

28

The politics of the regional development banks Stefano Palestini

435

29

The domestic and external conditions of the Chinese development path Alexandre Cesar Cunha Leite, Javier Vadell and Leonardo Ramos

450

30

Private foundations and the politics of international development Elham Seyedsayamdost

461

417

Index477

Contributors

EDITORS Melisa Deciancio, Senior Fellow Researcher at the University of Münster and Research Fellow at the National Scientific and Research Council of Argentina, based in the Department of International Relations at FLACSO Argentina. Melisa holds a Master in International Relations and Negotiations and a PhD in Social Sciences from FLACSO. Her research is focused on the areas of International Relations Theory, Latin American Foreign Policy and Global Governance. She is currently the Academic Coordinator of the Master in International Relations of FLACSO/Argentina and teacher at FLACSO. She has held visiting positions at Amherst University, the University of Warwick, Brown University, the German Institute for Global and Area Studies (GIGA) and the University of Southampton. Pablo Nemiña, PhD in Social Sciences and BA in Sociology, both at the University of Buenos Aires. Full Researcher of the National Council of Scientific and Technical Research, based at National University of San Martín (UNSAM). Associate Researcher of the Department of International Relations at FLACSO/Argentina. Undergraduate and graduate professor at the National University of San Martín, FLACSO and the University of Buenos Aires. His research agenda is organized around the IMF’s role in financial crises, the relations between that institution and developing countries, and the Political Economy of International Finances. Currently he serves as Director of Knowledge Management, Research and Publications at the National Institute of Public Administration of Argentina. Diana Tussie heads the Department of International Relations at FLACSO/Argentina where she teaches in the areas of International Political Economy, Economic Development and Diplomacy. Diana holds a PhD in International Relations from the London School of Economics. Her contributions to the debate and practice of International Political Economy and International Development are widely recognized. She has published extensively in English and Spanish. She has been co-editor of Global Governance and served on the Committee for Development Policy of the United Nations. She has been a visiting scholar at the University of Chile, Universidad de la República de Uruguay, Manchester, Oxford, Córdoba and the German Institute of Global and Area Studies. In 2017 she was awarded the Distinguished Scholar, Global South Caucus Award from the International Studies Association.

viii

Contributors  ix

CONTRIBUTORS María Paula Neira Ahumada, Lecturer, Universidad de los Andes, Colombia Jarrett Blaustein, Associate Professor, School of Regulation and Global Governance, The Australian National University Milindo Chakrabarti, Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University, Sonipat, Haryana; Visiting Fellow, Research and Information Systems for Developing Countries, New Delhi María Alejandra Chávez, Lecturer, Universidad de los Andes, Colombia Tom Chodor, Lecturer in Politics and International Relations, Department of Politics and International Relations, School of Social Sciences, Monash University Judith Clifton, Professor and Founding Director of the Jean Monnet Chair of EU Economic Policy for Business & Civil Society at the Faculty of Business & Economic Sciences, University of Cantabria, Spain Alexandre Cesar Cunha Leite, Assistant Professor of International Relations, Universidade Estadual da Paraíba – UEPB, Brazil Bruce Currie-Alder, Program Leader, International Development Research Centre, Canada Daniel Díaz-Fuentes, Professor of Economics, University of Cantabria, Spain Thomas Dietz, Professor for International Relations and Law, Institute of Political Science, University of Münster, Germany Víctor Ramiro Fernández, Senior Researcher, National Scientific and Technical Research Council (CONICET) and Universidad Nacional del Litoral, Argentina Timon Forster, PhD Candidate, Berlin Graduate School for Global and Transregional Studies, Freie Universität Berlin, Germany Giuseppe Gabusi, Assistant Professor of International Political Economy and Political Economy of East Asia, Department of Cultures, Politics and Society, University of Turin, Italy Rosalba Icaza, Professor in Global Politics, Feminisms and Decoloniality at the Institute of Social Studies, Erasmus University Rotterdam Daniela Irrera, Associate Professor of Political Science and International Relations, University of Catania, Italy and Visiting Professor at the OSCE Academy, Bishkek, Kyrgyzstan Daniel Kefeli, Doctoral Researcher, Institute of Political Science, University of Münster, Germany Alexander E. Kentikelenis, Associate Professor of Political Economy and Sociology, Bocconi University, Italy Vanesa Knoop, Researcher at Nueva Sociedad, Friedrich Ebert Stiftung, Argentina Thiago Lima, Associate Professor of the Department of International Relations, Postgraduate

x  Handbook on the politics of international development Program in Public Management and International Cooperation, Universidade Federal Da Paraíba, Brazil Xi Lin, Associate Professor and Assistant Dean of the Fudan Institute of Advanced Study in Social Sciences (IAS-Fudan), China María del Pilar López-Uribe, Professor Department of Economics, Universidad de los Andes, Colombia Bernabé Malacalza, Research Fellow at the National Scientific and Technical Research Council (CONICET) based at the National University of Quilmes (UNQ) in Argentina John Marangos, Professor of Economics, Department of Balkan, Slavic and Oriental Studies, University of Macedonia, Greece Axel Marx, Deputy Director, Leuven Centre for Global Governance Studies, University of Leuven, Belgium João Márcio Mendes Pereira, Professor of Contemporary History of Latin America at the Federal Rural University of Rio de Janeiro (UFRRJ), Brazil Fabiola Mieres, Technical Officer in Labour Migration, International Labour Organization, Geneva, Switzerland Amrita Narlikar, President, German Institute for Global and Area Studies (GIGA), Germany, Non-Resident Senior Fellow, Observer Research Foundation, India and Honorary Fellow, Darwin College, University of Cambridge, UK Helen E. S. Nesadurai, Professor of International Political Economy, School of Arts and Social Sciences, Monash University Malaysia Peter Newell, Professor of the Department of International Relations, School of Global Studies, University of Sussex, United Kingdom José Antonio Ocampo, Professor of Professional Practice in International and Public Affairs, University of Columbia, United States Kari Otteburn, PhD Candidate, Leuven Centre for Global Governance Studies, University of Leuven, Belgium Stefano Palestini, Professor of International Relations, Institute of Political Science, Pontificia Universidad Catolica de Chile Paulina Pastrana, Lecturer, Universidad de los Andes, Colombia Juliana Peixoto Batista, Research Fellow, CONICET, and Professor of International Political Economy and International Law at FLACSO/Argentina Guilherme de Queiroz Stein, Doctoral researcher, Institute of Political Science, University of Münster, Germany Leonardo Ramos, Professor of International Relations, PUC Minas Gerais, Brazil Andrés Rivarola Puntigliano, Director – Nordic Institute of Latin American Studies (Nilas), Stockholm University, Sweden

Contributors  xi Andrea Santos Baca, Adjunct Professor of International Relations, Universidade Federal do ABC, Brazil Elham Seyedsayamdost, Dean of the School of Arts and Sciences and Associate Professor of Political Science, School of Arts & Sciences, American University in Dubai Karen M. Siegel, Research group leader: “Transformation and Sustainability Governance in South American Bioeconomies” at the Institute of Political Science, University of Münster, Germany Leonardo E. Stanley, Associate Researcher at the Centre for the Study of State and Society – CEDES, Argentina Christiane Struckmann, Lecturer, Department of Political Science, Stellenbosch University, South Africa Thomas H. Stubbs, Senior Lecturer in International Relations at Royal Holloway, University of London, and a Research Associate in Political Economy at the Centre for Business Research, University of Cambridge, United Kingdom Manuel Facundo Trevignani, Professor and Researcher, Institute of Humanities and Social Sciences, Universidad Nacional del Litoral, Argentina Eirini Triarchi, Lecturer, Department of Accounting and Finance, University of Ioannina Oscar Ugarteche, Professor and Researcher, Institute of Economic Research, de Investigaciones Económicas, Universidad Nacional Autónoma de México Javier Vadell, Professor Postgraduate Program of International Relations, PUC Minas Gerais, Brazil Rolando Vázquez, Associate Professor of Sociology and cluster chair at the University College Utrecht, Utrecht Ernesto Vivares, Professor, Department of International Relations and Communications, FLACSO/Ecuador

Acknowledgements

This book is a three-year collective product which grew as the whole world went through radical upheavals. It was first projected with impassioned on-site discussions. Then it turned to – necessary – virtual interactions after the outbreak of the COVID-19 pandemic, and the final manuscript was rounded off with the resumption of personal contacts. This journey would not have been possible without the time and energy of our contributors all through the process and their particularly steadfast dedication once the pandemic broke out and shook our lives. All were patient with our comments and contributed challenging and constructive works that we are sure will be at the centre of future discussion in our field, particularly after COVID-19 has turned international development into the focus of world attention. COVID-19 has cemented the perception that all states, societies and social groups are now affected, though very unequally, by the forces of international development. We as scholars, students and citizens have an important role to play painstakingly combining the ethical with the conceptual with the practical. The Department of International Relations at FLACSO has been the basis and inspiration for the many debates we have engaged in. This would not have been possible without the drive of Agustina Garino, Pablo Trucco, Juliana Peixoto, Jorgelina Loza, Belen Herrero, Juliana González Jáuregui, Ignacio Sabbatella and many other colleagues who encouraged and shared insightful reflections. The National Scientific and Technical Research Council (known as CONICET by its acronym in Spanish) gave us the support and freedom to conduct our research. We want to thank Daniel Mather at Elgar for attentively and ever so patiently shepherding us with utter professionalism. Many thanks to all. M. D., P. N., D. T. Buenos Aires, September 2021

xii

Introduction to Handbook on the Politics of International Development Melisa Deciancio, Pablo Nemiña and Diana Tussie

The politics of International Development (ID) are in turmoil. In many ways, it would be surprising if the existing structures were not being challenged – the flare-up of COVID-19 would be enough in its own right. We are going through extraordinary transformations in the world order because of war, economic and political developments and, of course, the pandemic. The world is facing multiple crises related to global health emergencies and the economic devastation this has wrought, together with looming external debt concerns, and the effects of climate change already upon us. These multiple crises cannot be resolved without efforts of global cooperation. COVID-19 has fed off, increased and exposed inequalities of wealth, gender and ethnic groups. Yet, it has also shown us the vital importance of government action to protect our health and livelihoods. As a result, we are all forced to rethink our view of ID. The struggles over ID suggest that the status quo ante has not successfully ensured the economic stability and security that one might reasonably expect it to provide. Long-standing tensions have been apparent in a multitude of issue areas. In September 2019, more than 150 world leaders attended the Sustainable Development Summit at the United Nations (UN) headquarters in New York to formally adopt an ambitious array of Sustainable Development Goals (SDGs). The momentous agenda was expected to serve as the launchpad for action by the international community to promote shared prosperity and well-being for all over the next 15 years. Even before the outbreak of COVID-19, one only has to recall the titles of many major international organizations to understand that the politics surrounding these aims have a long and convoluted history – from the United Nations Development Programme (UNDP) and the United Nations Conference on Trade and Development (UNCTAD) to the International Bank for Reconstruction and Development (IBRD), the Regional Development Banks (RDBs) and the Organisation for Economic Co-operation and Development (OECD). The World Trade Organization (WTO) had also sought to bring the so-called ‘Doha Development Round’ to fruition. The United States and Australia have a body called the Agency for International Development; the United Kingdom has a specialist Department for International Development; and Turkey and a string of other countries have followed suit as a result of their growing economic and political influence in the global community. In 2012 India inaugurated its Development Partnership Administration to focus on least developed countries, particularly those in Africa. The European Commission has long had a Directorate-General for Development, whilst in 2019 the United States created the Development Finance Corporation. New kids have appeared on the block as a result of structural transformations. Civil society also more than matches government in its embrace of the ideas and politics of ID, setting the agenda of development from a bottom-up approach and addressing the socio-environmental impacts of development strategies. In this regard, what are the politics and agendas of these diverse bodies? How are they received? How do they cut across issues? To what extent are orientations shared? Will 1

2  Handbook on the politics of international development global economic and political shifts reduce the relative weight of established development agencies? How do the politics of the decolonization of development proceed? The remit of our analysis is international. We look at the global level, the big picture. We grasp wider-ranging dynamics and debates that emerge from the global, its various agendas and actors, be they International Organizations (IOs), states, business, civil society or individuals. The global level builds the context, provides or denies momentum to agendas and offers opportunities within which actors operate. Also, it is relevant to consider international linkages that go beyond single interactions. Intersectional agendas such as gender, migration and climate change as rallying cries bring social groups into focus. Such actors’ decisions, in turn, then feed into ID in ways that matter to other actors. Feminists argue that ‘the personal is political’, meaning that all human interactions carry and reproduce political meaning and are therefore part of the intricate process of ID. Thus, we see ID as a complex web of processes between people, social groups, states, and IOs. It is crucial to be aware of the diversity of actors and processes that make up ID and contest agendas. Decolonial politics, very clearly, sees development as representing and articulating the modern/colonial divide in which the West has arrogated authority to itself. Decolonial politics, therefore, do not recognize development as a horizon of realization (Icaza and Vázquez, Chapter 4). Being aware of various possible perspectives helps us develop an understanding of where we stand as students, analysts and practitioners. The emergence and evolution of strategies have a long history in ID. ID can be seen as a mediation between the Global North and the Global South. So far, the discussion on ID has neglected the combination of power politics with culture and value constellations as if ID were just a ready-made meal to be laid on every plate. There is a need to question this assumption and read approaches to ID as struggles over how markets are constructed, states reformed, and resources distributed, thus rooting ID firmly in the broader intellectual landscape of the political economy. There is also a need to study how alternative practices, mindsets, and concepts have emerged. We believe – and will seek to demonstrate with the selection of contributions to this Handbook – that we need to move away from the notion of a specialist field devoted to the study of ID not only as the conscious efforts of development agencies to intervene and promote change seen as positive but also to look at how the politics of actors have framed and contested issues and agendas. This Handbook will look at the politics of ID in a wide array of fields outlining key contributions and the continuous struggles to move the agendas forward. The focus on the politics of ID highlights context and history. It offers insight into how dominant discourses can contradict each other, how these can be challenged, and how alternative development paths might be constructed. This is especially important at a time when previous commitment to some multilateral development obligations has waned, and the burgeoning engagement of business interests via philanthropy is gaining strength with the increasing role of particular individuals. Philanthropic giving originates in the colossal new fortunes which have their roots in today’s technologies which have handed excessive market power to dominant players. For example, according to a report from Oxfam, the world’s 2,153 billionaires together have more wealth than the 4.6 billion people who make up 60 per cent of the planet’s population.1 Governments have long grappled with the implications of underpaid tax from global companies operating across many countries. That challenge has grown with COVID-19 1 See -people.

https://​www​.oxfam​.org/​en/​press​-releases/​worlds​-billionaires​-have​-more​-wealth​-46​-billion​

Introduction to Handbook on the politics of international development  3 and the boom in colossal tech corporations like Amazon and Facebook. In mid-2021, the Group of 7 (G7; the US, the UK, France, Germany, Canada, Italy and Japan, plus the EU) finally struck a deal to set a global minimum tax rate to avoid countries undercutting each other for low tax rates. It remains to be seen if the decision will lead to a balanced distribution of recovered tax or if those revenues will only accrue to G7 members. Such challenges lead to serious contentions from outside this circle of Western states. Even before geoeconomics came to the fore, even before the eruption of war and COVID-19 shook the world, the failings of the governing principles themselves led to questions over the efficacy and legitimacy of the IOs, erstwhile global bastions of ID and the urge to seek reform. Yet, it is not a simple case of the challenges from a group of rising powers. At the heart of this dissatisfaction is the idea that structural biases underpin in existing structures that favour some over others. These are not always obvious and self-evident. More generally, however, there is a feeling that the policies and ideas of ID represent the interests of a relatively narrow set of countries that once had the power to put in place most of the structures that still shape the way the world works today. They are neither representative nor fair, and as the Handbook shows, they are not always effective either. The debate as to whether existing IOs are appropriate to the changing global context is both externally and internally driven. This introductory chapter aims to situate the Handbook in its historical context of the early twenty-first century; to provide working definitions and discuss the contested nature of ID, thus clarifying our analytical framework; and to offer an example of how ideas and their political connotations can be disguised and become ‘invisible’ in the theory and practice of ID. The chapter concludes with an outline of the contents of the Handbook.

INTERNATIONAL DEVELOPMENT IN DEBATE ID is intimately connected to the emergence of the IOs of the post-war period and the espousal of self-conscious development programmes. With the creation of the UN and the Bretton Woods institutions, IOs were given unprecedented mandates and funding. Many organizations emerged in the bid to set up productive structures, offering a variety of monetary and financial regimes, commissions, standardization models, educational forms, collective identities, labels, procedures, organizational forms and values. The innovative plan to assist development must be understood in the geopolitical context of the Cold War. The geopolitical driving forces of the time twinned the supply and demand for ID, i.e. the unprecedented marriage between the universalist liberal ethos of the West and the anti-colonial struggles. The demand came mainly from the developing world associated with a growing sense that the mainstream neoclassical recipes were incapable of meeting developmental challenges – the literature on how the state could assist thrived from then on (Gabusi, Chapter 3). A central element of state assistance became trade protection for infant industries, which Ocampo refers to as the ‘Industrialization Consensus’ (Ocampo, Chapter 1), in contrast to the market reforms of the globalization project of ID with the end of the Cold War in the 1990s. At the time, the concept of development was also tied to existing asymmetries between early and late developers, along with the diagnosis of how these asymmetries were produced and how they could be overcome; law and economics were treated as instrumental tools to transform society. The mission was to remove ‘traditional’ barriers to modernity, with economists and lawyers being identified as the social engineers necessary to carry out this process (Chodor and Blaustein, Chapter 8). The

4  Handbook on the politics of international development solidarity ties of communities were dismissed as traditional values that interfered with ID (Xi Lin, Chapter 7). This was pivotal in institutionalizing ID when technical assistance programmes and planning commissions were established to initiate the reconstruction of world trade after the Second World War. Development found its inscription in global governance. The United Nations in the 1950s (Rivarola Puntigliano, Chapter 26) provided theoretical currency to policies. The World Bank (WB) followed once the reconstruction of Western Europe was seen to be on track (Mendes Pereira, Chapter 23). The first WB mission took off in 1950 in Colombia. A multitude of global and regional organizations mushroomed thereafter. At the front of the effort was a group of development economists and experts, supported by peripheral states with a critical view of the global system. The United Nations and its regional commissions played an essential role in development thinking and advising developing countries. In the 1960s, the struggle for development jumped to centre stage. The 1960s was named the UN Decade for Development, and in 1962 a new institution that could be better aligned with these priorities was set up seeking to reform the centre–periphery structure of the world economy, which inhibited the path to development. Trade became a focus of contention. The battle for securing development as a priority in the multilateral trade regime was a long and difficult one. In 1964, Part IV of the General Agreement on Tariffs and Trade (GATT) entitled ‘Trade and Development’ was adopted to provide a specific legal framework to favour exports of developing countries (Narlikar, Chapter 25; Peixoto Batista and Knoop, Chapter 22). Regional import-substitution industrialization or developmental regionalism (Nesadurai, Chapter 5) used regional industrial planning and protection of the regional common market to create the spatial conditions for rapid industrialization while overcoming the limited size of national markets. Altogether this posited a clear opposition to the dominant narrative through alternative epistemic frames and alternative institutional designs. This was epitomized in the attempt to create a New International Economic Order meant to gradually escape what Kwame Nkrumah described as a ‘neocolonial’ trap, in which an imperial power, despite losing direct political control, retained and extended its economic grip over formerly colonized territories. Since then, development and economic cooperation have been a central tenet of international relations, although what precisely that entails has shifted with the times, as we shall see throughout the chapters in the Handbook. Yet, the need for state reform was never eclipsed. In this first stage, states required modernization which meant transplanting American legal institutions to the developing world, with many transplants failing to sprout. Critics accused the effort of transplantation of ‘legal imperialism’ carried out by ‘legal missionaries’ who sought to remake developing countries in their image for their own gain (Chodor and Blaustein, Chapter 8) and to constitute a dominant project of civilization that could claim universality (Icaza and Vázquez, Chapter 4) in the fight against communism. Technical assistance and training operated quietly in the background to persuade and naturalize participants into accepting particular understandings of and approaches to development as best practices and common sense. When opportunities for export development grew, particularly from the 1960s in the capitalist world, a new ingredient came into the debate. The WB became a leading driver in arguing that those opportunities were an important source of success in the developing world. The call for greater integration into international trade was radicalized by orthodox thinkers who argued that protectionism associated with import-substitution policies generated inefficiencies, particularly the ‘anti-export’ bias that reduced growth opportunities. Based on the

Introduction to Handbook on the politics of international development  5 evaluations of the East Asian countries, state intervention had to be trimmed down to understand that trade liberalization was essential to accelerating economic growth. Regionalism was revived as open regionalism (Nesadurai, Chapter 5). Gabusi (Chapter 3) argues that these success stories were export-led and involved strong encouragement of industrialization from a developmentally engaged state. The developmental state paradigm – based on the empirical observation of the experience of Japan and the ‘Asian tigers’ – can shed some light on the very rationales of development as a transformative process guided by the state. Since the late twentieth century, China has followed a similar policy, in equal or even more aggressive ways than the prior East Asian tigers (Cunha Leite et al., Chapter 29). Nonetheless, by the end of the Cold War, the resistance to free trade had been overturned, and liberalization quickly became an avalanche. Developing countries dismantled protectionist regimes and flocked to free trade, partly due to a new mindset, partly due to the conditionalities of WB and International Monetary Fund (IMF) programmes (Mendes Pereira, Chapter 23; Forster et al., Chapter 24). The fall of the Berlin Wall and the subsequent collapse of the Soviet Union was interpreted as proof of the superiority of the kinds of economic policies these IOs had been advocating and thus was used to legitimize vastly expanded lending programmes and functions. IOs became vital players of the globalization project that replaced the industrialization consensus. The paradigm shift brought in not only new actors but also new agendas. Until the 1970s, finance for development was tight (Vivares and Stanley, Chapter 14) and mostly restricted to the Bretton Woods institutions and the RDBs (Palestini, Chapter 28). Private international finance had all but collapsed with the Great Depression in the 1930s. US disbursement of aid went essentially to geopolitically significant countries in the containment of communism, such as Taiwan or South Korea (Gabusi, Chapter 3). Together with the boost of financialization, private flows resumed, but the volatility of those flows became a problem of its own and implied a return to the boom-bust financial cycles and associated crises, starting with the Latin American debt crisis of the 1980s (Ugarteche, Chapter 10). From a long-term perspective, the essential issue is the tendency of financial sectors to experience boom-bust cycles. The availability of foreign exchange can push rapid economic growth, but also can lead to sudden crises, so the provision of counter-cyclical financing is crucial. The IMF, as the quasi lender of last resort and RDBs, aside from their particular geopolitical function, can play a counter-cyclical role, in fact counteracting the pro-cyclical character of private funding (Palestini, Chapter 28). RDBs are strong proponents of regional public goods provision, engaged in infrastructure connectivity projects, regional capital market development, and sub-regional development projects in the service of regionalism. Nesadurai (Chapter 5) very appropriately calls such a set of projects public goods regionalism. With an agenda that is functional, public goods regionalism can appear to be technocratic, aimed at delivering goods that may be collectively enjoyed and, therefore, regarded as distributively neutral. In reality, this type of developmental regionalism is as political as, or possibly even more so than, the other types, particularly in infrastructure provision that requires considerable funding. In such situations, developmental questions become intimately tied up with political questions of who funds what public good involving what type of conditionalities and trade-offs. The globalization project sought to institutionalize neoliberal market reforms at the world scale, downplaying industrial or manufacturing production in development (Fernández and Trevignani, Chapter 9). Development, instead, would be achieved by integrating national economies with global value chains. Since adjustment to a ‘business-friendly environment’ was needed, encompassing conditionalities had to be enforced (Mendes Pereira, Chapter

6  Handbook on the politics of international development 23; Forster et al., Chapter 24). It then meant a different law reform to ensure the appropriate environment (Chodor and Blaustein, Chapter 8). The US took the lead, developing projects in Central and Latin America which were subsequently extended to Eastern Europe and the post-Soviet sphere after the Cold War. In total, USAID spent around $200 million on such projects during the 1990s, with other institutions, such as the Justice and Commerce Departments, and the Securities and Exchange Commission, also getting in on the act. Similarly, the WB began to include law reform in its programmes, starting with Argentina in 1989. The hike in financial flows combined with the strengthening of North–South trade flows by virtue of opening to reciprocal trade extended global value chains. However, the globalization project, also known as the Washington Consensus model, did not go uncontested, nor was it adopted in toto worldwide. Most developing countries picked elements from the package to suit national development priorities, especially following a series of major financial crises since the late 1990s that had required state action to address the disruptions and failures of financial markets. As manifested in the so-called Battle of Seattle (Narlikar, Chapter 25), the backlash from civil society was especially strong, catalysing a crisis of legitimacy of IOs. The WB found itself under attack externally through a civil society-organized campaign called ‘Fifty Years is Enough’ and internally through in-house evaluations of its structural adjustment loans. This crisis of legitimacy, in turn, opened up political space for considering different conceptions of ID and its ends. A novel approach to poverty emerged in that space, which was concerned with alleviating the negative repercussions of globalization policies. There was an ideational change that expanded development beyond economic growth. Globalization required the humanizing of its processes. The emphasis on social aspects of these processes was an acknowledgement that the project had deep fault lines expressed in riot after riot at global conferences. The Rio+20 mega-conference in 2012 focused respectively on ‘people’ and ‘planet’, representing two unfinished agendas from earlier times. One must note that all through the Cold War, there was a decided tension between the demands of development and democracy (by which we mean not only civil but also social and economic rights), all complicated by the policies of the United States, which viewed socially progressive governments with decidedly mistrustful eyes. The view of the United States was that economic growth per se – fostered by private investment – would raise per capita income and lead to economic and social development, removing grassroots support for communism. Moreover, studies pinpointed a cosy relationship between foreign investors and authoritarian rule (Marangos and Triarchi, Chapter 2). After the collapse of the Soviet Union, foreign firms became keener to see themselves safeguarded by the institutional checks that democracies could offer. So, has democracy facilitated foreign direct investment (FDI)? Unfortunately, the multitudinous research focusing on the relationship between the host country’s political regime type and inward FDI has produced contradictory theoretical findings and ambiguous empirical results. The debate on the impact of political regimes on inward FDI is characterized by contradictory empirical results and serious disagreements among political scientists and economists. Many studies share the view that a democratic regime, supplemented by other factors, attracts more FDI than an autocratic one. But few provide strong empirical evidence for this. Moreover, multinational corporations are prone to invest in countries with low labour rights to enable global value chains (Fernández and Trevignani, Chapter 9; Mieres, Chapter 19), which these investments may often restrict. The upheaval of social arrangements that resulted from the reform to enable a business-friendly environment saw global protests and an explosion of domestic crime and violence in many

Introduction to Handbook on the politics of international development  7 parts of the Global South. Already high, homicide and robbery rates in Eastern Europe, Latin America and Central Asia doubled between the early 1980s and early 1990s, as one structural adjustment programme after another increased poverty and inequality (Forster et al., Chapter 24). By the late 1990s, research indicated a clear relationship between rising crime, poverty and inequality, and linked these to structural adjustment. Even the WB could no longer ignore how the political economy of adjustment was working out; in 1998, it published a report acknowledging that the contraction of jobs and wages, decline of public spending and deterioration of infrastructure were leading to social breakdown and forcing people – especially young males – to turn to crime as a ‘way out’. The UN transformed its crime programme into a standalone organization – the United Nations Office on Drug and Crime (UNODC) – in the late 1990s (Chodor and Blaustein, Chapter 8). However, policy and academic debates have devoted much less attention to whether lenders can be regarded as accomplices for financing or promoting policies that restrict economic, social and cultural rights or increase the global climate footprint (Newell, Chapter 15). Climate change and a whole range of issues around inequality and the unsustainability of systems of food and agriculture, water and energy, to name a few (Lima and Santos Baca, Chapter 16), also draw attention to the flaws of the prevailing ID model and expose the limits of (conventional) development as an ideology and set of institutions and practices (Deciancio et al., Chapter 21). Climate change and COVID-19 pose an indictment of the current global economy. There have been political attempts to manage this terrain. It is clear that the SDGs of the 2030 Agenda move towards breaking down ID into economic, social and environmental pillars. A good number of the goals refer to international agreements and conventions and, in this way, try to further implement existing international law. For example, several International Labour Organization (ILO) conventions, as laid out in the ILO Decent Work Agenda, are included in the remit of SDG8 on decent work and economic growth. These conventions include the prohibition of child labour and forced labour. The IMF, the WB and Northern member states also pushed to incorporate good governance and the rule of law into the SDG agenda. The culmination of this was SDG16, which includes several targets relating to promoting the rule of law, fighting corruption, and increasing the effectiveness, accountability and transparency of institutions. It is often cited in efforts to build up coalitions with non-state actors – including civil society and business – to pressure governments to confront crime. The SDG process is crucial because it rests on a coalitional view of ID, bringing together states, markets and civil society from both the Global North and the Global South. The highly inclusive and participatory process that gave rise to the SDGs came at a time of rising economic growth and unequal distribution of wealth. Civil society had become very active in confronting the negative effects of globalization. In 1999, the Battle of Seattle riots severely disrupted the WTO Ministerial Conference (Narlikar, Chapter 25; Peixoto Batista and Knoop, Chapter 22). In 2001, the first World Social Forum was held at Porto Alegre, Brazil. Social movements sprouted and continued with meetings in several other developing countries. At the same time, the spectacular growth of China triggered large opportunities for growth in developing countries (Cunha Leite et al., Chapter 29) which softened the fault lines between North and South. Negotiating the 2030 Agenda also reflected the coalitional spirit in an evolving North–South politics. This expectation was codified in an agreement as to ‘common but differentiated responsibilities’. The Global North would take on a large share of the financing for development to compensate the Global South for damage and support it in the transition to more sustainable pathways to development. The centres of agency and action shifted to below

8  Handbook on the politics of international development and beyond the nation-state, inspiring and mobilizing a global movement across civil society, the private sector and the scientific community (Currie-Alder, Chapter 20). That said, and so crudely evident with COVID-19, there remains to this day a remarkable absence of agency in global health politics. In short, then, colonial patterns persist: the Global South remains the object rather than the subject of global health politics (Struckmann, Chapter 18). But the engines of growth, even before COVID-19, did not follow pace as expected. World trade has slowed down significantly since the 2008–9 North Atlantic financial crisis. The boom that took place since the mid-1980s, which led to annual average growth of 7.3 per cent in the world’s trade volume in the period from 1986 to 2007, was followed by a growth of only 3.1 per cent from 2007 to 2019, the slowest of the post-war period (Ocampo, Chapter 1). In turn, the COVID-19 crisis has generated a significant trade contraction associated with the disruptions in value chains, which have been the primary source of growth in international trade for several decades. The uncertainties surrounding global trade at the time of writing this chapter are thus significant. It remains to be seen whether we will see a return to policies that focus on domestic markets, as in the early decades of ID and a greater focus on developmental regionalism (Nesadurai, Chapter 5). Also, it remains to be seen what will happen to China’s trading network dynamics. China has become a central trading partner for many developing countries and played a significant role in expanding world trade after the North Atlantic crisis. At this point, one must reiterate how central IOs have been in the politics of ID and the culture of technical assistance (as shown by a number of chapters in this volume: Struckmann, Chapter 18; Clifton and Díaz-Fuentes, Chapter 27; Mendes Pereira, Chapter 23; Palestini, Chapter 28; Rivarola Puntigliano, Chapter 26; Forster et al., Chapter 24). An increasing number of concerns have also been raised about the ineffectiveness of IOs, the WHO in particular in COVID times, in managing global health funding (Struckmann, Chapter 18). ID is now conducted by various actors and institutions, public/private partnerships, civil society (Irrera, Chapter 12) and philanthropic organizations (Seyedsayamdost, Chapter 30), raising questions about the political influence of philanthropic capital and the agendas wealth can buy. For example, most of these organizations, mainly aligned with the SDGs, believe in the market as the most powerful force – not only to allocate resources but also to promote social good. The goal-setting role of the SDGs has created a platform allowing private foundations to upload their agendas and select their favoured path. In this case, they can devise programmes following their preferences, generally incorporating a bias to market-based approaches broadly defined. They are not moving much beyond business as usual, which many would understand to be regulating rather than leaving it to markets (Newell, Chapter 15) with a logic that potentially isolates specific policies from each other. Fragmentation per se might not be a problem, but its effect on relationships between issue areas such as migration, labour rights or the environment, risks improving one only to worsen the next (Mieres, Chapter 19). Many ID proposals aim to ‘develop’ certain regions under the assumption that the appetite for migration would decrease. In this respect, however, the idea that development can drive migration positively as an enabler of economic growth rather than negatively (as a development failure) has been a solid and important argument used by various IOs to include migration in the SDGs. As in UNODC and crime, migration led to another important institutional development: in 2016, the International Organization for Migration (IOM) entered the UN system. It rebranded itself as the ‘UN Migration Agency’. In addition, a specific UN financing mechanism was created through a Migration Multi-Partner Trust Fund.

Introduction to Handbook on the politics of international development  9 We are keen to move away from an SDG-centric analysis of ID (‘what gets measured gets done’) but instead to look holistically at sources of discontent and potential alternatives. The important point to make is that in the SDG process, IOs moved to break down development into economic, social and environmental pillars with quantifiable goals and targets for each of them. Framing ID as consisting of those pillars and leading to lots of friction, became the norm. In the breakdown of ID into issue areas, new drivers and new actors shaped the coalitional view of ID with the normative environment becoming more embracing (rhetorically at least) of the ideals of equity and justice (Struckmann, Chapter 18), such as we see in the expansion of the global health agenda over the past 72 years, to respond more effectively to infectious and non-infectious diseases. Alongside these developments, the drivers, conditions and objectives of ID have evolved and diversified over time, responding to geopolitical and economic changes and new actors entering the field. India’s development cooperation, for example, prioritizes the resumption and sustainability of Southern growth as a testament to its desire to become a steadfast and reliable partner (Chakrabarti, Chapter 13). Since achieving independence, India has consistently supported anti-colonial and anti-racist liberation struggles in Africa. While the earlier relationship was built on the legacy of colonialism, the wave of liberalization and privatization in the 1990s led to a decisive shift in its Africa engagement towards trade and economic matters. Apart from India being the staunch proponent of South– South cooperation, other developing economies like Turkey, China and Brazil have also grown rapidly, at least in the years before COVID-19, with a consequent multiplication of South–South forms of cooperation (Malacalza, Chapter 11). Such practices ‘do development differently’, with a distinct shift away from reform and engineering towards the coalitional view of ID that emphasizes a solid social development agenda. This has also led to acknowledging the South as donors in ID debates. In a way, we have come to see the fluidity of the notions of Global North and South. The fluidity is ever more evident in the string of countries of the Global South that joined the OECD (Clifton and Díaz-Fuentes, Chapter 27). From its establishment in 1961, the OECD constituted a North Atlantic organization, known colloquially as the ‘rich man’s club’ or the ‘economic NATO’. However, over time such club-like governance came to be seen as increasingly obsolete since it excluded key economies from partaking in financing and managing goods or services. Enlargement of the OECD to Chile, Israel, Slovenia and Estonia in 2010, Latvia in 2016, Lithuania in 2018, and Colombia in 2020 brought its membership to 37 countries, thus extending its reach to non-core ‘Western’ countries as well as to ‘emerging economies’. Costa Rica was invited to become a member in 2020. The deeper cooperation with emerging economies – Brazil, China, India, Indonesia and South Africa – was formalized through its ‘enhanced engagement’ programme, with a view to their possible future membership. Regional programmes have been set up throughout the developing world in Africa, Asia and Latin America. West-driven club-like governance continues, however, in the G7 and the G20. Despite limited institutionalization and no permanent secretariat, they have been widely considered to have taken on the role of ‘global steering committees’ within several areas of ID in which they exercise authority and traction among other international fora (Marx and Otteburn, Chapter 6). None of these institutions works alone – each may build on, reference, compete with, antagonize or substitute one another, and in many cases, more than one of these interactions coincide. Furthermore, in many cases, the agenda-setting in one institution is carried out, directly or indirectly, through other institutions that amplify, fund and implement (Clifton and Díaz-Fuentes, Chapter 27; Palestini, Chapter 28).

10  Handbook on the politics of international development As the locus of economic power has become divided, new RDBs – led mainly by China and countries in the South – have emerged or grown in prominence. The New Development Bank (NDB) based in Shanghai and the Asian Infrastructure Investment Bank (AIIB) based in Beijing are two that have inspired significant controversy and anxiety among Western commentators, with some policymakers expressing concern about the role these banks will play vis-à-vis the WB (Marx and Otteburn, Chapter 6). The emergence of the AIIB has been particularly noteworthy. The tussle between developmental paradigms seems to be less important to understand the new RDBs (Palestini, Chapter 28). We do not find such a contrasting set of ideas similar to what state promotion under the industrialization consensus and market reforms for the globalization project had each meant in their own time. What we find instead is a tendency to pick and choose from both policy paradigms, including the SDGs agenda. As the regime becomes de-nested, authority becomes less hierarchically concentrated in a single (set of) institution(s) and becomes more evenly distributed horizontally. This is also observed in the monetary and financial sphere, where the Chinese currency and bilateral financing is expanding – especially in developing countries with restricted or negligible access to global capital markets – and gradually contesting US dollar and financial order hegemony (Ugarteche, Chapter 10). Shifting power relations among international actors are reshaping ID agendas in terms of its objectives, as we will see throughout the chapters. The burgeoning engagement of philanthropy in ID is relatively more hidden from view and significantly less studied (Seyedsayamdost, Chapter 30). Philanthropic organizations have been aligning their work with the SDGs. Still, they are neither accountable to citizens, as state officials are, nor are they accountable to clients or shareholders, as private enterprise is. They enjoy what Seyedsayamdost calls ‘dual independence’. Controversial and contested, they need to be taken into consideration. In addition, civil society organizations have risen to the challenge of ID, directly or indirectly strengthening direct relationships with member states and IOs, and reshaping ID agendas, particularly under the globalization project when the market has replaced the state as the favoured development driver – so much so that the 1990s are often called ‘the NGO decade’. The relationship between the UN and NGOs has been labelled a marriage of convenience. The World Food Programme (WFP), World Health Organization (WHO), UNICEF, and UN Environment Programme have a long-standing pattern of cooperation with non-state actors. This has resulted in a mixture of top-down general reforms, promoted by the UN, along with bottom-up attempts, on the part of NGOs, to exert a more decisive influence by the multitude of functions they fulfil, from service delivery to advocacy on issues of public policy, from research to the promotion of human rights. At the same time, NGOs play the role of implementing actors. The result is a multi-layered policy process in which national interests, shared values, universal principles, and global duties merge and interact (Irrera, Chapter 12). While the legacy of economics as social engineering still looms large in contemporary analyses, more fluid perspectives have arisen. Xi Lin (Chapter 7) brings a holistic approach to development by combining the idea of civitas homini as the core concept. It refers to the linking of individuals to each other in particular and to society in general via voluntary associations based on multiple cohesive factors, whether modern or traditional. This is development as solidarity transcending the narrow boundaries of the nation-state, advocating for emotional empathy and rational communication across cultures, locations, races, and languages. Here both solidarity and anti-colonialism come together, reflecting on the importance of histories of freedom, oppression, and resistance in forming contemporary solidarities (Icaza and

Introduction to Handbook on the politics of international development  11 Vázquez, Chapter 4). The global gender and environmental movements are good examples of such cross-boundary interaction (López-Uribe et al., Chapter 17; Newell, Chapter 15). These movements draw on local and global resources in advancing the welfare of residents and communities across the world. Now having reached this stage, we turn to offer our readers a guide to the structure of the Handbook.

SOME POINTERS FOR THE VOLUME ● We define development as an object of strategy. The argument here is a reminder of the importance of politics and agency. In our current era, ID is pursued by a wide array of actors, which include social elites, international organizations, non-governmental organizations, and social movements, in a variety of spatial settings, such as regions, countries, or the globe as a whole. Equally, the focus on who or what is being developed can encompass states, individual people and social groups, which may or may not be defined by their location in a national polity or international organization. Our collaboration over this time has produced a joint conviction that the study of ID needs to be rehabilitated by rooting it firmly in the politics of how, for what purpose, and who. ● We recognize the contested ideological dimension of ID. The point here is, in turn, to understand how intense the struggle can be. The particular ideological associations that inevitably underpin different concepts of ID have long been in dispute, precisely because definitions of paths to growth, or ID or the good life vary so widely. They can even reveal a crude image of development that does not correspond to its self-representation as progress and salvation. Particular conceptualizations of ID thus inevitably sit within broader visions. That is obvious enough, but it is nevertheless something that we will rediscover throughout the chapters. ● Our third pointer locates all concepts of ID in their historical contexts and sees them as always being historically shaped. In our view, ideas about development cannot but be shaped by time and place. Ideas emerge in particular historical situations, and they change as a result of specific historical events. For example, the various human development, gendered, environmental rights or global value chains did not enter the ID debate until the end of the Cold War in the 1990s. In the late twentieth century, the globalization project turned towards open trade and finance, while discussions of inequality have flourished in the twenty-first century. With these pointers in mind, the contributors to this Handbook were asked to focus on the politics of these struggles. The framework that the collection as a whole addresses started with unpacking these issues and asking if there is a single set of ordering principles, ideas and ideals, or whether instead, we can identify different ID normative orders that then spill out into other issue areas. The volume is organized in four parts. They are structured according to the four themes that relate intimately to the politics of international development: (i) key concepts and conceptual debates; (ii) international development and the consolidation and contestation of globalization; (iii) the international politics of development agendas; and (iv) global actors in the politics of development.

12  Handbook on the politics of international development Contributions to the first part engage with the conceptual perspectives at stake and provide the overall critical framework for studying ID today. In the second part, the authors explore how the politics of ID have unfolded in the consolidation and contestation of the globalization project discussing the (im)possibility of pluralizing ID. Each chapter takes up a different case study to highlight different practices, approaches towards, and conceptualizations of ID. The third part examines the unfolding of ID agendas, while the last part of the Handbook looks at the prescriptive ways in which global actors embed ID. It seeks to identify commonalities, differences, contradictions and tensions among the various perspectives on ID. The section critically discusses ID from a conceptual, institutional, and geopolitical perspective. The contributors address collectively whether these multiple actors and their agendas recapture an essential dimension of what decolonization stood for at its inception and can still aspire to in the present: the forging of a more just and equal international legal, economic, and political order. Second, a closely related question that the Handbook addresses is whether the sort of public goods that IOs are increasingly seeking to provide, represent an alternative, or do they instead represent a tool that actors (public or private) use to compete for dominance within the broadly defined existing definition of ID. Do they fill gaps in existing processes that have not been adequately provided at the global level? In short, when do we see change within ID, and when is there (if at all) an attempt to change the essential natures of the ID processes? Third, since there is some challenge in various issue areas, where is that challenge coming from? In some quarters, non-governmental organizations and philanthropic foundations are sometimes identified as the most likely source of new thinking and new preferences. So are local communities and gender movements. So are China and India. Can they ensure that their preferences are heard but that policies actually deliver what they mean to provide? Implicit is the question of what role can, do and/or should markets, states, IOs and non-state actors each play in a coalitional framework. China looms large in the analysis in a number of the contributions. China looms large outside the pages of this Handbook, too, and is widely seen as being the primary potential source of both a challenge to the status quo and also of new ideas and preferences. Or perhaps there is a desire to seek reform rather than a fundamental change in some areas, but a real and deep desire to fundamentally overturn basic starting points and principles in other areas. The entire point of the debate that the Handbook raises is to look beyond one size fits all approaches and solutions and to search for a new form of democratic ID processes. A key collective theme in the contributions is the importance of thinking of different sites of authority and contestation, especially if they are posed as being very different from the previously imposed preferences of the USA or ‘the West’. The contributors to this volume seek purposefully to remove the technical shroud of neutrality. They collectively set out to expose how political forces and struggles themselves govern ID. The chapters also reflect on the new challenges that have been presented to us by contemporary events, which, we suggest, should prompt a ‘refreshing’ or re-examination of assumptions. The individual chapters speak for themselves and draw their own conclusions. Together they generate a picture of considerable unease with both the effectiveness of ID and the normative basis of many of its functional arrangements. What is much less clear is how this dissatisfaction can be converted into agendas for change that gain followership from others who are also dissatisfied; let alone how this dissatisfaction can be accommodated by those resistant to change. It is also a rather patchy picture with different constellations of interests and power in different issue areas. Rather than a single all-encompassing holistic questioning of ID, there is

Introduction to Handbook on the politics of international development  13 a general tendency for fragmentation in terms of the acceptance and commitment to the status quo in different issue areas. As the Handbook was being developed, the COVID-19 pandemic shook the globe, war in the heart of Europe has broken out. Although it is premature to evaluate and adequately assess the multidimensional impacts of these watershed events, it would be naïve to assume that the world can easily transition into a ‘known normality’. We think that to envisage a better future, we must start by looking properly at the past to accommodate the associated conceptual, political and empirical challenges that are now laid before us. The ID community is immersed in talks about ‘building back better’ but it is too early to see if a ‘better normal’ is feasible. The pandemic has crudely exposed the world to the realization of existing inequalities, which have been exacerbated. These inequalities have been socially constructed for many years. The outbreak of the COVID-19 pandemic has pushed the world into not only a serious health crisis, but also it is confronting us with the moral task of rethinking and reassessing well-established paradigms and forms of policy-making. It is clear its impacts will be manifold and enduring for some time to come. Analogies have been drawn between this moment, the two world wars, and the 1918 flu epidemic as examples of game-changing episodes. At those points in time there were few global institutions. The current crisis will have some features in common with previous analogues, and some that are unique to it. We are still in the realm of informed speculation, but it is not too early to reflect on what the lasting impacts of the crisis will be. With major power fault lines sharpening across the world, crude North–South fault lines may re-emerge in the post COVID-19 era giving more primacy to sovereignty or, alternatively international cooperation may receive a boost to ensure that large parts of the world are embraced.

PART I THE CONCEPT AND POLITICS OF DEVELOPMENT: PARADIGMATIC DEBATES

1. International development in a historical context José Antonio Ocampo1

1.

A FIRST LOOK

Development economics was born in the 1940s and 1950s in Eastern Europe and Latin America, the two regions of the developing world2 that had achieved an intermediate level of development. From the start, it was associated with broader intellectual economic debates, particularly on the role of the state in economic policy, which had made a push forward in the 1930s with the Keynesian revolution. The basic conception of classical development economics was the need to industrialize to accelerate economic growth and technological change. I will refer to this idea as the “Industrialization Consensus,” to use a term that was widely used later on in reference to market reforms. The ideas put forward by the new field of economics took place in a world economy that was already highly unequal in terms of levels of development, and characterized by a division of labor in which developed countries were exporters of manufactures and developing countries of primary goods. In the view of some classical development economists, one feature of that system was the tendency for the terms of trade to move against primary goods and, thus, of developing countries. The commodity terms of trade were also subject to significant fluctuations, which were a basic source of business cycles and of periodic balance of payments crises in these economies. Given their strong dependence on the imports of machinery, equipment and many intermediate goods, the availability of foreign exchange was also seen by some classical development economists as a long-term constraint to growth. Industrialization was, of course, a major challenge in many ways. The first was that, as indicated, it took place in an unequal world economy. This implied that technology had to be imported. Additionally, imported machinery was more capital intensive that what made sense for the developing world, given their abundant labor supply and lower wage costs. Industrialization also involved significant linkages among sectors, which required policies that could help develop them. Technological learning and the development of these linkages generated dynamic economies of scale that enhanced the development process. The 1960s and 1970s led to three significant changes. The first was that the world economy started to offer developing countries increasing opportunities to export manufactures. This led to an increasing differentiation between those countries that were able to benefit from that 1 Professor in the School of International and Public Affairs at Columbia University, and Chair of the United Nations Committee for Development Policy. Formerly United Nations Under-Secretary-General for Economic and Social Affairs, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), and Minister of Finance of Colombia. I borrow here from my writings on these issues which are quoted throughout the chapter. 2 I will refer to developing countries in a broad sense, including what are now called “emerging economies,” with a specific reference to the latter in reference to capital flows.

15

16  Handbook on the politics of international development trend and those that continued to depend on exports of primary goods. The second was the rise of a new brand of orthodox economics critical of state intervention. It included a strong criticism of import substitution, the pattern that had been generalized in the developing world before the rise of the opportunities to export manufactures; it was also critical of other forms of state intervention – e.g., in the financial sector, against what this school referred to as “financial repression”. The orthodox views were codified in what came to be known as the “Washington Consensus”. The third trend was the return – for the developing countries particularly in the 1970s – of private international capital flows, which had collapsed with the Great Depression in the 1930s. However, the volatility of those flows became a problem of its own, and implied a return to boom-bust financial cycles and associated crises, starting with the Latin American debt crisis of the 1980s (see Chapter 10 by Ugarteche in this volume). The mix of international financial flows and strengthening of trade flows, particularly with the rise of international value chains, gave rise to a growing integration of the world economy (see Chapter 9 by Fernández and Trevignani in this volume). There was also a rise of migration flows, but with significant restrictions. This “globalization” process offered very unequal opportunities to different groups of developing countries, with successful manufacturing exporters from East Asia leading the process but other countries experiencing slower growth, including processes of “premature de-industrialization”. Globalization also generated crises that involved a large number of countries: the 1997 East Asian crisis that spread to large parts of the developing world, and the North Atlantic financial crisis of 2008–2009.3 The current COVID-19 crisis is perhaps the most global, but its origins are not economic. The concept “development” was originally thought of in strict economic sense – as rising per capita income – but with time came to encompass its social and environmental dimensions.4 However, this chapter will focus on the evolution of the theoretical debates on the economic dimensions of development, and their relation to the evolution of the world economy. It is divided in five sections, the first of which is this introduction. The next focuses on the structure of the world economy and the terms of trade of developing countries. The third analyzes the debates on economic structures, from the Industrialization to the Washington Consensus, and the return to more positive views of industrial policies in recent decades. The fourth reviews some of the macroeconomic debates, particularly on the management of terms of trade fluctuations and boom-bust cycles in international finance. The last summarizes some policy conclusions. Given the long period and the massive literature on the issues analyzed here, I will be very selective in the topics I cover and the literature I quote. I will not look at the social and environmental issues, but will make some references to dualistic economic structures, which is one of the major determinants of inequality in developing countries. I will also make some passing references to the role of international organization in the historical debates on development. These issues are analyzed in other chapters in this volume. 3 I prefer this term to the more commonly used of “global financial crisis” because it centered in the United States and Western Europe. 4 The United Nations was crucial in this trend. The International Labor Organization developed the concept of “basic needs” in the 1970s, and the United Nations Development Programme that of “human development”. The environmental dimensions of development were also gradually incorporated and led to a broad concept of “sustainable development” that in the United Nations terminology is meant to include the economic, social and environmental dimensions, as incorporated in particular in the “Sustainable Development Goals” approved in 2015.

International development in a historical context  17

2.

THE INTERNATIONAL DIVISION OF LABOR AND THE TERMS OF TRADE DEBATE

Development economics was born, as indicated, in a world economy characterized by a group of higher income countries that dominated manufacturing production and exports, and a group of developing countries specialized in the production of primary goods – a “center-periphery system,” as Prebisch (1950) characterized it. In his view, the asymmetries between the center and the periphery under this system destroyed some of the basic advantages of the international division of labor, particularly because it made the transmission of technological change in the world economy “relatively slow and uneven”. In his view, and that of Singer (1950), an additional characteristic of this system was the tendency of the terms of trade of commodities – and thus of developing countries – to experience a long-term decline. This hypothesis generated a heated theoretical and empirical debate. It also represented a major break with the views of classical economics, according to which the laws of diminishing returns in primary production and the increasing returns in manufacturing implied that the terms of trade of primary goods would show a long-term improvement vis-à-vis manufactures. Both Prebisch and Singer were associated with the United Nations,5 which played an important role in development thinking and in advising developing countries at the time, and became the center of the debates on the need to reform the world economic system. The P-S (Prebisch-Singer) Hypothesis can be understood as involving two different theoretical variants (Ocampo, 1993). The first drew on the negative impact that the low income-elasticity of demand for primary commodities – and particularly, agricultural goods – had on the terms of trade of developing countries. The second was based on the asymmetric functioning of factor and goods markets in the developed vs. developing countries. The fundamental difference between the two variants was that, in the first case, the downward pressure was reflected directly in the barter terms of trade, whereas, in the second, it was generated through factor markets – the factorial terms of trade – and only indirectly, through the effects of production costs on commodity prices. Another important difference is that the first variant applied only to primary commodities, whereas the second should affect all goods and services produced in developing countries. The second variant had major implications on how the fruits of technological progress are distributed: in the case of manufactures, through higher incomes of producers, but in the case of commodities (and possibly today of manufactures produced in developing countries), through lower prices that benefited buyers (importers in the case of trade). One reason is that, because of the lower income-elasticity of demand for agricultural goods and the high capital intensity of mineral production, there was a tendency to generate a labor surplus in the developing countries, which led to a relative decline in the wages of workers and, hence, in the goods they produce. The concept of labor surplus fitted well with Lewis’ (1977) terms-of-trade theory, according to which the international terms of trade were determined by relative wages in developing versus developed countries, which were determined, in turn, by the levels of productivity in 5 Prebisch was associated with the Economic Commission for Latin America (ECLA) (later ECLAC, when the Caribbean joined the Commission) and Singer with the Department of Economic Affairs. These two organizations were later joined by the United Nations Conference on Trade and Development (UNCTAD), which was created in 1962 and initially headed by Prebisch.

18  Handbook on the politics of international development the production of food (or of subsistence goods in general) in the two groups of countries. An increase in labor productivity that boosted real wages had a positive effect on the terms of trade of developed countries. In contrast, the “unlimited supply of labor,” to use Lewis’ (1954) own concept, limited the capacity of developing countries to increase real wages in their export sectors, which implied that technological change was transferred to the rest of the world through a decline in the terms of trade. Therefore, according to the second variant, the trend in the terms of trade was not associated with the types of goods produced but rather with the structural characteristics of the countries that produced them. The North–South models developed in the 1980s, by Findlay (1980) and Taylor (1983, ch. 10), among others, formalized this analysis. A common feature of these models was that, due to differences in economic structures, wage increases in the North were proportional to the rise in productivity, while the unlimited supply of labor implied that real wages were not affected by technological change, which was then “exported” to the rest of the world through lower prices. According to these analyses, the corresponding effect transmitted through production costs and was therefore unrelated to the type of goods being produced or the demand for them, a view that was supported by Singer (1998) in later analyses. According to this view, the terms of trade between standardized manufactures produced by developing countries would tend to deteriorate relative to the innovative products of developed countries. This meant that, even though developing countries could industrialize and produce manufactures, the fact that these products were standardized meant that they did not create new economic rents. Instead, the rents associated with innovations were captured by developed countries’ entrepreneurs. The expansion of world trade also offered since the 1960s opportunities for the diversification of primary good exports towards goods of higher income-elasticity of demand and value added. This included a higher array of perishables – fruit, vegetables and flowers – the development of which required special transportation and handling. It also offered technological opportunities – in biotechnology, nanotechnology, and subsequently in environmentally friendly products – as well as those associated with the possibility of exploiting the full value chains of natural resource-intensive sectors (see, in this regard, Pérez’s 2010 analysis on Latin America). The spectacular growth of China in recent decades has also generated large opportunities for developing countries’ exports of primary goods to the Asian giant. In contrast to these possible positive effects of commodity development, the literature identified since the 1980s the risks of “Dutch disease” effects of commodity booms and, in particular, the de-industrialization processes that they could generate.6 The macroeconomic issues that will be analyzed in the fourth section of this chapter are at the center of this problem: the real exchange rate appreciation during commodity booms that have adverse effects on non-commodity tradable (both exports and import-competing) sectors. The unstable incentives associated with real exchange rate fluctuations through the commodity price cycle also makes the profitability of those sectors highly volatile, thus reducing the incentives to invest in non-commodity sectors. On top of these problems, the Dutch disease literature has emphasized political-economy and institutional problems, in particular the “rentierism” associated with natural resource dependence.

6 On the “Dutch disease”, see, among many others, Corden and Neary (1982), van Wijnbergen (1984), and Krugman (1990, ch. 7).

International development in a historical context  19 In relation to the empirical validity of the P-S Hypothesis, the literature written up to the end of the 1970s was ambivalent, but most of the studies of the 1980s tended to corroborate the P-S Hypothesis.7 A major World Bank paper on the topic, by Grilli and Yang (1988) showed that there was indeed evidence of a long-term deterioration in real non-oil commodity prices through the twentieth century, and became a milestone in the debate. The later empirical literature has reinforced this conclusion, although indicating also that the adverse trend of the commodity terms of trade was a feature of the twentieth century (particularly after the First World War), not of the nineteenth or the twenty-first centuries. In turn, the adverse trend in the twentieth century is largely explained by two major downward shifts: one after the First World War and the other in the 1980s. In both cases, these adverse shifts represent the delayed effects of sharp slowdowns in the world economy. An additional conclusion is that the adverse price trend in the twentieth century was particularly strong for tropical agricultural goods, and that both oil and minerals have shown a positive long-term trend since the last decades of the twentieth century. Finally, although the evidence is more fragmentary, there is evidence on the decline of the terms of trade of manufactures exported by developing countries since the 1980s (at least for significant categories of them) relative to those exported by developed countries (Parra-Lancourt, 2019, ch. 3). An important implication of the P-S Hypothesis was that industrialization was the principal means at the disposal of developing countries to share in the benefits of technological progress and raise the standard of living of their population. Even for the intellectual leaders behind the hypothesis, the case for industrialization was thus broader than the issues associated with the tendency of the terms of trade. In Prebisch’s view, it was essential to speed up technological transfer from the center to the periphery, and in Singer’s analysis to exploit the strong technological externalities generated by manufacturing. The terms of trade debate may have sidetracked the discussion from what remained for several decades a broader consensus on industrialization. To that broader case for industrialization we now turn.

3.

FROM THE INDUSTRIALIZATION CONSENSUS TO MARKET REFORMS, AND TO A REVIVAL OF INDUSTRIAL POLICIES

The inequalities that characterized the world economic when the development literature was born implied that industrialization in the developing world would necessarily be a process of “late industrialization,” to use a term that had been coined by Gerschenkron (1962). In fact, as such industrialization followed that of the continental European countries he analyzed, it was “late-late industrialization.” The major challenges were guaranteeing access to technology and the need to create the sectoral linkages necessary for a successful industrialization. As Gerschenkron had already pointed out, this required stronger state intervention. A central element of state intervention to support industrialization in the developing world at the time was protectionism. It was already the rule since the last decades of the nineteenth century in many developed countries and in several politically independent developing countries, particularly in Latin America. In turn, the Great Depression of the 1930s led to the explo7 See a review of the empirical literature and particular evidence of trends and cycles for different commodities in Erten and Ocampo (2013).

20  Handbook on the politics of international development sion of protectionism worldwide and to the collapse of international trade. In this context, looking at the opportunities that domestic markets provided to encourage industrialization through import substitution was not only natural but, in a strong sense, the only alternative available. The rising anti-colonialist movements in Asia and Africa and the de-colonization process that took place in the post-Second World War years, gave industrialization an additional political push in those parts of the world, as an expression of national self-determination. Furthermore, the reconstruction of world trade after the Second World War concentrated initially on flows among industrial economies. The opportunities for developing countries, particularly for manufacturing exports, came only in the 1960s, and benefited those countries where industrialization was already underway thanks to prior import-substitution processes. The recognition that rising incomes are linked to a reduction in the relative weight of primary production and an increase of that of manufacturing was developed by Kuznets (1966), and was at the center of early work on the patterns of structural transformation by Chenery (1979) and others. As Chenery became the first Chief Economist of the World Bank, this institution came to be one of the centers of analysis on this issue. In fact, the link of industrial development to long-term economic growth became one of the strongest observed “regularities” in development. The implementation of the Industrialization Consensus faced, of course, major challenges, some of which have already been highlighted. The first was that technology, and the machinery and equipment in which it was embodied, had to be imported. An alternative was attracting the firms that controlled the technology through foreign direct investment (FDI). Strong support for domestic firms, including with protection and export subsidies, was a necessary complement – in the latter case, when export opportunities opened up. Additionally, imported technologies were more capital intensive that what made sense for the developing world, given the lower wage costs associated with the large supply of labor. They thus generated a dualistic economic structure, in which some labor would be employed in the productive sectors but a large proportion were left in the traditional agricultural activities or were absorbed in a growing urban informal sector. To be successful, industrialization also required the creation of significant linkages among sectors, which generated externalities and required policies to help develop those linkages. This implied that the development process was characterized by major complementarities, in wide contrast to the emphasis on substitution (in the choice of consumers or the selection of production techniques) emphasized by neoclassical microeconomic theory. Hirschman (1958) classified the associated complementarities as a mix of “backward” and “forward” linkages. The idea that there are strong complementarities gave rise to another series of concepts that came to occupy a central role in classic development debates. The most important were Rosenstein-Rodan’s (1943) “big push” and Nurkse’s (1961) “balanced growth.” In both cases, the central idea was the need to design a policy package that involved the simultaneous development of complementary industries. In contrast, Hirschman argued that this required developing countries to implement policies that were beyond their capacities. As an alternative, he formulated the view that the development process takes place through a sequence of imbalances, which implied that the policies it required were sequential rather than simultaneous (Hirschman, 1984). In his view, imbalances actually played a positive role if they generated policy innovations and induced investments to correct them. The opportunities for export development, particularly from the 1960s, introduced a new element in the development debate. Chenery became a leading thinker in arguing that the use

International development in a historical context  21 of those opportunities was an important source of success in the developing world. He claimed that sustained economic growth required a transformation of the structures of production compatible with both the evolution of domestic demand and the use of the opportunities provided by international trade (Chenery, 1979). The call for greater integration into international trade was made in a radical way by more orthodox thinkers, and particularly, his successor as Chief Economist of the World Bank, Krueger (1978), who argued that protectionism associated with import-substitution policies generated inefficiencies, and particularly an “anti-export” bias that reduced growth opportunities. Trade liberalization and a full integration into international trade was thus essential for developing countries to accelerate economic growth. This generated an extensive debate on the determinants of growth in developing countries. Most authors agreed that export performance was a key ingredient to success, but expressed contrasting views on whether such performance was best generated by the neutral incentives associated with trade liberalization policies or by active industrial policies to deepen structural change. Amsden (2001) argued that export performance generated a “reciprocal control mechanism” that allowed incentives generated by government policies to be aligned with performance, but her and Wade’s (1990) evaluations of the East Asian success stories indicated that they were associated with active government strategies aimed at diversifying manufacturing exports towards sectors with higher technological contents (see Chapter 3 by Gabusi in this volume). Therefore, these success stories were export-led but also involved strong state encouragement of industrialization. Since the late twentieth century, China has followed a similar policy, in equal or even more aggressive ways than the prior East Asian tigers (see Chapter 29 by Vadell and Ramos in this volume). In broader terms, and going back to the work by Chenery and collaborators, growth is accompanied by regular changes in the sectoral composition of output and the patterns of international specialization (Chenery et al., 1986). The reduction in the income gap vs. developed countries – “convergence,” as it is called in the literature – has been generally associated with processes of industrialization and the reallocation of labor from low- to high-productivity sectors subject to economies of scale and scope (specialization), but there are also many cases that have ended in truncated convergences or even growth collapses (Easterly, 2001; Ros, 2013). One of the adverse trends has been “premature de-industrialization,” particularly of Latin America – i.e., the reduction in the share of manufacturing in employment and GDP at much lower levels of income per capita at which similar processes took place in developed countries8 – which is, of course in sharp contrast with the persistent industrialization of East Asia and its spread to a group of middle- and lower-income countries in South-East and South Asia. As Diao et al. (2019) have recently shown, the Asian countries are the only developing countries where growth has been on both changes in economic structures and improvements in labor productivity at the sectoral level, whereas Latin America has lacked the first element and Africa the second. Premature de-industrialization, at least in Latin America, may have been generated by the way trade liberalization was undertaken, and by the “Dutch disease” effects of the super-cycle of commodity prices of the early twenty-first century (Bértola and Ocampo, 2012, ch. 5).

8 This concept was first highlighted by Palma (2005) and Dasgupta and Singh (2006), and more recently by Rodrik (2016).

22  Handbook on the politics of international development The opportunities for export development did not eliminate, therefore, the classical case for industrial policies, as part of active industrialization strategies, though they certainly changed the type of industrialization needed. Lall (2003) argued, for example, that the fact that export structures are path-dependent, has important implications for growth and development, with the highest technology products having the greatest benefits, in terms of spillover effects and dynamic economies of scale (learning), as well as greater dynamism in world trade. Hausmann et al. (2007) also argued that the quality of exports, as reflected in the “income level” of a country’s exports (i.e., an estimate of the weighted average income of countries exporting specific products, which in their view is an index of technological content), is an independent determinant of economic growth. This brings us to the analysis of innovations and structural change, which is one of the most interesting contributions to the development literature in recent decades. The basic issue in that structural transformation is not a “once and for all” event, but a continuous process. Therefore, the dynamic efficiency, understood as the capacity to generate new waves of structural change, is the essential determinant of rapid economic growth (Ocampo, 2017b, 2020). This concept is in sharp contrast with static efficiency, the central focus of traditional microeconomic and international trade theories. It requires high degrees of state intervention but also innovative ways of interaction between the public and the private sectors (Mazzucato, 2013). The dynamics of production structures may be understood, therefore, as the result of the interaction between two basic forces: (i) innovations, broadly defined as new technologies, new activities and new ways of doing previous activities, and the learning processes that characterize their full realization and their diffusion through the economic system;9 and (ii) the complementarities underscored by classical development economics, and the networks of production activities that they generate – “value chains,” as they have come to be called. The public and private sector institutions required to enhance these structural processes are crucial and also subject to learning. Elastic factor supplies are essential to guarantee that these dynamic processes can deploy their full potentialities. It is the combination of these factors that determines the dynamic efficiency of a given production system (Ocampo, 2017b, 2020). In industrial countries, the incentive to innovate is provided by the extraordinary profits that can be earned by the innovating firms. In developing countries, they are rather largely associated with the transfer of sectors, new products and technologies previously developed in the industrial centers. The extraordinary profits that innovators enjoy in developed countries may be absent, as they may involve entry into mature activities with thin profit margins. Thus, in the absence of policy incentives, there may be a suboptimal search for new economic activities (Hausmann and Rodrik, 2003). No innovative process is passive: it requires investment and learning. Climbing up the ladder in the world hierarchy entails shortening technology transfer periods, taking “detours” to manage existing intellectual property rights and, most importantly, gradually becoming a more active participant in technology generation (Lee, 2019). It requires national innovation systems to be built up, which should include an institutional framework to coordinate the various actors engaged in innovation and learning – research and development centers, universities, extension services, and the innovating firms themselves.



9

This broad concept of innovations coincides with Schumpeter’s (1961) “new combinations.”

International development in a historical context  23 Some of the most interesting insights into these dynamics have been provided by “evolutionary” theories of technical change (Nelson and Winter, 1982; Nelson, 1996) and associated analyses.10 These theories emphasize that technology is to a great extent tacit in nature – i.e., there are no detailed “blueprints” – which implies that it is incompletely available and imperfectly tradable. An additional feature is that technology proficiency cannot be detached from production experience, as it has a strong learning-by-doing component. This implies that the capacity of firms to innovate depend on their accumulated technological knowledge and production experience, and also that the contraction or disappearance of a given economic activity – due, for example, to the effects of trade liberalization – will have adverse long-term technological effects. Two final comments on global trends are in place. The first is that the ongoing shift away from manufacturing into services is transforming the global economy. The rise of modern services (transport and communications, finance and services to enterprises, as well as modern state services) is as essential as manufacturing, and has been at the center of successful development experiences. We also know that at high levels of income the dynamics of services eventually overtake that of industrialization, and that the revolution in information and communications technologies (ICT) has induced major changes in manufacturing itself. These issues, as well as the innovations that take place in primary sectors and the value chains in those sectors that were discussed in the previous section, should certainly be at the center of development strategies. Therefore, the adequate industrial policies required should be understood in a broad sense, including not only manufacturing production but innovation and value chains in primary sectors as well as services. In this sense, a broader concept of “production sector strategies” may be more appropriate that the traditional one of “industrial policies.” The second is that world trade slowed down significantly since the 2008–2009 North Atlantic financial crisis. The boom that took place since the mid-1980s, which led to annual average growth of 7.3 percent in the world’s trade volume in 1986–2007, was followed by a growth of only 3.1 percent in 2007–2019, the slowest of the post-Second World War period.11 In turn, the COVID-19 crisis has generated a major trade contraction associated with the disruptions in value chains, which have been the primary source of growth in international trade for several decades, and has paralyzed tourism and passenger airline services. The uncertainties surrounding global trade at the time of writing this chapter are thus significant. It remains to be seen whether this will lead to a return to policies that focus on domestic markets, as in the early decades of development thinking, and to a greater focus on regional integration (see Chapter 5 by Nesadurai in this volume). And it remains to be seen what will be the dynamics of China’s trading network, given the fact that it has become central for many developing countries, and played a very important role in the expansion of world trade after the North Atlantic crisis.

10 See also Dosi et al. (1988) and, with respect to developing countries, Katz (1987), Lall (1990, 2003), and Lee (2019). 11 These growth rates are estimated from information from the United Nations for the first period and from the IMF since 2007.

24  Handbook on the politics of international development

4.

MACROECONOMIC POLICIES AND DEVELOPMENT

Macroeconomic policies have also played an important role in development debates, particularly in recent decades. In the initial stages of development economics, the major issues were the availability of savings to finance the investment needed for industrial development, as well as the foreign exchange required to pay for the imports of machinery, equipment and intermediate goods that that process required. With the return of capital flows and the growing role of domestic private finance, the attention increasingly focused on how to manage the boom-bust cycles in private flows, avoiding also possible domestic financial crises. Although with passing references to strictly domestic issues, I will focus here on the management of external shocks, positive and negative, which are perhaps the most important determinant of business cycles in developing countries – a condition that can be referred to as “balance of payments dominance” (Ocampo, 2016). International trade can generate major macroeconomic shocks to developing countries. They include both fluctuations in commodity prices as well as in the demand for the goods and services that these countries export. The latter issue has become important in recent crises, notably the North Atlantic financial crisis, which affected the exports of manufactures from developing countries, and the COVID-19 crisis that, aside from manufacturing trade has affected some service exports, as already indicated. However, in the debates that characterized the early decades of development economics, the major issues were the management of fluctuation in commodity prices and, from a longer term perspective, how savings or foreign exchange gaps could affect the growth process. In relation to commodities, an important proposal was the possibility of moderating price fluctuations with the creation of international commodity agreements. Although there were precedents since the 1920s, the creation of commodity agreements became a strong trend in the mid-1950s and early 1960s after the collapse of the commodity price boom that had taken place in the early post-Second World War period. Several of them included both producing and consuming countries, following the pattern of the Inter-American Coffee Agreement promoted by the United States to manage the market for that commodity during the Second World War. The creation in 1960 of the Organization of Petroleum Exporting Countries (OPEC) did not follow that pattern and its decisions in the 1970s to reduce oil supplies, which generated two major price shocks, contributed to the lack of support of consuming countries for commodity price agreements in general. So, in contrast to the 1950s and 1960s, there was no significant action to stabilize commodity prices when they weakened in the last two decades of the twentieth century. Domestic stabilization funds are also essential to manage commodity price fluctuations. They save commodity export revenues during price booms to have them available when the succeeding crises hit. The can also aim at stabilizing domestic commodity prices, with taxes or forced savings imposed on producers during booms, matched with compensatory subsidies or refund of forced savings during crises.12 If export revenues accrue to the public sector through taxes on commodity-producing firms or profits of state-owned companies – as is typical in oil and mineral exporting economies – they save revenues in a sovereign wealth fund or similar 12 A good example is the Colombian National Coffee Fund, created in 1940 to manage domestic effects of the Inter-American Coffee Agreement. The domestic price stabilization mechanism that it created continued to be in place for several decades.

International development in a historical context  25 mechanisms during booms, again to have them available to increase government spending during crises or for longer-term objectives. The Norwegian oil fund is generally recognized as the best instrument of this kind, but several oil exporting countries have similar instruments. A very good example is also the series of Chilean stabilization funds for its main export, copper, the first of which was launched in 1987. From a long-term perspective the essential issue is the possibility that the availability of foreign exchange would become a major constraint on economic growth. A basic issue underscored by some classical development economists was the effects of the asymmetry between the high income-elasticity of the demand for imports by these countries vs. the low elasticities of demand for their export goods, particularly for several commodities. Under these conditions, the availability of foreign exchange could become the basic determinant of economic activity. The work of Thirwall (2011a, 2011b) has been the most influential in the analysis of this issue.13 This underscores the role that active export strategies and, more generally, structural diversification play in overcoming possible foreign exchange gaps. The availability of domestic savings can be another constraint, as well as the availability of long-term credits in the domestic financial system to support investment. The development of national development banks, as well as public sector investments in new industrial sectors came to occupy an important place in managing these issues in several developing countries. Although trade issues continued to be important for many developing countries, since the 1970s the capital account has played a growing role in the economic fluctuations experienced by developing countries. This was particularly so for the increasing number of countries that came to have access to international private capital markets – particularly the “emerging economies” but also the low-income countries that came to be part of the “frontier markets.” The literature on this topic has identified a sort of hierarchy of volatility of capital flows, with FDI being the more stable, and short-term bank lending and portfolio flows the more unstable (Rodrik and Velasco, 2000). In this context, the major risk that developing countries face is the possibility of a “sudden stop” of volatile financial flows (Calvo, 1998), which can generate “twin crises” (i.e., combined external and domestic financial crises) if the abundance of external financing has generated a parallel boom in domestic financing. This is, of course, a specific manifestation of a more general problem: the tendency of financial sectors to experience boom-bust cycles, a topic that has been analyzed by Minsky (1982), Kindleberger and Aliber (2005), and Reinhart and Rogoff (2009), among others. The management of external financial cycles require active countercyclical fiscal and monetary policies. In the first case, the best is the design of fiscal rules that determine the medium-term trajectory of the fiscal balance and debt ratios, but allow for deviations around that trend to counteract positive and negative shocks to smooth the fluctuations in aggregate domestic demand. However, the domestic political economy tends to generate pressures in most developing countries to spend in good times, which in turn limit the policy space to adopt expansionary policies when crises hit. The limited availability and higher costs of financing may also constrain countercyclical fiscal policies during crises. If austerity policies are adopted as a result, the political pressure to expand during the subsequent upswing in economic activity would be strong. For these reasons, and in contrast to developed countries, pro-cyclical fiscal

13 See also the October 2019 issue of the Review of Keynesian Economics in honor of Thirwall. For a broader analysis of gaps in macroeconomic adjustment, see Taylor (1994).

26  Handbook on the politics of international development policies tend to prevail in developing countries, as underscored by Kaminsky et al. (2004). This conclusion has been generally confirmed in later studies. In the case of monetary policy, countercyclical policies face two major dilemmas. The first one is that, through the management of the domestic interest rate or monetary aggregates in a countercyclical way, they may increase rather than reduce the volatility of capital flows – i.e., bring more capital flows during booms if monetary authorities increase interest rates to reduce domestic demand, and generate more capital flight during crises if they reduce interest rates. For this reason, the recommendation of the traditional macroeconomic literature is to let exchange rates be flexible. Expressed in terms of the “trilemma” of open economies, in economies with open capital accounts, the authorities can control the exchange rate or the interest rate, but not both. However, this generates a second dilemma, because of the negative effects on growth that the appreciation of the exchange rate during booms may generate, both through the reduction of investment in tradables sectors in the short term but also the unstable incentives generated by the instability of the exchange rate in the long term. A growing literature has shown that long-term growth in developing countries is positively associated with the capacity to guarantee a competitive and relatively stable real exchange rate (see Rodrik, 2008; Razmi et al., 2012; and the survey by Rapetti, 2020). The limitations that monetary policy faces in open developing economies generate a case against full capital account liberalization and to actively use regulations – capital controls, as they are usually called – to manage the associated volatility. The broad agreement that capital market liberalization generates stronger business cycles in developing countries was supported by a major International Monetary Fund (IMF) study (Prasad et al., 2003; see also Chapter 24 by Kentikelenis in this volume). There is also strong evidence and a broad consensus in the literature that capital account regulations help improve the composition of capital flows toward less reversible flows, and provide room for countercyclical monetary policies (Erten and Ocampo, 2017). The IMF’s “institutional view” on capital account management, adopted in 2012, accepted that the full liberalization is not always desirable, and that regulations can play a positive macroeconomic role to manage capital account volatility (IMF, 2012). Such regulations should be combined with active intervention in foreign exchange markets and management of foreign exchange reserves in a countercyclical way: accumulation during booms to have them available during crises. Countercyclical foreign exchange reserve management has indeed been a widespread practice in developing countries since the East Asian crisis (Ocampo, 2017a, ch. 2). However, the “self-insurance” that it provides is costly, as it involves accumulating an asset that has low yields (foreign exchange reserves) to compensate for the entry of private capital inflows, which have higher costs; furthermore, if reserve accumulation is domestically sterilized, central banks may also incur losses. Capital account regulations are, therefore, a less costly policy instrument, but countries may be reluctant to use them because they are seen as distortions in financial markets, and there may be restrictions on their use in investment treaties. Capital account regulations should be complemented at the domestic level with regulatory policies aimed at avoiding unsustainable credit booms, and managing the maturity and currency mismatches in portfolios. The provision of countercyclical financing at the national level is also crucial. National development banks can play a countercyclical role, aside from their long-term development goals, in fact counteracting the pro-cyclical character of private financing at the national level (Griffith-Jones and Ocampo, 2018).

International development in a historical context  27 In summary, the combination of capital account regulations with exchange rate and foreign exchange management, together with countercyclical fiscal and monetary policies constitute the appropriate macroeconomic policy package to manage boom-bust cycles in external financing. Aside from its contributions to countercyclical management, this policy package has long-term development implications, as it contributes to maintaining a competitive and relatively stable real exchange rate.

5.

POLICY CONCLUSIONS

This chapter analyzes the evolution of development thinking in the context of the major changes that have taken place in the world economy since the rise of classical development economics in the 1940s and 1950s. After summarizing these changes, it first looks at the P-S Hypothesis. It argues that, although there is partial evidence that supports this hypothesis, the major contribution of the terms of trade debate was the emphasis on industrialization as the principal means for developing countries to share in the benefits of technological progress and raise the standard of living of their population. It was thus part of the Industrialization Consensus, the major conception of classical development economics according to which developing countries had to industrialize to accelerate economic growth and technological change. The major challenges of the industrialization strategy since the early days were how to guarantee access to technology and develop complementary industries. Since both generated dynamic economies of scale, they required active development policies. In contemporary terms, I argue that successful development should be based on “dynamic efficiency,” understood as the capacity to generate new waves of structural change. A successful strategy is the result of the interaction between innovations and associated learning processes – which cannot be detached from production experience – and the development of the networks of production activities or value chains. Export diversification should be an essential part of that strategy, but it does not eliminate the need of active industrialization policies, mixing manufacturing with value chains in natural resource sectors and dynamic service activities. Macroeconomic policies are crucial to manage external shocks, positive and negative. A traditional issue is managing commodity price fluctuations, with the support of commodity stabilization agreements (now in disuse) and domestic stabilization funds. Avoiding foreign exchange gaps calls for active export diversification strategies. In turn, the capital account volatility that came back with the return of international capital flows since the 1970s requires active countercyclical fiscal and monetary policies, complemented with capital account regulations (controls), and countercyclical interventions in foreign exchange markets. A major objective should be avoiding exchange rate appreciations during booms and the instability of the real exchange rate, both of which can have adverse effects on the structural transformation. Adequate domestic financing of investments is also required, with national development banks playing a potential role.

28  Handbook on the politics of international development

REFERENCES Amsden, Alice (2001). The Rise of the Rest: Non-Western Economies’ Ascent in World Markets. Oxford: Oxford University Press. Bértola, Luis and José Antonio Ocampo (2012). The Economic Development of Latin America since Independence. New York: Oxford University Press. Calvo, Guillermo A. (1998). Capital flows and capital markets crises: The simple economics of sudden stops. Journal of Applied Economics, 1(1), 35‒54. Chenery, Hollis (1979). Structural Change and Development Policy. New York: Oxford University Press and World Bank. Chenery, Hollis, Sherman Robinson, and Moshe Syrquin (1986). Industrialization and Growth: A Comparative Study. New York: Oxford University Press and World Bank. Corden, W. Max and J. Peter Neary (1982). Booming sector and de-industrialization in a small open economy. Economic Journal, 92 (December), 825–848. Dasgupta, Sukti and Ajit Singh (2006). Manufacturing, Services and Premature Deindustrialization in Developing Countries: A Kaldorian Analysis. Research Paper No. 2006/49. World Institute for Development Economic Research (UNU-WIDER). Diao, Xinshen, Margaret McMillan, and Dani Rodrik (2019). The recent growth boom in developing economies: A structural change perspective. In Machiko Nissanke and José Antonio Ocampo (eds.), The Palgrave Handbook of Development Economics: Critical Reflections on Globalisation and Development. Cham: Palgrave Macmillan, pp. 281–334. Dosi, Giovanni, Christopher Freeman, Richard Nelson, Gerald Silverberg, and Luc Soete (eds.) (1988). Technical Change and Economic Theory. Maastricht Economic Research Institute on Innovation and Technology (MERIT)/The International Federation of Institutes for Advanced Studies (IFIAS). London and New York: Pinter Publishers. Easterly, William (2001). The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. Cambridge, MA: MIT Press. Erten, Bilge and José Antonio Ocampo (2013). Super cycles of commodity prices since the mid-nineteenth century. World Development, 44, 14‒30. Erten, Bilge and José Antonio Ocampo (2017). Macroeconomic effects of capital account regulations. IMF Economic Review, 65(2), 193–240. Findlay, Ronald (1980). The terms of trade and equilibrium growth in the world economy. American Economic Review, 70(3), 291–299. Gerschenkron, Alexander (1962). Economic Backwardness in Historical Perspective. Cambridge, MA: Harvard University Press. Griffith-Jones, Stephany and José Antonio Ocampo (eds.) (2018). The Future of National Development Banks. Oxford: Oxford University Press. Grilli, Enzo R. and Maw Cheng Yang (1988). Primary commodity prices, manufactured goods prices, and the terms of trade of developing countries: What the long run shows. The World Bank Economic Review, 2(1), 1–47. Hausmann, Ricardo, Jason Hwang, and Dani Rodrik (2007). What you export matters. Journal of Economic Growth, 12(1), 1–25. Hausmann, Ricardo and Dani Rodrik (2003). Economic development as self-discovery. Journal of Development Economics, 72, 603‒633. Hirschman, Albert O. (1958). The Strategy of Economic Development. New Haven: Yale University Press. Hirschman, Albert O. (1984). A dissenter’s confession: ‘The strategy of economic development’ revisited. In Gerald M. Meier and Dudley Seers (eds.), Pioneers in Development. New York: Oxford University Press, pp. 87–111. IMF (International Monetary Fund) (2012). The Liberalization and Management of Capital Flows: An Institutional View. Washington, DC: International Monetary Fund. Kaminsky, Graciela L., Carmen M. Reinhart, and Carlos A. Végh (2004). When it rains, it pours: Pro-cyclical capital flows and macroeconomic policies. NBER Macroeconomics Annual, 19, 11–53. Katz, Jorge (1987). Domestic technology generation in LDCs: A review of research findings. In Jorge Katz, Technology Generation in Latin American Manufacturing Industries. London: Macmillan.

International development in a historical context  29 Kindleberger, Charles P. and Robert Aliber (2005). Manias, Panics, and Crashes: A History of Financial Crises. New York: John Wiley & Sons. Krueger, Anne O. (1978). Liberalization Attempts and Consequences. New York: National Bureau of Economic Research. Krugman, Paul (1990). Rethinking International Trade. Cambridge, MA: MIT Press. Kuznets, Simon (1966). Modern Economic Growth: Rate, Structure and Spread. New Haven: Yale University Press. Lall, Sanjaya (1990). Building Industrial Competitiveness in Developing Countries. Paris: OECD Development Center. Lall, Sanjaya (2003). Technology and industrial development in an era of globalization. In Ha-Joon Chang (ed.), Rethinking Development Economics. London: Anthem Press, pp. 277–98. Lee, Keun (2019). The Art of Economic Catch-Up: Barriers, Detours and Leapfrogging in Innovation Systems. Cambridge: Cambridge University Press. Lewis, W. Arthur (1954). Economic development with unlimited supplies of labor. The Manchester School, 22(2), 139–191. Lewis, W. Arthur (1977). The Evolution of the International Economic Order. Princeton: Princeton University Press. Mazzucato, Mariana (2013). The Entrepreneurial State: Debunking Public vs. Private Sector Myths. London: Anthem Press. Minsky, Hyman P. (1982). Can “It” Happen Again? Essays on Instability and Finance. Armonk, NY: M. E. Sharpe Nelson, Richard R. (1996). The Sources of Economic Growth. Cambridge, MA: Harvard University Press. Nelson, Richard R. and Sidney G. Winter (1982). An Evolutionary Theory of Economic Change. Cambridge and London: The Belknap Press of Harvard University Press. Nurkse, Ragnar (1961). Problems of Capital Formation in Underdeveloped Countries. Oxford: Oxford University Press. Ocampo, José Antonio (1993). Terms of trade and center-periphery relations. In Osvaldo Sunkel (ed.), Development from Within: Toward a Neostructuralist Approach for Latin America. Boulder, CO: Lynne Rienner Publishers. Ocampo, José Antonio (2016). Balance-of-payments dominance: Implications for macroeconomic policy. In Mario Damill, Martin Rapetti, and Guillermo Rozenwurcel (eds.), Macroeconomics and Development: Roberto Frenkel and the Economies of Latin America. New York: Columbia University Press, pp. 211–228. Ocampo, José Antonio (2017a). Resetting the International Monetary (Non) System. Oxford and Helsinki: Oxford University Press and UNU-WIDER. Ocampo, José Antonio (2017b). Dynamic efficiency: Structural dynamics and structural change in developing countries. In Akbar Noman and Joseph E. Stiglitz (eds.), Efficiency, Finance, and Varieties of Industrial Policy. New York: Columbia University Press, pp. 65–102. Ocampo, José Antonio (2020). Industrial policy, macroeconomics and structural change. In Neil Foster-McGregor, Ludovico Alcorta, Adam Szirmai, and Bart Verspagen (eds.), New Perspectives on Structural Change: Causes and Consequences of Structural Change in the Global Economy. Oxford: Oxford University Press, chapter 3. Palma, José Gabriel (2005). Four sources of ‘de-industrialization’ and a new concept of the ‘Dutch disease’. In José Antonio Ocampo (ed.), Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability. Palo Alto: Stanford University Press, ECLAC and World Bank, pp. 71–116. Parra-Lancourt, Mariangela (2019). Prebisch and Singer in a value chains world: Essays on manufacturing and commodities terms of trade. PhD thesis, New School University. Pérez, Carlota (2010). Technological dynamism and social inclusion in Latin America: A resource-based production development strategy. CEPAL Review, 100, 121‒141. Prasad, Eswar S., Kenneth Rogoff, Shang-Jin Wei, and M. Ayhan Kose (2003). Effects of Financial Globalization on Developing Countries: Some Empirical Evidence. Occasional Paper 220. Washington, DC: International Monetary Fund. Prebisch, Raúl (1950). The Economic Development of Latin America and its Principal Problems. New York: United Nations. Reprinted in Economic Bulletin for Latin America, 7 (1962).

30  Handbook on the politics of international development Rapetti, Martin (2020). The real exchange rate and economic growth: A survey. Journal of Globalization and Development, 11(2). Razmi, Arslan, Martin Rapetti, and Peter Skott (2012). The real exchange rate and economic development. Structural Change and Economic Dynamics, 23(2), 151‒169. Reinhart, Carmen and Kenneth Rogoff (2009). This Time is Different: Eight Centuries of Financial Folly. Princeton: Princeton University Press. Rodrik, Dani (2008). The real exchange rate and economic growth. Brookings Papers on Economic Activity, Fall, 365‒412. Rodrik, Dani (2016). Premature deindustrialization. Journal of Economic Growth, 21, 1‒33. Rodrik, Dani and Andrés Velasco (2000). Short-term capital flows. In Boris Pleskovic and Joseph E. Stiglitz (eds.), Annual World Bank Conference on Development Economics 1999. Washington, DC: World Bank, chapter 5. Ros, Jaime (2013). Rethinking Economic Development, Growth and Institutions. Oxford: Oxford University Press. Rosenstein-Rodan, Paul N. (1943). Problems of industrialization of Eastern and South-Eastern Europe. The Economic Journal, 53, 202–211. Schumpeter, Joseph A. (1961). The Theory of Economic Development. Oxford: Oxford University Press. Singer, Hans W. (1950). U.S. foreign investment in underdeveloped areas: The distribution of gains between investing and borrowing countries. American Economic Review, Papers and Proceedings, 40. Singer, Hans W. (1998). Beyond terms of trade: Convergence/divergence and creative/uncreative destruction. Zagreb International Review of Economics and Business, 1(1), 13–25. Taylor, Lance (1983). Structuralist Macroeconomics: Applicable Models for the Third World. New York: Basic Books. Taylor, Lance (1994). Gap models. Journal of Development Economics, 45, 17‒34. Thirlwall, Anthony Philip (2011a). The Economics of Development: Theory and Evidence, 9th edition. London: Macmillan. Thirlwall, Anthony Philip (2011b). Balance of payments constrained growth models: History and overview. PSL Quarterly Review, 64(259), 307–351. van Wijnbergen, Sweder (1984). The Dutch disease: A disease after all? Economic Journal, 94, 41–55. Wade, Robert (1990). Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton: Princeton University Press.

2. Democracy and development: the case of foreign direct investment John Marangos and Eirini Triarchi

1. INTRODUCTION Foreign direct investment (FDI) plays a unique role in promoting broad-based economic and social development. Given FDI’s contribution, developing countries, emerging economies, and economies in transition have liberalized the investment regulatory framework to attract FDI flows. Benefits of FDI include the provision of an external financial boost without the creation of a new debt, transfer of knowledge, organizational skills and technology (know-how) to host countries, firms and labor force, competitiveness enhancements, and market access for exports. FDI boosts the total factor productivity of the host country’s output and supports the rise of domestic income. FDI’s importance to host countries’ economic growth is well documented. The voluminous literature on the motivations for FDI examined mostly economic factors, while political variables were often ignored (Büthe and Milner, 2008; Jensen, 2003). A case in point has been the analysis of the developmental state (see Gabusi, Chapter 3 in this volume) as well as discussion on growth strategies (see Ocampo, Chapter 1 in this volume). Thus, an arising question is whether a host country’s political regime influences the level of inward FDI. The contemporary empirical evidence regarding the relationship between FDI inflows and political regimes is limited to two distinct political systems, democracy and authoritarianism or autocracy. These two terms, authoritarianism or autocracy, will be used interchangeably throughout the chapter. Meanwhile, the debate on the impact of political regimes on inward FDI is characterized by contradictory empirical results and serious disagreements among political scientists and economists. By reviewing the empirical studies, this chapter examines the political environment–inward FDI nexus considering the host country’s political determining factors alongside with the political regime. The sample of states in the empirical review covers a large number of host countries with shortcomings in democracy and violation of human rights, including severe labor repression. However, this chapter makes no particular reference to the developmental states of East Asia, the so-called Asian tigers (see Gabusi, Chapter 3 in this volume), or to China (see Ocampo, Chapter 1 in this volume) since these are examined separately in this volume. They are outliers in our analysis because of the time period under examination. The chapter includes political variables that have a significant impact on inward FDI and deemed to stimulate or hinder the institutional stability and credibility of a regime. This chapter aims to discover an effective way of defining the role of the host country’s political environment in attracting FDI and promoting development. Policymakers, scholars, and students of international development will benefit from this chapter, since it determines the impact of political systems specifically matched with empirical results in an attempt to derive conclusive answers to this contentious issue. 31

32  Handbook on the politics of international development The structure of the chapter is as follows: Section 2 presents the types of political regimes, authoritarianism and democracy; section 3 discusses the impact of political regimes and political determinants (property rights protection, the signing of bilateral investment treaties, human rights, and governance) on inward FDI. The final section concludes.

2.

AUTHORITARIANISM AND DEMOCRACY

Empirical research on the influence of political regimes and FDI focuses on two quite opposite political regimes – either democracy or authoritarianism. Authoritarianism or autocracy is a form of government characterized by liberty’s limitations, the absence of parliamentary institutions, tradition-oriented society, and a clique of military, religious leaders, and bureaucrats exercising political power (Salami, 2015, p. 87). Democracy means the power or rule of the people as designated by its ancient Greek etymological origin. Morlino (2008, p. 42) argues that “a regime has to be considered a minimal democracy if it has at least universal adult suffrage; recurring, free, competitive and fair elections; more than one political party; and more than one source of information.” Democracy provides protection of the rights of individuals and minorities, which guarantees the freedom or liberty of its citizens. Since these guarantees are incorporated into the constitution, and the government is limited and constrained by the rule of law, democracy is often called constitutional or liberal democracy (Plattner, 2010, p. 84). Electoral democracies hold de facto free and fair, multiparty elections in a pluralistic media and associational environment (Lührmann et al., 2019, p. 15). The collapse of centrally administered socialism in the Soviet Union and Eastern Europe provoked a remarkable rise in the number of democracies. Since 1995, electoral democracies have become the world’s dominant form of regime, comprising more than 60 percent of all countries (Plattner, 2014, p. 5). In the 2000s, the failure of reformist governments in transition countries to break with their autocratic past and to establish consolidated democracies, facilitated the re-emergence of forms of authoritarianism (Bieber, 2018, p. 337). In a consolidated democracy, legitimate political decisions are not overridden arbitrarily by either a domestic or an external non-democratic actor. An tendency is found across the literature to classify the non-democratic regimes as incomplete democratic transitions and not as autocracies; whereas the replacement of autocracies in many cases was not by democracies but by some new type of authoritarian rule (Plattner, 2014, p. 10). These regimes combine democratic with autocratic elements and as such are placed in a gray political zone (Diamond, 2002, p. 23). The term “anocracies” (created to enable the labeling of the middle field between democracies and autocracies in the POLITY IV Index) is used to describe the non-democratic, non-authoritarian regimes or competitive authoritarian regime. An authoritarian regime is competitive when the opposition parties use democratic institutions to seriously contest for power, but it is not democratic because the playing field is heavily skewed in favor of incumbents (Bieber, 2018, p. 339). Recently, the global financial crisis reduced democracy’s attractiveness. Democracy now is facing serious challenges globally such as governments’ manipulation of media, civil society, rule of law, and elections. The toxic polarization of the public scene results in a division of society into distrustful antagonistic camps, and the digitalization is misused by governments to manipulate the informational environment (Lührmann et al., 2019, p. 5). The decline in democracy and a rise of illiberal politics is reported in both consolidated democracies, as

Democracy and development: the case of foreign direct investment  33 well as in democracies with weak institutions. Nevertheless, democracy remains the most common type of regime. The 2019 V-DEM Institute’s annual report on democracy counts 99 democracies representing 52 percent of the world’s population and 80 autocracies in 2018. In particular, the global share of liberal democracies has declined from 25 percent (44 countries) in 2014 to 22 percent (39 countries) in 2018, while the share of electoral democracies has increased from 10 percent (17 countries) in 1972 to 34 percent (60 countries) in 2018 (see Figure 2.1). Respectively, the global share of electoral authoritarian regimes has increased from 21 percent (33 countries) to 31 percent (55 countries). The state of the world compared to 1972 is improved, since after the fall of the Berlin Wall, the number of closed autocracies, that is, the autocracies that do not hold elections, declined. In 2018 their share accounted for 14 percent (25 countries) (Lührmann et al., 2019, pp. 15–16).

Source: Adapted from V-Dem Institute annual report on democracy (Lührmann et al., 2019, p. 16).

Figure 2.1

Share of regime types globally, 1972–2018

Democracy secures political freedom, political stability, and satisfies citizens’ respect for human rights. A country under a democratic rule of governance appears to have all the prerequisites for assuring foreigners that their investments will be protected through its strong institutions that are managed efficiently and prevent any destabilizing threats. Thus, it appears a democratic host country has the potential to attract more foreign capital than a non-democratic host country. Empirical testing is needed to substantiate this argument.

34  Handbook on the politics of international development

3.

POLITICAL REGIMES, POLITICAL DETERMINANTS AND INWARD FDI

This section presents research on the political regimes–inward FDI nexus, as well as specific political variables that determine this nexus. Beyond their significant impact on inward FDI, the political determinants also support the institutional stability and credibility of the host country’s political system. 3.1

Political Regimes and Inward FDI

Several empirical studies recognize the influence of the host country’s political regime on inward FDI. Some autocracies have been more appealing to foreign investors than some democracies at comparable development levels. Some autocracies have been more flexible in adopting and implementing new market-friendly policies, despite any opposition of domestic actors and they have even successfully managed the volatility of their macroeconomic environment (Madani and Nobakht, 2014). Early studies suggested that a cozy relationship exists between investors and autocrats, and that investor-state collusion shields foreign capital in authoritarian countries (O’Donnell, 1978). The foreign investors that prefer an autocracy are attracted by the authoritarian capacity to suppress labor demands, repel protesters, and legislate tax laws in ways that serve the interests of multinational enterprises (MNEs). Also, there are authoritarian countries that want to grasp a share of FDI inflows from democracies by promoting their willingness to implement liberal economic policies and to sign an international investment treaty. However, there is always the risk of non-compliance to the treaty by authoritarian leaders, though limited when there is a high level of public deliberation in the policymaking process. Although democratic regimes are those with a consistently high level of public deliberation, some select authoritarian regimes permit a certain level of public deliberation (Chandra and Rudra, 2015, p. 254). On this point, Bastiaens (2016, p. 141) supports the view that “[Bilateral Investment Treaties] BITs will be effective in attracting the most to authoritarian countries with high levels of public deliberation, as these regimes are credible in their liberal economic policy commitments” (more on Bilateral Investment Treaties in section 3.2.2). The governments that are consistent in a high level of commitment to economic policies conducive to MNEs’ interests are those that achieve higher levels of inward FDI (Jensen, 2008, p. 1043). In well-established democracies, investments are secure for a long time due to independent judiciaries, respect for law, and individual rights to property and contract (Olson, 1993, p. 572). Investors prefer a democratic to autocratic regime since the first prevents the political uncertainty that derives from the irregular government change that often occurs in autocracies. Foreign firms are motivated by the credibility of government policy, which is safeguarded by institutional checks, which are more effective in democracies (Zheng, 2011, p. 294). A significant number of researchers are supportive of the argument that a host country under a democratic regime receives more FDI insisting on the distinct positive association between democracy and FDI (Ahlquist, 2006; Busse, 2004; Busse et al., 2011; Jensen, 2003, 2008). Jensen (2003, p. 612) identified a lack of empirical evidence of MNEs’ preference to invest in dictatorships over democratic regimes. Democracies experience low country risk due to the low risk of expropriation and per se attract more FDI flows (Jensen, 2003, 2008; Li, 2009).

Democracy and development: the case of foreign direct investment  35 Ahlquist (2006, pp. 698–700) provided evidence for the significant positive effect of democracy on FDI based on MNEs’ experience of the host country’s decision-making environment; thus, the longer MNEs’ experience in democracies the more likely they are to increase their investments. Li and Resnick (2003) outlined two contradictory causal explanations focusing on democratic constraints and property rights protection respectively, that produced both positive and negative relations of democratic institutions with inward FDI. Choi and Samy (2008) indicated specific attributes of democracies that are positively related to FDI. Guerin and Manzocchi (2009) reiterate the positive relation of democracies to inflows of FDI, but propose that the type of democracy in host countries matters, finding that parliamentary democracies are more likely to attract FDI than presidential democracies. The parliamentary type has a more positive effect than the presidential democracy on trade liberalization, and/or property rights protection. Sometimes democracy by itself is not as decisively important as certain political factors which are often part and parcel with liberal democratic institutions, providing a hospitable investment climate (Biglaiser and Staats, 2010; Moon, 2015). Hence, the importance of the enforcement of property rights, the adherence to rule of law, and reliable court systems, are mainly related to foreign investors’ concerns about the risk and their decision to invest (Biglaiser and Staats, 2010, pp. 518–519). Meanwhile, the effects of the political institutions are positively modified by the strength of property rights institutions that can attract FDI, even in the case of regimes that are not fully democratized (Moon, 2015, 2019). Asiedu and Lien (2011) answering the question “does democracy facilitate FDI?” identified the role of natural resources in host countries. The effect of democracy on FDI depends on the importance of natural resources in the host country’s exports. Thus, democracy increases FDI inflows in countries where the share of natural resources in total exports is low (Asiedu and Lien, 2011, p. 109). Democracy’s role in attracting FDI may be positive in some countries but in others like Pakistan, it has less power to influence FDI decisions of MNEs (Uddin et al., 2019). Finally, there is no evidence of a systematic relationship between democracy and FDI inflows to the least developed countries (Yang, 2007), as they were called then, now developing countries. The multitudinous research, focusing on the relationship between the host country’s political regime type and inward FDI, unfortunately, produces contradictory theoretical findings and ambiguous empirical results. Although many studies produce results that democratic regimes attract FDI, other factors, other factors need to be taken into consideration as well. 3.2

Political Determinants and Inward FDI

The political determinants analyzed below regarding inward FDI are property rights protection, the signing of Bilateral Investment Treaties (BITs), human rights, and the quality of governance. Although countries’ commitments through BITs are mostly analyzed in terms of the property rights determinant, due to BITs’ underlying importance, they deserve an independent investigation. 3.2.1 Property rights protection One important way to stimulate inward FDI is the mitigation of risk by improving the host country’s political and economic environment. Since developing countries are often politically unstable, they cannot easily convince MNEs of their commitment to implement legislation for property rights protection (Büthe and Milner, 2008, p. 743). Once an MNE undertakes an

36  Handbook on the politics of international development FDI, part of the bargaining power is transferred to the host country’s government, which can change unexpectedly the terms of the investment to its advantage. Vernon in 1971 described such a state’s insolvent behavior as an “obsolescing bargain” (Büthe and Milner, 2008, p. 743) outlining that outright expropriation is a major source of risk for MNEs. Although globalization provides opportunities for MNEs, FDI remains vulnerable to the risk of expropriation. Risk reduction can be achieved through the existence of well-enforced property rights. There is a positive association between property rights protection and economic growth and investment and even of intellectual property rights (IPR) protection and the volume and composition of FDI (Javorcik, 2004; Lee and Mansfield, 1996). Biglaiser and DeRouen (2006) shared the argument that since the enforcement of property rights minimizes the expropriation risk, the FDI inflows are increased. Both democratic and autocratic states expropriate FDI; the difference is that democracies do so less frequently (Li, 2009, p. 1120). Well-established democracies secure property rights and provide the optimal environment for investors (Ali et al., 2010; Jensen, 2008; Li and Resnick, 2003). Although Li and Resnick (2003) discovered conflicting findings on the impact of democratic institutions on inward FDI; specifically, concerning the impact of property rights protections on FDI, the result was unambiguous. Thus, when a country proceeds to a commitment to the protection of property rights, it means that foreign investors will not have to face the arbitrary seizure of tangible and intangible goods by the state (Li and Resnick, 2003, p. 202). Jensen (2008) revealed a strong correlation between democratic institutions and lower levels of political risk, and the importance of imposing constraints on executives in reducing risks for MNEs. The insurance industry identified the need for MNEs to mitigate political risk and offered the solution through the purchasing of insurance contracts. These contracts offer risk covering from direct nationalization and expropriation of assets along with breach of contracts between the MNE and government (Jensen, 2008, p. 1043), providing political risk insurance ratings. Ali et al. (2010) argued that the protection of property rights is the most important determinant for FDI over institutional attributes of democracy, corruption, political instability, and social tension in the host country. Nevertheless, the democratic regime remains important in attracting FDI flows, due to its inherent advantages over autocracies in protecting property rights (Ali et al., 2010, p. 204). Autocratic countries with long time horizons can establish institutions similar to those in democratic countries and receive a larger volume of FDI flows than autocracies with short-term horizons (Moon, 2015, 2019). Although democracies, on average, have better institutions, scholars must be open-minded to the possibility that high-quality institutions do not exist exclusively in democratic regimes (Moon, 2015, p. 353). Both democracy and autocracy have a privileged position for attracting FDI considering that the effect of property rights on FDI is time-varying and conditioned by the institutional structure and legitimacy of the country’s regime type (Nieman and Thies, 2019, pp. 15–16). Nieman and Thies (2019) found that prior to 1995 all regime types held a negative relationship between the protection of property rights and FDI, with autocracies having the less negative; whilst after 1995 democracies have a positive marginal effect on the relationship between property rights and FDI. 3.2.2 The signing of BITs Büthe and Milner’s (2008) empirical study of 122 developing countries for the 1970–2000 period provided evidence that countries in their effort to attract FDI inflows proceeded to establish commitments favorable to foreign investors via international institutions. These

Democracy and development: the case of foreign direct investment  37 international commitments are characterized by high credibility, since relegation is extremely costly. The most popular international commitment is a ΒΙΤ. Over the past two decades, BITs have evolved as the dominant international legal tool for the stimulation of FDI flows. BITs establish terms under which nationals and companies of one country can undertake investments in another country; thus, BITs act as an institutional device that protects FDI. The legal framework of these treaties provides a broad set of investors’ rights with the right to take legal action against a host government in an international tribunal in case of investors’ rights violation (Kerner, 2009, p. 73). Institutions like BITs were effective in restoring the reputation and credibility of unilateral FDI-related measures of transition economies after the fall of centrally administered socialism (Berger et al., 2011, p. 272). Salacuse and Sullivan (2005) highlighted the positive contribution of BITs to inward FDI in determining BITs’ effectiveness concerning foreign investment protection, market liberalization, and investment promotion. A positive relation between BITs and FDI is recorded in those developing countries that sign BITs mostly with developed countries (Neumayer and Spess, 2005). However, Berger et al. (2011, p. 272) questioned the overall positive correlation of BITs and FDI, as they are effective mostly in a relatively small subset of host countries, like Central and Eastern Europe (CEE). Nevertheless, MNEs regard BITs as facilitators to invest in reducing the cost of doing business in CEE. The effectiveness of a BIT, as a commitment device, should depend on the risks to which MNEs are exposed in the host country. BITs can be successful when they increase the volume of bilateral FDI by preventing the political juxtaposition between countries that generates expropriation risks and maintaining good quality of domestic institutions. Desbordes and Vicard (2009) focused on the quality of political relations between the signatory states as a stimulant to FDI. BITs have a greater impact on inward FDI between countries with political tensions, whereas they are insignificant between friendly countries. Additionally, they found evidence about the complementarity of BITs to strong domestic institutions (Desbordes and Vicard, 2009, p. 383). Kerner’s (2009) empirical analysis provided consistent evidence that BITs do attract FDI and democracy is related positively to FDI. BITs are more effective for countries that in the eyes of investors, are most in need of the treaty’s assurances. To this line of argument, non-transparent countries with weak institutional and policy environments seek to sign BITs to establish stability, transparency, and credibility, thereby increasing FDI inflows. Whereas for countries with democratic regimes that already experience a conducive investment environment, entering into BITs will not substantially influence the level of FDI inflows (Rosendorff and Shin, 2012, pp. 34–35). Finally, the impact of BITs on a country’s FDI flows must be examined within the context of its political, economic, and institutional environment and in the light of the global BITs regime (Tobin and Rose-Ackerman, 2011, pp. 28–29). Hence, as the coverage of BITs increases, overall FDI flows to low- and moderate-income countries increase (Tobin and Rose-Ackerman, 2011, pp. 28–29). Therefore, BITs are effective in attracting FDI and appear to be more valuable commitment devices for non-democracies and non-transparent countries, which have fewer mechanisms to communicate with credibility their resolves to international investors. 3.2.3 Human rights: political participation, civil liberties and labor rights The question arises whether guarantees of political participation and civil liberties or civil and political repression, and curtailed labor rights boost FDI. Human rights repression drives

38  Handbook on the politics of international development “a race to the bottom” in that constraints to human rights are considered to create a more safe and favorable business environment for investors, who benefit from low labor costs and oppression of labor rights. The validity of this conventional wisdom that the interests of foreign capital are best served by repressive states, has been questioned. The respect of human rights can also reduce the risk for FDI, by enhancing political stability and predictability and decreasing the vulnerability of investors to the costs associated with public sensitivity to human rights’ repression (Blanton and Blanton, 2007, p. 144). There is a positive relationship between political participation and FDI (Busse, 2003, 2004; Harms and Ursprung, 2002). MNEs are more interested in countries respecting civil liberties and political rights, and accepting an organized labor force than in non-democratic regimes suppressing residents’ basic human and democratic rights (Harms and Ursprung, 2002, p. 653). Busse (2004) established the linkage between democracy and FDI, by using two separate indicators of “civil liberties” and “political rights” provided by Freedom House. The political rights include the free participation of people in the political process, the right to vote, the competition for public office, and the election of representatives who have a decisive vote on public policies. Civil liberties include the freedom to develop views, institutions, and personal autonomy without interference from the state. Busse (2003, 2004) concluded that countries with improved political rights and civil liberties receive a larger volume of FDI per capita. As well, Tintin (2013) provided evidence that better institutions attract more FDI in transition economies of CEE, recognizing political rights and civil liberties as comprehensive institutional variables along with economic freedom and state fragility (Tintin, 2013, p. 297). In a similar research for the countries of CEE, Pournarakis and Varsakelis (2004) used the two indices with the variable of the freedom of the press. They concluded that more improvements in the civil rights level of a country, the more positive is the impact of an increase in per capita income on FDI (Pournarakis and Varsakelis, 2004, p. 89). Madani and Nobakht (2014) used the Freedom House indices of “civil liberties” and “political rights” for the measurement of the types of political regimes (democracies or autocracies) across the Upper Middle-Income Countries (UMCs) in their research on the political regimes– inward FDI nexus. They revealed the importance of the quality of political institutions in recipient countries and their findings support the notion of democratic regimes attracting higher levels of FDI than autocratic ones. In the same vein, Durmaz (2017) examined the relationship between democracy and FDI in Turkey for the period 1977–2011. Durmaz’s analysis presents democracy as an important factor in MNEs’ decisions for choosing Turkey as a potential investment destination. The economic externalities generated concerning human rights makes countries attractive hosts of FDI. According to Blanton and Blanton (2006, 2007), human rights act complementarily to political institutions in providing a friendly FDI environment, unlike countries under oppression. Later, the same authors Blanton and Blanton (2012) discovered a “race to the bottom” dynamic concerning the FDI–labor rights nexus. As foreign investors choose to invest in a stable society with a skilled labor force that does not necessarily imply that the same foreign investors are in favor of labor rights. MNEs are more willing to invest in countries that have a lower level of labor rights, which investments further undermine labor rights (Blanton and Blanton, 2012, p. 288). Sharing the same argument, Olney (2013, p. 203) provided evidence that labor protection rules are significantly related negatively to inward FDI and that countries following FDI-friendly strategies are competitively lowering their labor rights. In contrast, Busse et al. (2011) by using a sample of 28 source countries of FDI

Democracy and development: the case of foreign direct investment  39 (including non-OECD countries) and 82 low and middle-income host countries, for the period 1984–2004, proved that labor rights limitations in, for example, freedom of association and objective bargaining, decrease inward FDI. 3.2.4 Governance Governance is a determinant that consists of the six dimensions defined by the Worldwide Governance Indicators (WGI) project: voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law, and control of corruption (Kaufmann et al., 2011). Across the literature, these indicators are used as variables in the examination of the inward FDI–political regimes nexus. Also, reference will be made to the variables of veto players and audience costs since some important studies on the same issue used these determinants in the quality of governance. Jensen (2003, 2008) examined the relationship between FDI and democracy and concluded that since a democratic regime is characterized by credibility, a positive relation between democracy and a higher volume of inward FDI is present. One supportive mechanism for the high credibility of democratic governments is the number of veto players that the democratic political system involves (Jensen, 2008, p. 1041). Veto players can include chambers of the legislature, a supreme court, separation of the executive and legislative branches of government, or federal actors (Jensen, 2003, p. 594). MNEs can enter foreign markets with the assurances provided by veto players that government policies will not change after entry (Jensen, 2003, 2008). Even more significant for the positive association of inward FDI with democracy, is the host government’s reputation. In the case that democratic leaders decide to call off commitments made to foreign investors, this may gain them a bad reputation in the financial markets that will follow them to the polls where voters will express their dissatisfaction. This political process is defined as “audience costs” (Jensen, 2003, pp. 594–595). Hence, a cost-benefit calculation discourages leaders from opportunistic behavior. In a later study, Jensen and Johnston (2011) added the “resource curse” to distinguish the impact of audience costs on leaders of regimes with abundance in natural resources, like Chavez in Venezuela. In these regimes, governments are lacking incentives to maintain a good reputation (Jensen and Johnston, 2011, p. 663). The wealth of natural resources continues to attract FDI despite the higher level of political risks and bad reputation associated with audience costs (Jensen and Johnston, 2011, pp. 680–681). Choi and Samy (2008) provided evidence that institutional credibility enforced by veto players in democracies may contribute to a rise of FDI inflows, though political constraints produced by audience costs do not increase FDI. Daude and Stein (2007) proved that the indicators of WGI – regulatory quality followed by government effectiveness – act as the most significant stimulants of FDI inflows. Governance indicators that enhance good governance are more important in determining FDI inflows than the political regime’s democratic spirit (Mengistu and Adhikary, 2011; Rodríguez-Pose and Cols, 2017). Mengistu and Adhikary (2011) provided tangible evidence for political stability and the absence of violence, government effectiveness, rule of law, and control of corruption as indicators to the quality of governance that have a significant role in attracting inward FDI. Although regime type and favorable policy mix are important in stimulating inward FDI, the quality level of governance that enhances the rule of law, limits corruption, and ensures political stability turns out to be the most important determinant of FDI (Mengistu and Adhikary, 2011, p. 295). In the same vein, Rodríguez-Pose and Cols (2017) underlined the contribution of the quality of governance in FDI’s distribution in sub-Saharan Africa, for the

Human rights

The signing of BITs

53 developing countries, 1982–1995

Li and Resnick (2003)

Property rights protection

69 developing countries, 1981–2005 138 developing countries, 1976– 2004 86 autocratic countries, 1970–2008 149 countries, 1970–2009

Li (2009)

Ali et al. (2010)

Biglaiser and Staats (2010)

Moon (2015)

Nieman and Thies (2019)

●

●

●

26 OECD countries, 1985–2007 6 host CEECs, 1996–2009 31 UMCs, 1990–2011

Olney (2013)

Tintin (2013)

Madani and Nobakht (2014)

(mid-1990s–2002)

 

 

  ●

 

 

 

 

Blanton and Blanton (2012)

35 developing countries, a period of 8 years for each country

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

●

 

 

 

 

 

 

●

 

 

 

●

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blanton and Blanton (2006, 2007) Developing non-OECD countries, 1980–2003

105 developing and developed countries, 1989–1997

Adam and Filippaios (2007)

●  

69 developing and emerging market countries, 1972–2001

Busse (2003, 2004)

Pournarakis and Varsakelis (2004) 11 transition economies in CEE, 1997–2001

62 emerging markets and developing economies, 1989–1997

Harms and Ursprung (2002)

112 developing countries, 1970–2004

 

Kerner (2009)

 

Rosendorff and Shin (2012)

127 OECD host countries, 1982–2001

Desbordes and Vicard (2009)

 

 

 

30 OECD countries & 32 non-OECD emerging countries, 1991–2000

Neumayer and Spess (2005)

 

 

 

○

 

○

○

 

 

Democracy impact on FDI (+) (+,−) (−)

Tobin and Rose-Ackerman (2011) 97 low- and middle-income countries, 1984– 2007

100 OECD developing countries, 1991–2000 120 developing countries, 1984–1996

Salacuse and Sullivan (2005)

122 developing countries, 1970–2000

63 developing countries, 1960–1990

Jensen (2008)

Büthe and Milner (2008)

15 Latin American countries, 1980–1996 134 countries, 15-year

Biglaiser and DeRouen (2006)

 

 

Sample of countries and time period

Studies

 

Literature findings on the impact of democracy on inward FDI based on political determinants

Political determinants

Table 2.1 Ns

 

●

●

●

●

 

●

 

 

 

●

 

●

●

●

●

 

●

 

●

 

 

●

 

40  Handbook on the politics of international development

15 countries of Eastern, Southern and Southeastern Asia, 1996–2007 24 Eastern European and Eurasian countries, 1996–2012 17 Latin American countries, 1996–2007 22 sub-Saharan African countries, 1996–2015 Sample of 91 published and 6 unpublished studies from 1976 to 2011

Mengistu and Adhikary (2011)

Touchton (2015)

Staats and Biglaiser (2012)

Rodríguez-Pose and Cols (2017)

Bailey (2018)

 

  ○

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

●

 

●

Democracy impact on FDI (+) (+,−) (−)

Ns

 

●

●

●

●

 

●

 

Notes: 1. (+) The study reports a positive impact of democracy on FDI; (−) The study reports a negative impact of democracy on FDI; (+) (−) The study reports both positive and negative impact of democracy on FDI; Ns: The study reports an insignificant impact of democracy on FDI. 2. ● represents the direct impact of democracy on FDI, ○ represents the indirect impact of democracy on FDI.

90 developing countries, a period of 20 years

1980–1998

79 countries, 1990–1997, 114 countries, 1970–1997 & 79 countries,

Choi and Samy (2008)

Jensen (2003)

Governance

 

Sample of countries and time period

34 source countries to 152 host countries, 1982–2002

 

 

Daude and Stein (2007)

Studies

Political determinants

Democracy and development: the case of foreign direct investment  41

42  Handbook on the politics of international development period 1996–2015. They provided evidence for the positive relation of the good institutions to FDI, in the sense that stable, more credible and effective, and less corrupt regimes, with sound and trustful legal systems stimulate inward FDI (Rodríguez-Pose and Cols, 2017, p. 79). A later study by Bailey (2018) also using the WGI for the quality of governance confirmed these results. The significance of the rule of law as a dimension of governance is identified in Staats and Biglaiser’s (2012) empirical study in Latin America. Those countries in the region with greater judicial strength and rule of law are receiving higher flows of FDI (Staats and Biglaiser, 2012). As well, Touchton (2015) uses the same WGI database to model the rule of law in post-socialist countries of Eastern Europe and Eurasia. Thus, an improved rule of law increases the host government’s credibility and results in increasing inward FDI (Touchton, 2015, p. 480). A summary of the studies is presented in Table 2.1. Thirty-two studies are reported in Table 2.1 that examine the impact of democracy on FDI, incorporating the aforementioned political determinants. Seven of these papers find a positive impact of democracy on FDI, four an indirect positive impact, one a negative impact, two both positive and negative, while eighteen studies determined an insignificant role for democracy. Concerning the impact of political variables on FDI, two of these papers find both positive and negative impact (one for property rights protection and the other for human rights), two negative impacts (both for human rights), while twenty-eight find a positive impact on FDI.

4.

CONCLUDING REMARKS

Most of the literature on the allocation of FDI around the world examines the influence of general economic phenomena discounting political conditions. Nevertheless, there are several empirical studies on the critical role of the host country’s political system in MNEs’ investment decision-making process. These scientific efforts provide the underpinnings for further research on inward FDI distribution considering the current international political scene. Despite the decline in democracy, and the rise of illiberal politics, democracy remains the most common system globally. A country under a democratic rule of governance, holding strong institutions, offers guarantees to foreign investors for the safety of their investments. Many studies share the argument that a democratic regime attracts more FDI than an autocratic one, but few provide strong empirical evidence. This chapter presented an analysis based on the extant literature of specific political determinants that increase the institutional stability and credibility of a regime, and as such have a significant impact on the volume of FDI inflows. Specifically, the chapter findings suggest that the protection of property rights generates the optimal environment for foreign investors. The way the recipient country guarantees the protection of property rights, decreasing the risk of an investment that the “obsolescing bargain” produces, enhances stability and predictability for FDI, is the signing of BITs. Conventional wisdom and sometimes the assumption that foreign capital is best served by repressive states securing “desirable” conditions to investors, seem to be rejected, as the respect of human rights can guarantee a healthier investment environment. When the host country’s political environment provides guarantees of political participation and civil liberties, the country attracts more FDI inflows. However, MNEs are willing to invest in countries with a low level of labor rights. As the average labor rights standard among competitors of inward FDI countries decreases, in response a host country

Democracy and development: the case of foreign direct investment  43 may lower its labor rights standards even further. In such a case inward FDI may actually act to restrict labor rights. A host country that can ensure institutional quality and establish political stability, greater judicial strength and rule of law, activate multiple veto players to take into consideration possible audience costs and manage to control corruption, will be relatively more successful in stimulating more FDI. The research on specific political factors of the host country may help to improve the relationship between political regime and FDI and support the extraction of conclusive arguments. Policymakers may benefit by directing their interest at improving the specific features of the political environment, to encourage effective FDI policies that promote economic growth.

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Democracy and development: the case of foreign direct investment  45 Rodríguez-Pose, A. and Cols, G. (2017). The determinants of foreign direct investment in sub-Saharan Africa: What role for governance? Regional Science Policy & Practice, 9(2), 63–81. Rosendorff, B. P. and Shin, K. (2012). Importing transparency: The political economy of BITs and FDI flows. Working Paper, New York University Political Science Department. Salacuse, J. W. and Sullivan, N. P. (2005). Do BITs really work? An evaluation of bilateral investment treaties. Harvard International Law Journal, 46(1), 67–130. Salami, A. T. (2015). Democracy, authoritarianism and the inflow of foreign direct investments: A critical examination of a debate and its associated consequences for social science. Journal of Finance and Investment Analysis, 4(2), 85–98. Staats, J. L. and Biglaiser, G. (2012). Foreign direct investment in Latin America: The importance of judicial strength and rule of law. International Studies Quarterly, 56(1), 193–202. Tintin, C. (2013). The determinants of foreign direct investment inflows in the Central and Eastern European countries: The importance of institutions. Communist and Post-Communist Studies, 46(2), 287–298. Tobin, J. L. and Rose-Ackerman, S. (2011). When BITs have some bite: The political-economic environment for bilateral investment treaties. Review of International Organizations, 6(1), 1–32. Touchton, M. (2015). Who commits to the rule of law? Constrained government and foreign direct investment in postcommunist states. East European Politics, 31(4), 468–486. Uddin, M., Chowdhury, A., Zafar, S., Shafique, S. and Liu, J. (2019). Institutional determinants of inward FDI: Evidence from Pakistan. International Business Review, 28(2), 344–358. Vernon, R. (1971). Sovereignty at Bay: The Multinational Spread of U.S. Enterprises. Harlow: Longman. Yang, B. (2007). Autocracy, democracy, and FDI inflows to the developing countries. International Economic Journal, 21(3), 419–439. Zheng, Y. (2011). Credibility and flexibility: Political institutions, governance, and foreign direct investment. International Interactions, 37, 293–319.

3. The politics of the developmental state Giuseppe Gabusi

Neoliberal theories and practices recommend that developing countries rely on markets only to meet their development aspirations. Accordingly, states should create the conditions for open, liberalized, and unfettered markets to work properly and not interfere in their economies. The developmental state paradigm advances a powerful counter-narrative that shows how states can intervene effectively in the economy to ensure sustained growth and integration in global markets. This chapter outlines the intellectual origins of the developmental state, its history in East Asia, its conceptual elements, and its current rehabilitation in the West.

1.

BACKGROUND: WHY THE DEVELOPMENTAL STATE MATTERS

Over the past 30 years, neoliberalism has become the official narrative in the global political economy. Open markets, free flows of capital, and the state’s general retreat from directly or indirectly managing the economy have become part of the standard recipe for growth and development. Using the intellectual tools of neoclassical economists, international donors and agencies such as the World Bank (WB) and the International Monetary Fund (IMF) have advised developing countries to implement standardized policies. In a nutshell, these policies are based on the idea that the state’s involvement in the economy is the main cause of stagnation and lack of growth, and that free markets’ “invisible hand”1 will yield an economic take-off in poorer parts of the world. In the early 1990s, this set of prescriptions became known as the Washington Consensus (Williamson, 1990). Through structural adjustment programs requested by the WB and the IMF and in exchange for loan disbursement, states were encouraged to deregulate and privatize their economies, open up their markets, rely on exports, adopt strict fiscal and monetary policies, and avoid any price distortions. Another suggestion was to slim down the size of bureaucracy and make it more effective while increasing salaries to public officials to attract the best and the brightest and eliminate any potential for corrupt behavior (Williamson, 1993). As soon as the Washington Consensus was codified, however, three case studies made it clear that relying on self-regulating markets was not always conducive to economic success. The first (negative) example was post-Soviet Russia, where a horde of international public officials and consultants urged Boris Yeltsin’s government to implement policies of radical

1 The term was first introduced by Adam Smith (1776 [1976]), but the British philosopher never went as far as neoliberals to dismiss the role a state can play in setting up and regulating the market. His trust in markets was tempered by a sense of public and private morality that should accompany them (Smith, 1759 [1982]).

46

The politics of the developmental state  47 liberalization that did not create any economic benefit.2 The second (also negative) case involved Latin America, where states adopted the consensus prescriptions on a large scale, yet their growth rates were lower than before the 1980s (Rodrik, 2005). The third (positive) instance was the spectacular success of post-war Japan and the four “Asian tigers” (Hong Kong, Singapore, South Korea, and Taiwan, also known as the newly industrialized countries or NICs) – all nations, with the possible but controversial exception of Hong Kong, where the state, defined in the literature as “developmental,” intervened in the management of the economy in a particular manner.3 Inspired by the literature of new institutional economics (North, 1981, 1990) and the powerful intellectual voices of economists like Joseph Stiglitz (1994, 1996, 1998), the debate finally reached the WB. By recognizing that states can play a positive but limited role in fostering economic development (World Bank, 1993, 1997), the official narrative moved toward a so-called post-Washington Consensus (Burki and Perry, 1998; World Bank, 2002, 2005). Its recognition of the diversity of national conditions led the bank to consider the possibility of different solutions: “History matters,” “institutions matter,” and “one size does not fit all” became widely accepted buzzwords. Therefore, a new set of recommendations was put forward: Developmental countries should set up a clear and well-defined system of property rights, a competent and efficient bureaucracy, and a legal system administered by professional and independent judges. “Good governance,” based on the rule of law and market-friendly institutions, became the precondition for development. In the end, the post-Washington Consensus was rooted in the notion that democracy encompasses the best set of institutions for development: By giving a “voice” (see Hirschman, 1970) to the poor, the state would almost inevitably have poverty-reduction policies. However, the post-Washington Consensus has been unable to solve the puzzle of states such as Taiwan and South Korea, which started their successful developmental path under authoritarian regimes and “bad” (i.e., corrupt and inefficient) institutions. The truth is that efficient and properly functioning institutions are ultimately an effect and not a cause of economic development (Khan, 2005, p. 78). In this respect, the post-Washington Consensus is problematic because it is based on a sterile view of institutions that does not consider which political and social conditions are necessary for the establishment of pro-growth institutions nor how they create value for the economy. The World Bank eventually went beyond the post-Washington Consensus with the “Governance and the Law” development report. This report acknowledged that governance4 also matters and that we need to look at actors’ behaviors within institutions. However, it still relied on the view that power asymmetries can lead to inefficient economic outcomes, while governance – meaning good governance, of course – can reduce power asymmetries through bargains involving elites and civil society (World 2 Joseph Stiglitz made the comparison between Russia and China: In the 1990s, China’s GDP almost doubled, while Russia’s halved, to the point that, while Russia’s GDP had been more than double China’s at the beginning of the decade, it was a third smaller by the end (Stiglitz, 1999). 3 It is also debatable whether Singapore could be defined as a developmental state, as it presented only some of its typical aspects (e.g., subsidies for local firms or public support for innovation) while avoiding others (e.g., strategic engagement with FDI). For a brief overview of the debate, see Haggard (2018, pp. 40–41). 4 The World Bank defines governance as “the process through which state and non-state actors interact to design and implement policies within a given set of formal and informal rules that shape and are shaped by power” (World Bank, 2017, p. 41).

48  Handbook on the politics of international development Bank, 2017). And yet, the WB’s apparent shift to a more political view of institutions does not concede that, historically, power asymmetries have often been a prerequisite for economic take-off, when the rulers mobilized society for a development project. By contrast, by “bringing politics back in” (Leftwich, 1995), the developmental state paradigm – based on the empirical observation of the experience of Japan and the “Asian tigers” – can shed some light on the very rationales of development as a transformative process guided by the state, which could be inefficient but extremely effective (Khan, 1995). This chapter is divided as follows: Section 2 traces the intellectual roots of the paradigm, while section 3 looks at the historical experiences of developmental states in East Asia (the three classic examples of Korea, Japan, and Taiwan, as well as China). Section 4 outlines the conceptual elements of the developmental state. Section 5 briefly discusses the developmental state’s replicability outside East Asia and its current rehabilitation in the West.

2.

THE INTELLECTUAL ORIGINS OF THE DEVELOPMENTAL STATE

Even though the developmental state paradigm originates in the study of Japan’s economic boom in the 1960s and 1970s, its intellectual roots date to classic Western economic nationalism from the eighteenth and nineteenth centuries. For the economic nationalists of the time, free trade and the market’s “invisible hand” might have been good for England, which, as the cradle of the Industrial Revolution, had an advantage over the rest of the world, but not so good for less developed countries eager to embark on an industrialization process. They agreed with liberals that the key to development is shifting capital and labor from the agriculture sector to manufacturing, as the division of labor in the industrial sector increases productivity, creates additional employment and demand, and fosters innovation. But they had a different view of the market’s role in moving the economy from one sector to another. Although they were not against free trade and market incentives per se, they thought that – due to the comparative advantage enjoyed by British industry – national manufacturers, which were still small and weak, could never grow and become competitive if markets were opened up to goods imported from the United Kingdom. In other words, economic nationalists feared that Smith’s insistence on free markets as tools for a correct development strategy could mask a sheer defense of England’s national interest to maintain its industrial monopoly. Therefore, to industrialize their economies and catch up with the UK, countries necessarily had to protect their markets from imports while nurturing the indigenous manufacturing industry. The American statesman Alexander Hamilton (1791 [1964]) was the first to advocate protection of US manufacturers from European competition unless America wanted to be relegated to a perennially (forsaken) agricultural country. The state had to implement protecting duties on foreign goods, prohibit the export of goods that could benefit competitors abroad, grant bounties and premiums to entrepreneurs, and encourage new inventions. Friedrich List (2005 [1841]) argued that the “cosmopolitical economy” in the minds of liberals could work well in a universal union or confederation, but as long as the international system was divided into national units, each nation should first have the right to reach the same stage of industrial development as Britain. List did not rule out free trade as an efficient economic principle once countries reached a level playing field in industrial competition. However, he thought open markets were not in the national interest of his native Germany at that stage of development because free trade would

The politics of the developmental state  49 favor only British exports and investments in Europe, thereby preventing the German nation’s full industrialization. For this reason, the government should defend its domestic producers by applying selective protectionist measures, which could make consumers worse off in the short run but could benefit the nation as a whole – its wealth, self-confidence, power, and international status – in the long term. Since Britain was the first country to win the global competition for industrialization,5 the history of economic development has consisted, fundamentally, in a race to catch up with it and then with the rest of Europe and the United States. The race became even more crowded in the second half of the twentieth century when decolonization increased the number of states looking for a feasible path to economic growth. Because these societies were mostly agricultural, they were also well aware that closing the gap with the industrialized countries would be an almost impossible pipedream without assistance from the state. A growing sense of mainstream neoclassical economics being incapable of meeting the developing countries’ needs gave birth to literature on development economics. Even though this is not the focus of our chapter, we should mention here Paul Rosenstein-Rodan’s “Big Push” theory (Rosenstein-Rodan, 1943). Rosenstein argues that industrial take-off in developing countries requires a minimum level of overall investment that cannot be provided by single firms if they exist. The scarcity of available capital is such that only the state can provide enough support – that is, the “Big Push” – for the development transition to start with a meaningful industrial sector. Late developers, contrary to the situation in eighteenth-century England, face a lack of private entrepreneurs and bankers who could amass (on a large scale) the capital needed to acquire the technology needed to set up an industrial basis and compete with early developers. Only the state has this capacity (Gerschenkron, 1962). As “late-late developers,” post-colonial states would even need to go beyond financial support and create a set of policy/market incentives to suggest, constrain, and guide business decisions on a clear path of (industry-driven) national development (Hirschman, 1958). These lessons were clearly learned by developmental states in East Asia, as shown in the next section (see Ocampo, Chapter 1 in this volume).

3.

THE DEVELOPMENTAL STATE IN EAST ASIA

Credit for the original definition of the developmental state goes entirely to Johnson (1982), who studied the spectacular economic growth of Japan following the Second World War. The concept was subsequently elaborated to take into account the economic take-off of both South Korea (Amsden, 1989) and Taiwan (Wade, 1990). These are the three “classic” examples of developmental states. More recently, the People’s Republic of China has been added to the list as a peculiar case of a decentralized, post-socialist developmental state (Breslin, 2011; Gabusi, 2012, 2017; Bolesta, 2015; So, 2016; Li, 2016). Johnson (1982) describes the Japanese state in the 1950s and 1960s as a “plan-rational” system and juxtaposes it with the communist “plan-ideological” system. In the Japanese system, a powerful, competent, and effective bureaucracy (i.e., the Ministry of International Trade and Industry, or MITI) developed a coherent strategy of support for entrepreneurial 5 As Cecil John Rhodes famously stated, “remember that you are an Englishman, and have consequently won first prize in the lottery of life.”

50  Handbook on the politics of international development decisions via constant coordination with the private sector. Insulated from day-to-day political pressures, the MITI was able to pursue a long-term plan of growth in the private sector, which remained autonomous but “embedded” in a system designed to strengthen business capacity, technological acquisitions, and dissemination (Evans, 1995). Unlike what happens in plan-ideological economies, the government let companies choose their own business strategies; in practice, however, the MITI put policy mechanisms in place that set entrepreneurial behaviors in line with the overall national growth strategy – especially those of the big conglomerates (keiretsu). Far from opening its domestic market under a free trade consensus, Japan did not welcome foreign direct investment (FDI) but encouraged Japanese companies to invest abroad (starting with South-East Asia) so that Japan would retain the lead in high-end technology: Low-end technology was controlled from industrial plants in countries with lower production costs, as described in the “flying geese” model (Akamatsu, 1962). In late industrializers like South Korea, it became essential to promote exports while selectively importing foreign technology. Strengthening industrial capacity was key, and the state intervened directly in price formation mechanisms to create multiple prices that could channel companies’ investments into strategic industrial sectors (Amsden, 1989, 1992). In particular, the government set favorable interest rates for exporters, thereby manipulating the market in a clearly developmental trajectory. Amsden famously coined the phrase “getting prices wrong” to underline how far South Korea strayed from the idea that markets, if left to their own devices, would set the “right” prices for the economy. The authoritarian government of General Park Chung-hee (1963–1979) was able to effectively impose strict rules on private companies when it came to using capital and labor. In parallel, it assigned production and trade targets and implemented a system of result-oriented punishments and rewards. The state was firm in creating the conditions for companies to grow and become the world-champion conglomerates (chaebol) that consumers around the world are now familiar with. To this end, the government set optimal standards in production and managerial organization and restricted market access and competition. Capital movements were controlled, credit institutions were in state hands, and prices were regularly renegotiated. The gap in productivity between late developers and advanced countries is so big that developing countries cannot compete on purely market-determined production costs (Amsden, 1992, p. 54). A simple comparative advantage determined by low salaries and exploited by foreign multinationals does not automatically guarantee a structural change in the economy in favor of industrialization. But rather than insist on merely a comparative advantage, South Korea created a series of “competitive advantages” aimed at improving long-term national growth (Pempel, 1999, p. 139),6 realizing that market mechanisms alone, with their insistence on allocative efficiency, were inadequate for the country’s development (Chang, 1994, p. 128; Chang, 2003). Under the authoritarian rule of Chiang Kai-shek (until 1975) and then his son Chiang Ching-kuo (who died in 1988), Taiwan went through a similar experience. There, the market was governed by the state through a set of strategic industrial policies combined with a gradual and selective opening to inward FDI for technology acquisition (Wade, 1990). A centralized bureaucracy – a “pilot agency,” in Johnson’s terms, namely the Council for Economic Planning and Development – intervened to both “lead” and “follow” the market. “Leading the market” meant choosing sectors to expand, products to manufacture, and technologies to



6

For more on the concept of competitive advantage, see Porter (1990).

The politics of the developmental state  51 develop, while “following the market” was about supporting worthy entrepreneurial projects while being in continuous consultation with the private sector (Wade, 1990, p. 28). The state wanted not only to build a market and make it function, in Karl Polanyi’s (1957) sense, but also to create the conditions for the market to expand in high technology-intensive directions, possibly shifting Taiwan toward the technological frontier. The state decided which sectors were important for future economic growth and protected them from foreign competition while encouraging companies to export to international markets. The strategic engagement of foreign multinationals, which were welcome to invest but not to sell on the domestic market, played a part in transferring technical knowledge and soft managerial skills to national producers. This management of foreign capital differentiated the East Asian experience from Latin America’s adoption of the import substitution strategy (ISI) in the 1970s. In South America, the ISI relied on FDI from industrialized countries, but these investments did not trigger an expansion of domestic manufacturers able to export world-class products. In the end, countries like Argentina and Brazil suffered from a sort of “dependent development” (Evans, 1979) that made them collapse into a trap of unsustainable foreign debt. They mistakenly believed in industrialization as a means to achieve autarchy (Haggard, 2018, pp. 13–14, quoting Prebisch, 1950, p. 6). By contrast, the “Asian tigers” succeeded in coopting multinationals for a national project of widespread and competitive industrialization (Haggard and Cheng, 1987). Throughout their respective take-off stages, which coincided with the Cold War period, Japan, Korea, and Taiwan were (and continue to be) under the security umbrella of the United States, which supplied them with material and financial aid to protect them from any embrace of communism. We will return to this international aspect of the developmental state paradigm later on in the chapter, but here we should mention that there is no consensus in the literature about the role played by the Americans in fostering structural change in the economies of Taiwan and South Korea of the kind we have seen. Some voices argue that the US disbursement of aid was, in this case, fundamental to economic growth (see, for instance, Pempel, 1999, p. 155; Woo-Cumings, 1996, p. 334), while others think the US government really did not intend to support the large industrial plants and infrastructure that would physically represent the landmark of their economy strategies (Amsden, 1992, p. 142; Weiss and Hobson, 1995, pp. 166, 188–189). The point that is missing here, however, is that America did play an enabling role at the global level for East Asian developmental states to succeed, but this did not have anything to do with specific measures or policies toward them. Rather, this role was related to America being a benevolent hegemon offering public goods. We will return to this issue in the next paragraph. Evidence that the security alliance with the United States was not a factor explaining the dynamics at work in all developmental states is provided by the economic rise of the People’s Republic of China (PRC), starting with Deng Xiaoping’s reforms in 1978. The enormous success of the reforms allowed the country to become the largest economy in the world as measured in purchasing power parity. The PRC does not appear to fit the category of developmental states because it is (formally) a socialist state with a large presence of state-owned enterprises (SOEs) and has a much more decentralized institutional framework than Taiwan or South Korea. Moreover, China did not deliberately create a competitive advantage, and it relied on light, labor-intensive industries rather than heavy, capital-intensive sectors (Boltho and Weber, 2015). Path dependency matters: In 1978, the PRC already had a large, heavy industrial sector in place, but it was inefficient and stagnant. If the Chinese party-state’s objective was to catch up with Japan and the NICs, it had to find a new growth strategy. It found

52  Handbook on the politics of international development its comparative advantage was to exploit cheap labor. As a socialist country, China already had mandatory economic plans in place. It was indeed a “plan-ideological” state, in Johnson’s terms, but these plans proved to be dysfunctional. By introducing market incentives, the economy started to “grow out of the plan” (Naughton, 1995). In a sense, the plan, which has never been abolished, became more “rational” – a flexible guideline rather than a commitment to production quotas. Thus, China became a “post-socialist developmental state” (PSDS) (Bolesta, 2015) with peculiar characteristics due to its own institutional features (“history matters,” as the post-Washington Consensus would have it), but the same growth-enhancing logic and dynamics of the three “classic” developmental states were nevertheless at play. The strategy was not clear at the outset, and it would be based on gradualism and experimentation, but the project of “catching up” with at least the industrialized countries of East Asia was there: Deng famously set the target of quadrupling China’s GDP by 2000 – an objective the country reached in the late 1990s. By opening up special economic zones (SEZs) to attract FDI and by strategically engaging with the global economy through a mix of importing-substituting and export-oriented policies, China relied on its comparative advantage to grow at a neck-breaking pace. It eventually joined the World Trade Organization (WTO) in 2001. Unlike Russia, China did not dismantle its national Leninist system, and it gradually liberalized the economy following a long developmental trajectory (Zweig, 2002). In the 1990s, China was also strengthening some SOEs in strategic sectors to make them national champions capable of competing in global markets. In the case of China, the “pilot agency” in charge of the developmental project was not a single ministry or bureaucracy but the same Chinese Communist Party (CCP) that mobilized the entire bureaucracy to design, adopt, and implement growth-enhancing policies. The CCP acted as a political economy residual claimant ready to reap the benefits in terms of both political legitimacy and economic profits. However, it was also ready to use its monopoly of violence if private economic actors crossed a “red line” deemed unacceptable by the regime (Gabusi, 2012). Through its organization department, the CCP could monitor the performance (in terms of GDP growth) of local officials at the provincial, county, and township levels. Career incentives made them “agents for development” and generated a local developmental state than was much more decentralized than in Japan and Korea (Blecher, 1991; Bolesta, 2015; Gabusi, 2017). The central party-state would keep its general supervision of the direction of development while allowing different degrees of (embedded) autonomy, as long as local policy-making decisions created new investment projects, new trade opportunities, and new jobs. In a country as large and diverse as China, relying on the CCP’s powerful institutional network to implement the development project was a more effective move than concentrating powers in a single ministry in the (distant) capital – indeed, it was a developmental state with Chinese characteristics (Zhang, 2018). The practice of the developmental state can be complex, but its conceptual features are rather simple and easy to detect in all four East Asian countries examined so far, as outlined in the following section.

4.

THE CONCEPTUAL ELEMENTS OF THE DEVELOPMENTAL STATE

The term “developmental state” does not equate to any kind of intervention in the economy, although it is often used as a synonym for industrial policies (Fine, 2013, p. 22). Even though

The politics of the developmental state  53 the latter are an essential tool used by developmental states, the mere implementation of an industrial policy does not mean a state is developmental. A developmental state explicitly adopts a project of economic nationalism that relates to distinctive institutions, pursues particular policies, and is involved in society in a corporatist fashion. Therefore, drawing on the experience of the East Asian four, the developmental state paradigm presents three dimensions: ideational, institutional, and social (Gabusi, 2017, pp. 236–238). First, developmental states embraced economic nationalism as the state ideology (Bolesta, 2015, p. 40) that gave legitimacy to the elites. The need to pursue economic development became a “transformative project” for the nation (Weiss, 2000, p. 23) – a “binding agent” (Hirschman, 1958) that could unite and help people coalesce around a common goal. When South Korea’s exports surpassed USD 100 million in 1964, President Park Chung-hee declared a new national holiday that was dubbed “export day” and subsequently relabeled “trade day” (The Economist, 2019, p. 4). The international situation also mattered: Japan, South Korea, and Taiwan were all conservative, staunchly anti-communist polities – in fact, at the time of their take-off, the latter two were military dictatorships – firmly located in the Western camp during the Cold War. Therefore, sustaining their economic growth was also a security concern for the United States, as poverty and social unrest would have made it more tempting for the masses to wage a Soviet-style revolution. As we noted in the previous paragraph, the role played by America’s specific material aid in fostering developmental changes is debatable, but the US certainly helped in two ways – one immaterial and one more structural. First, in exchange for their loyalty in the fight against communism, Washington was ready to allow and tolerate economic policy departures from the market-friendly and anti-statist mainstream approach that would later be known as the “Washington Consensus.” Second, in its capacity as a “benevolent hegemon” (Gilpin, 1987), the US offered these countries’ exports the “public good” of its large domestic market. This aspect of American support is crucial because it defines the developmental state’s capacity to exploit the opportunities available during that take-off moment for its own benefit in the global political economy. That is why China, a communist regime outside the US security network, can nonetheless be defined as a developmental state in this framework. Just a few days after the Third Plenum of the 11th Central Committee of the CCP had approved Deng Xiaoping’s reform agenda in 1979, the USA and the PRC established bilateral diplomatic relations (an evident anti-Soviet move by Washington, as the PRC and the USSR had previously been partners and shared the same political philosophy of Marxism-Leninism). Western capital flooded to China, both indirectly through Hong Kong and Taiwan, especially in the 1980s, and directly after 1992. China’s vast pool of cheap labor was a perfect opportunity for entrepreneurs from Taiwan and Hong Kong – two economies that had reached maturity and whose economic competitiveness was at risk of faltering – due to high production costs. China created SEZs as “nests” to attract “birds” (foreign investments) (Zweig, 2002, p. 60) and put in place the political economy conditions to let them prosper and “fly.” In due course, FDI, often in joint ventures with domestic capital, set up production sites to assemble final goods to export to the USA, Europe, and the rest of Asia. In sum, China, like Japan, South Korea, and Taiwan before, strategically managed its integration in global markets, preventing the same integration from disrupting the domestic political-economic system. Second, this system had institutional features in common among the four developmental states. First of all, they were all strong states that could easily and effectively implement their policies because they were facing low transition costs (the political costs borne by reformists

54  Handbook on the politics of international development to carry out reforms, measured by the level of resistance to change they encounter at the societal level) (Khan, 1995, pp. 81, 83–84). Low resistance to change was sometimes a colonial legacy, as in South Korea, where Japan’s direct rule had wiped out the dominant agrarian class, but also developed strong and loyal cooperation with a nascent class of bureaucrats and capitalists who would later become the new elite of an independent South Korea (Kohli, 1994, 2004). Japan emerged from the Second World War in tatters, with its industrial base in complete disarray. Chiang Kai-shek effectively led the remains of his army and coterie to the island of Taiwan. During his cultural revolution (1966–1976), Mao Zedong disrupted urban China’s social fabric to prevent it from turning against CCP policies. In fact, the weakening of society provoked by exogenous factors (such as wars, invasions, and revolutions) and the concentration of social control in the hands of the state are essential preconditions for a developmental state to succeed (Migdal, 1988). Thus, because of different social structures, the same policy can yield different outcomes. If development policies are not compatible with the interests of dominant social groups, they are doomed to fail: For example, South Korea and Pakistan in the 1960s adopted the same industrial policy, but while the former became a global industrial powerhouse, Pakistan’s economy has been stagnating for decades (Khan, 1999). Under these conditions of low social resistance to change, the four developmental states made use of a centralized bureaucratic agency in charge of governing the market, to quote Wade (1990), on a path of fast-growing industrialization. These institutions could effectively require top-down discipline from private actors so as not to let market forces hijack the developmental trajectory. They could take different forms, such as government ministries or commissions or even (in China’s case) the entire party-state with all its local ramifications, but they were all committed to implementing a historical national project of economic growth. Top leaders directly supported the bureaucratic organizations in charge of economic policy: From 1965 until he died in 1979, “President Park Chung-hee attended nearly every monthly meeting of [South Korea’s] export-promotion committee” (The Economist, 2019, p. 4). Administrative action was easier in authoritarian states (South Korea, Taiwan, and China), but in a democracy like Japan, the MITI was at the apex of the “iron triangle” of bureaucratic, economic, and political elites, and in this sense, it was able to take a longer-term approach isolated from day-to-day party politics.7 In line with Listian political economy perspectives, the four developmental states did not surrender their sovereignty to global market forces, nor did they “retreat” (Strange, 1996) by adopting neoliberal policies in line with the Washington Consensus, as the hyperglobalization theory would predict (Ohmae, 1990). The strength of their institutions allowed developmental states to avoid succumbing to global capital and helped them to elude the “dependencia” trap that countries in Latin America had fallen into (Sunkel, 1972). By selectively engaging with foreign markets and multinationals, the developmental state “acted as an effective filter, making domestic political economy conditions compatible with incentives coming from the international political economy environment” (Gabusi, 2017, p. 237). In other words, market incentives coming from abroad were managed by institutions in a way that would conform to the elite’s political imperatives and economic interests. The process generated economic 7 However, some have argued that while the “iron triangle” could well explain Japan’s institutional framework in the 1950s and 1960s, the same does not hold true for the 1970s and 1980s, when the dominant Liberal Democratic Party started to infiltrate the bureaucracy and make the Japanese democracy “dysfunctional.” For an account of these critical voices, see Bowen and Kassiola (2002).

The politics of the developmental state  55 growth for the nation and allowed the elites to enrich themselves by often amassing an enormous amount of wealth. It created “greater congruence between economic and political space,” allowing societies to limit, constrain, and guide “the potentially overwhelming forces of competitive markets” (Wade, 2004, 107–108).8 Economic inefficiencies and corruption were widespread, but the state’s “infrastructural power” (Weiss and Hobson, 1995) directed rents to a young would-be capitalist class that would support the entire developmental project in a dynamic of cooptation representing the social element of the developmental state. Third, the developmental state presented a corporatist organization of state–society relations. State agencies, private companies, and workers all rallied behind the national project of economic growth in a pattern of “governed interdependence” (Weiss, 2000, p. 23). In Japan, bureaucracies, chambers of commerce, trade councils, and industry organizations were involved in a “market-enhancing” cooperation exercise that was as important as the top-down guidance from central governments (Aoki et al., 1997). In China, the interaction between state-led measures and bottom-up initiatives from a new and vibrant class of entrepreneurs ignited a virtuous cycle of production, trade, and consumption that Christopher McNally (2012) labels “Sino-capitalism.” Even in the 1990s, long after the end of the economic take-off stage, the Taiwanese state was able to support technological upgrades to small and medium-sized enterprises and “develop linkages with the private sector through varieties of para-state institutions to extract and collect information from producers through routinized interactions so as to build and mobilize a greater level of industry collaboration” (Hsieh, 2016, p. 92). In this sense, the institutions of the developmental state helped to overcome collective action problems (Noble, 1998). While the elites were coopted in the developmental project, they were made subordinate to the state, which ensured that working classes could not organize themselves into a mass movement (Castells, 1992, quoted in Chu, 2016, p. 10). Labor was clearly repressed, but the state offered a clear trade-off to workers and peasants: accepting political marginalization in exchange for economic empowerment. Politically, in the corporatist structure of the state, they did not have a voice in policy making, which is one reason why salaries could remain low for so long (Bolesta, 2015, p. 16). This was true not only in the three capitalist developmental states but also in China’s PSDS, which does not permit independent trade unions. At the same time, land reform and strategic and selective engagement with foreign manufacturing companies, which benefited both export-oriented and import-competing sectors, enhanced the population’s welfare (Waldner, 1999). Therefore, as the economy effectively started to grow, raising the standard of living, the working class accepted the trade-off between political submission and economic improvement. In other words, every class – the political elite, the economic actors that would, eventually, form a new capitalist class, and the workers – was given a stake in the economic growth nationalist agenda, forging a dominant and pervasive discourse that was Gramscian at its core (Blecher, 2002).



8

Here, Wade also makes reference to Bienefeld (2000).

56  Handbook on the politics of international development

5.

CONCLUSION: REPLICABILITY OF THE DEVELOPMENTAL STATE AND ITS REHABILITATION IN THE WEST

The heyday of the developmental state in the development debate was undoubtedly the end of the 1980s and the early 1990s. Since then, three changes at both the domestic and the international levels have seemingly brought an end to the historical experience of developmentalism in East Asia and, consequently, any interest in the intellectual appeal of the concept of a developmental state as such and any thought about its replicability abroad (Haggard, 2018). First, by softening US concerns over a possible communist domino effect in the region, the end of the Cold War made Washington and Brussels less tolerant of Japan’s exploitation of the American and European open markets without reciprocity. For this reason, they asked Tokyo to liberalize its markets. Second, the mainstream view of the deep underlying causes of the Asian Financial Crisis in 1997 was that the corporatist structure of the economies in East Asia had given rise to inefficient dynamics of cronyism and nepotism that would ultimately make economic growth unsustainable – therefore, states should not follow their example but implement market-oriented reforms. Third, in a world where transborder global value chains were rapidly expanding, “the idea that countries could succeed by promoting national champions through restrictions on trade and investment became increasingly anachronistic” (Haggard, 2018, p. 74). With the establishment of the WTO in 1995 and the adoption of neoliberal trade policies, the policy space for heterodox state interventions in the economy was “shrinking” (Wade, 2003). In particular, the WTO Agreement on Subsidies and Countervailing Measures prohibited the kind of subsidies that had been “the bread and butter of industrial policy” in East Asia (Haggard, 2018, pp. 78–79). Developmental states protected some policy space by turning to developmental regionalism (see Nesadurai, Chapter 5 in this volume). It did not help that no real examples of paradigm-confirming developmental states emerged in other corners of the world. Although Haggard (2018, p. 68) seems to think that Chile under Pinochet was in a position to implement an outward-oriented strategy that could resemble the East Asian experience, truth is that Pinochet’s Chile did not have East Asia’s start-up capacity and became, following the neoclassical rulebook, the most open economy of the world, deprived of the protectionist elements that we have observed in East Asian developmental states. In the rest of larger economies in Latin America, anyway, protectionism and the defense of import-substituting activities never waned (Haggard and Kaufman, 2008). Brazil has been defined as an interesting “intermediate” case halfway between developmental and predatory states (Evans, 1989). Polities in Brazil, as in India, were too fragmented to find consensus to sustain a capitalist entrepreneurial class (Kohli, 2004). Non-oil dependent states in the Middle East, such as Syria and Turkey, in their post-war reformist period, failed to create pro-business social coalitions and ended up with inefficient and ineffective “precocious Keynesianism” (Waldner, 1999, p. 179). In Africa, with the possible exception of Botswana, changing international circumstances and the persistence of weak and dysfunctional governments led to a consensus around the “impossibility theorem” of any possible unfolding of developmental state practices on the continent (Meyns and Musamba, 2010; Routley, 2014), even though some have argued that conditions could be found for setting up a democratic developmental state in more structured states like South Africa (Edigheji, 2010). In fact, the “impossibility theorem” has been criticized because it is based on a convenient (and self-serving) stereotype of African states that offers an excuse to developed countries and donors to offer policy sug-

The politics of the developmental state  57 gestions more in line with their (market-friendly) preferences. But there is nothing in Africa preventing a developmental inclination of the elite (Mkandawire, 2001, p. 310). However, debate around the developmental state is as lively as ever (see, among others, Williams, 2014; Centeno et al., 2017), and it is likely to remain central to development discourses because it deals particularly with the state’s capacity to steer a path of sustained national economic growth. Over the past 15 years, two events have shown the continued relevance of the paradigm. First, as we saw in section 3, China’s astonishing growth can be explained by looking at the People’s Republic as embodying the essential features of a developmental state. Second, the Great Recession of 2007–2008 prompted governments in developed countries to intervene in the economy, thereby loosening their (ideological) commitments to unfettered markets and the strict separation of public institutions and private economic spheres. Bestselling books like The Entrepreneurial State debunked the myth that states in the West left their economies in the “invisible hand” of the market: Even the iconic success of Silicon Valley was made possible thanks to huge support from the American government during the Cold War and beyond (Mazzucato, 2013). The economic emergency resulting from the COVID-19 pandemic of 2019–2020 only consolidated the idea that it is acceptable for the state to make a “return” to the economy. In a surprising twist, even the IMF has finally rehabilitated the once very taboo concept of industrial policy by looking at the experience of the “Asian tigers” (Cherif and Hasanov, 2019). Since states do not embark on a path of capitalist development without the consent of their elites, the politics of the developmental state sheds some light on how governments could profit from favorable conditions in the global economy to foster national growth without disrupting existing institutions. However, we should not forget that neoliberal and neostatist perspectives share the view that development is mainly economic development quantitatively measured by GDP growth rates. As the human and environmental costs of the developmental state have now become clear (especially in China), the challenge for the paradigm, if it is to be of practical use in the twenty-first century, is to embrace human development as a holistic concept and to address the legitimate concerns of the dispossessed, who are often left behind by the political logic of the developmental state (Evans and Heller, 2015).

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The politics of the developmental state  59 Hamilton, Alexander (1791). Reports on manufactures, December 5, 1791. Reprinted in Jacob E. Cooke (ed.) (1964), The Reports of Alexander Hamilton. New York: Harper & Row, p. 177. Hirschman, Albert O. (1958). The Strategy of Economic Development. New Haven, CT: Yale University Press. Hirschman, Albert O. (1970). Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press. Hsieh, Michelle F. (2016). Embedding the economy: The state and export-led development in Taiwan. In Yin-wah Chu (ed.), The Asian Developmental State: Reexaminations and New Departures. Basingstoke: Palgrave Macmillan, pp. 73–95. Johnson, Chalmers (1982). MITI and the Japanese Miracle. Palo Alto, CA: Stanford University Press. Khan, Mushtaq H. (1995). State failure in weak states: A critique of new institutionalist explanations. In John Harriss, Janet Hunter, and Colin Lewis (eds.), The New Institutional Economics and Third World Development. London and New York: Routledge, pp. 71–86. Khan, Mushtaq H. (1999). The political economy of industrial policy in Pakistan 1947–1971. SOAS Department of Economics Working Paper 98, London. Khan, Mushtaq H. (2005). What is a “good investment climate”? In Gudrun Kochendorfer-Lucius and Boris Pleskovic (eds.), Investment Climate, Growth, and Poverty. Washington, DC: World Bank, pp. 77–83. Kholi, Atul (1994). Where do high-growth political economies come from? The Japanese lineage of Korea’s “developmental state”. World Development, 22(9), 1269–1293. Kohli, Atul (2004). State-Directed Development: Political Power and Industrialization in the Global Periphery. Cambridge: Cambridge University Press. Leftwich, Adrian (1995). Bringing politics back in: Towards a model of the developmental state. The Journal of Development Studies, 31(3), 400–427. Li, Rebecca S. K. (2016). Changing developmental-ness of the state: The case of China. In Yin-wah Chu (ed.), The Asian Developmental State: Reexaminations and New Departures. Basingstoke: Palgrave Macmillan, pp. 197–216. List, Friedrich (2005 [1841]). National System of Political Economy. New York: Cosimo Classics. Mazzucato, Mariana (2013). The Entrepreneurial State: Debunking Public vs. Private Sector Myths. London: Anthem Press. McNally, Christopher (2012). Sino-capitalism: China’s reemergence and the international political economy. World Politics, 64(4), 741–776. Meyns, Peter and Musamba, Charity (eds.) (2010). The Developmental State in Africa: Problems and Prospects. Duisburg, Essen: Institute for Development and Peace, INEF Report 101/2010. Migdal, Joel S. (1988). Strong Societies and Weak States: State-Society Relations and State Capabilities in the Third World. Princeton, NJ: Princeton University Press. Mkandawire, Thandika (2001). Thinking about developmental states in Africa. Cambridge Journal of Economics, 25(3), 289–313. Naughton, Berry (1995). Growing Out of the Plan: Chinese Economic Reform, 1978–1993. Cambridge: Cambridge University Press. Noble, Gregory (1998). Collective Action in East Asia: How Ruling Parties Shape Industrial Policy. Ithaca, NY: Cornell University Press. North, Douglass C. (1981). Structure and Change in Economic History. New York: W. W. Norton. North, Douglass C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Ohmae, Kenichi (1990). The Borderless World. London: Collins. Pempel, T. J. (1999). The developmental regime in a changing world economy. In Meredith Woo-Cumings (ed.), The Developmental State. Ithaca, NY: Cornell University Press, pp. 137–181. Polanyi, Karl (1957). The Great Transformation: The Political and Economic Origins of Our Time. Boston, MA: Beacon Press. Porter, Michael (1990). The Competitive Advantage of Nations. London: Macmillan. Prebisch, Raul (1950). The Economic Development of Latin America and Its Principle Problems. New York: United Nations. Rodrik, Dani (2005). Growth strategies. In Philippe Aghion and Steven N. Durlaf (eds.), Handbook of Economic Growth, vol. 1A. Amsterdam: Elsevier Science Publishers, pp. 967–1014.

60  Handbook on the politics of international development Rosenstein-Rodan, Paul N. (1943). Problems of industrialization of Eastern and South-Eastern Europe. Economic Journal, 53(210/11), 202–211. Routley, Laura (2014). Developmental states in Africa: A review of on-going debates and buzzwords. Development Policy Review, 32(2), 159–177. Smith, Adam (1759). The Theory of Moral Sentiments. Reprinted in D. D. Raphael and A. L. Macfie (eds.) (1982), Glasgow Edition of the Works and Correspondence of Adam Smith. Indianapolis, IN: Liberty Fund. Smith, Adam (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Reprinted in W. B. Todd (ed.) (1976), Glasgow Edition of the Works and Correspondence of Adam Smith. Oxford: Oxford University Press. So, Alvin Y. (2016). The post-socialist path of the developmental state in China. In Yin-wah Chu (ed.), The Asian Developmental State: Reexaminations and New Departures. Basingstoke: Palgrave Macmillan, pp. 175–196. Stiglitz, Joseph E. (1994). Whither Socialism? Cambridge, MA: MIT Press. Stiglitz, Joseph E. (1996). Some lessons from the East Asian miracle. The World Bank Research Observer, 11(2), 151–177. Stiglitz, Joseph E. (1998). More instruments and broader goals: Moving toward the post Washington Consensus. The 1998 WIDER Annual Lecture, Helsinki, 7 January. Stiglitz, Joseph E. (1999). Whither reform? Ten years of transition. Keynote address at World Bank’s Annual Conference on Development Economics, 28–30 April. Strange, Susan (1996). The Retreat of the State: The Diffusion of Power in the World Economy. Cambridge: Cambridge University Press. Sunkel, Osvaldo (1972). Big business and “dependencia”: A Latin American view. Foreign Affairs, 50(3), 517–531. The Economist (2019). New Stripes. Special Report: Asian Tigers, December 7. Wade, Robert H. (1990). Economic Theory and the Role of the Government in East Asian Industrialization. Princeton, NJ: Princeton University Press. Wade, Robert H. (2003). What strategies are viable for developing countries today? The World Trade Organization and the shrinking of the “development space”. Review of International Political Economy, 10(4), 621–644. Wade, Robert H. (2004). The reprinting of Governing the Market: A dinner table conversation. Issues & Studies, 40(1), 103–134. Waldner, David (1999). State Building and Late Development. Ithaca, NY: Cornell University Press. Weiss, Linda (2000). Developmental states in transition: Adapting, dismantling, innovating, not “normalizing”. The Pacific Review, 13(1), 21–55. Weiss, Linda and Hobson, John M. (1995). States and Economic Development: A Comparative Historical Analysis. Cambridge: Polity Press. Williams, Michelle (ed.) (2014). The End of the Developmental State? London: Routledge. Williamson, John (ed.) (1990). Latin American Adjustment: How Much Has Happened? Washington, DC: Institute for International Economics. Williamson, John (1993). Democracy and the Washington Consensus. World Development, 21(8), 1329–1336. Woo-Cumings, Meredith (1996). ‘The political economy of growth in East Asia: A perspective on the state, market, and ideology. In Masahiko Aoki, Hyung-Ki Kim, and Masahiro Okuno-Fujiwara (eds.), The Role of Government in East Asian Economic Development: Comparative Institutional Analysis. Oxford: Clarendon Press, pp. 323–341. World Bank (1993). World Development Report: The East Asian Miracle: Economic Growth and Public Policy. Washington, DC: Oxford University Press. World Bank (1997). World Development Report: The State in a Changing World. Washington, DC: Oxford University Press. World Bank (2002). World Development Report: Building Institutions for Markets. Washington, DC: Oxford University Press. World Bank (2005). World Development Report: Economic Growth in the 1990s – Learning from a Decade of Reform. Washington, DC: Oxford University Press.

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4. The politics of decolonizing development1 Rosalba Icaza and Rolando Vázquez

This chapter is concerned with a politics of decolonizing development that foregrounds knowing and delinking as central, but not unique to this task. The question of decolonizing development is oriented towards a decolonial politics of dignity that does not recognize development as its horizon of realization. Our point of departure is that the notion of development cannot be separated from the history of Western modernity. Development has functioned at one and the same time as representation and articulation of the modern/colonial divide. The division between the human and the savage, between civilization and nature, lingers behind the notion of development. From our point of view, development belongs to the epistemic tradition of the West that has arrogated to itself the authority to classify the diversity of the Earth as nature and the diversity of peoples of the world as “others.” In other words: development belongs to a Eurocentric and anthropocentric epistemology whose identity as the geographical center and historical now of humanity depended on the externalization of the Earth and the peoples of the world as otherness. Development as an expression of this genealogy of an anthropocentric Eurocentrism has functioned as a mediation that marks the border between today’s standard of humanity: the consumer and alterity; the poor, the dispossessed and the Earth. We want to explore the notion of development precisely in its function in articulating the separation between the consumer and the lives of the peoples and Earth that are being incorporated, dispossessed, extracted and consumed. In doing so, we ask the following: Can the notion of development respond to the possibility of an ethical life that is not structurally implicated with the suffering and the consumption of life of the Earth and others? What does it mean to decolonize development? This chapter seeks to advance some reflections around these questions inspired by decolonial thinking.2 Decolonial thought acknowledges that there is “no modernity without coloniality,” hence there is no narrative of development, without its coloniality (Icaza and Vázquez, 2016; Icaza, 2018; Lugones, 2010a, 2010b; Mignolo, 2003, 2013; Quijano, 2000; Vázquez, 2009, 2011, 2014; Walsh, 2007, 2010, 2011). In a nutshell, modern development cannot be thought, sensed and experienced without its underside, without the processes of exclusion, destitution and extraction that accompany it. From this perspective, the analysis of development (human,

1 An earlier draft of this chapter was published as: Rosalba Icaza and Rolando Vázquez (2017) “Notes on Decolonising Development”, in Josef Estermann (ed.), Entwicklungsbegriff auf dem Prüfstand – Wie wir die Zukunft im Norden und Süden gestalten möchten (The concept of development in question: How we want to shape the future in the north and south), Lucern, Switzerland: Comundo. Both authors want to thank Josef Estermann for his support and encouragement to write this piece in a revised version for this volume. 2 Decolonial thinking partakes in this critical endeavor of decolonizing development (see Icaza, 2015; Icaza and Vázquez, 2016).

62

The politics of decolonizing development  63 sustainable, “green” or alternative) cannot be done without unpacking its ethno-centrism, its epistemic violence as a mono-cultural and hegemonic project (Icaza, 2021; Walsh, 2011). We want to acknowledge and build on previous efforts in critical development studies, informed by critical feminisms, post-development, and post-colonial analytical frameworks, dealing with the task of deconstructing and unsettling development narratives (e.g. Apffel-Marglin and Marglin, 1996; Bendix et al., 2020; Escobar, 1992, 1995; Radcliffe, 2012; Saunders, 2004; Simon, 2006; Wainwright, 2008; Ziai, 2004). In so doing, we recognize the contributions of these interventions for an understanding of development as a dominant discourse (Escobar, 1995; Bergeron, 2006; Griffin, 2007) that produces idea of the so called “Third World” as “always lacking” and in need, and that concurrently produces the other as “subaltern” or “backward” (Mohanty, 2003). This perspective has allowed critical scholars to identify development as a mediation between the Global North and the Global South. Our decolonial approach to development focuses on development as a mediation that instruments the colonial difference, that is the imposition of modernity over other worlds of meaning. In so doing, it reveals the connection between the representation (discursive) and the materiality (political economy) of development not only as problematic but as corresponding to the Western project of civilization. These two movements – representation and appropriation – allow us to address the task of decolonizing development by analyzing how it functions as an articulation of the modern/ colonial divide along two axes: (i) the mediation towards the social majorities of the world, and (ii) the mediation towards Earth. By the modern/colonial divide we mean the separation that has been produced by the Western project of civilization between civilization and colonialism, between the human that classifies and the people that are/were classified, racialized, and impoverished. The colonial difference marks the line between those that could enjoy the privileges of “progress” and those whose lives are/were made dispensable. Where Western thought sees a development gap between the advanced societies and those that need to catch up, decolonial thought listens to the colonial wound of those lives that are being consumed. In this same vein, we consider that the project of development is conceptualized in a radically different way by those who have suffered its force and who have seen the denigration and even extinction of their ways of living and of their possibilities to inhabit the world. A view from the “epistemic South” reveals a crude image of development that does not correspond to its self-representation as progress and salvation. The coloniality of development is evident for those whose livelihoods have been disabled by development projects. From a decolonial perspective we suggest approaching the question of development along two intermeshed axes of differentiation: the relation to Earth as the “other” of the human and the relation to “others.” Development is demarcated by a negative relation to Earth which is reduced to “nature” as an alterity, and in negative relation to the “social majorities” of the world reduced to the category of poor as alterity. These two axes allow us to see development as an articulation of the western project of Civilization’s specific relation to Earth and to the so-called Global South/Third World. These two axes of differentiation and domination are suggested as questioning guides towards a decolonial critique of development. The rest of the chapter is divided into three sections. In the first, a brief introduction to decolonial thinking in development studies is provided. The second section introduces elements of what we call a decolonial method of research. The third section provides clues as to what a decolonial analysis of development might look like.

64  Handbook on the politics of international development

1.

ON DECOLONIAL THINKING AND DEVELOPMENT

In his seminal article of 2007, “World and Knowledges Otherwise: The Latin American Modernity/Coloniality Research Program,” Colombian anthropologist Arturo Escobar links for the first time the emerging decolonial agenda mainly developed by academics and activists from/based in Latin America to the post-development critique in development studies. In the article Escobar starts a discussion on the ontology of development from a decolonial perspective. Escobar shows the importance of the irruption of non-Western “cultural archives” to better understand the question of development and of modernity at large. Escobar’s article revisited the international financial institutions’ (IMF, World Bank) “there is no alternative” (TINA) mentality after two decades of neoliberal structural programs in Latin America, Africa and Asia. For Escobar, the context was of a “paradigm crisis” of the Western project of civilization that proved to be insufficient to address contemporary problems. This crisis coincided with the emergence of the decolonial current of thought that he then called the modernity/coloniality and decoloniality (MCD) research group/agenda. The point of departure of the MCD’s collective effort of research was the acknowledgment that there is “no modernity without coloniality” (Quijano, 2000). The relevance of this affirmation is that on the one hand the history of modernity cannot be disassociated from the violence of coloniality, from enslavement, extraction, disposition and disdain. Coloniality is a co-constitutive element of the Western model of civilization. Most importantly the realization that there is no modernity without coloniality allows for an epistemic shift. It enables a decolonial critique of modernity that is not grounded on modernity’s own narrative but on the thinking and experiencing of coloniality. Modernity could be thought from the experiences of oppression that enabled it and crucially from an epistemic outside (Vázquez, 2011). The question of coloniality opened a field of investigation not simply focused on how modernity established itself but also on the processes of negation that it implied. To foreground what is negated distinguishes the contribution of decolonial thinking from established critical theories in much of the Anglo-American and French academies. Furthermore, the question of coloniality points towards what has been denied the right to exist, to become world. The experience of coloniality becomes an epistemic location from which to think our world’s historical reality. Decoloniality allows for a shift in the geography of reason, as explained by Walter Mignolo (2013) that challenges the self-representation of modernity. Decolonial thought is grounded in the historically lived experiences of coloniality and challenges the universality of the narrative of Western modernity moving towards the humbling of modernity (Vázquez, 2012). Precisely in seeking to avoid becoming just another hegemonic project, decolonial thinking is also understood as an option – in contrast to a paradigm, grand theory or imperative – among a plurality of options (Icaza, 2021).3 However, it is important to note that the view of a plurality of options is not grounded in relativism but in the recognition of the wide diversity of particular geo-genealogical positionalities. The various positionalities of the destituted majorities of the world are the source of grounded critiques of modernity and its notion of development.

3 Argentinian cultural historian Zulma Palermo identifies the relevance of understanding decolonial thinking as an “option” to a border epistemology. See Palermo (2008).

The politics of decolonizing development  65 We see the decolonial humbling of modernity as a precondition for an intercultural understanding of the world. The recognition of the radical diversity of the world does not mean to render modernity as monolithic; on the contrary the humbling of modernity includes a recognition of the wide diversity within the West that has been subsumed also under a dominant anthropocentric and individualizing project. From the perspective of coloniality, “Western modernity,” in spite of its internal plurality and its internal tensions, constitutes a dominant project of civilization that claimed “universality,” or the totality of world historical reality for itself at the moment of the violent encounter with “the Other” and the subsequent concealment of this violence. The colonial encounter can be symbolically marked in 1492 as the beginning of the conquest of Abya Yala (the Americas), the beginning of a genocide of millions of indigenous peoples, and the enslavement of millions of African peoples. This has been understood also as an epistemicide and as the defuturing of their worlds (Mignolo, 2003; Quijano, 2000; Sousa Santos, 2014; Vázquez, 2017b). Decolonial thinking gravitates around the binomial modernity/coloniality, while acknowledging the margins and the genealogical exteriority of modernity (Vázquez, 2014, p. 173). This is in marked contrast with the thinking centered in the Western philosophical tradition (including critical social theory), in which modernity in its different facets (i.e. unfinished modernity, plural and hybrid modernities, post-modernities, globalization, capitalisms, and so on) is assumed as the total horizon of intelligibility. “For decolonial thinking modernity (with its modernities) cannot claim to cover all the historical reality. There is an outside, something beyond modernity, because there are ways of relating to the world, ways of feeling, acting and thinking, ways of living and inhabiting the world that come from other geo-genealogies, non-Western and non-modern” (Vázquez, 2014, p. 173). Early writings on modernity/coloniality understood it as a co-constitutive duality and a matrix of power that operates by controlling the economy and authority (government, politics); knowledge and subjectivities; gender and sexuality (Mignolo, 2013; Quijano, 2000). From this perspective the “coloniality of power” explains that “the basic and universal social classification of the population of the planet in terms of the idea of ‘race’ is introduced for the first time” with the conquest of the Americas (Lugones, 2010a, p. 371). This analysis “has displayed the heterogeneous and transversal character of the modern/colonial system” (Vázquez, 2014, p. 176). More recently, modernity and coloniality have been understood as co-implicated or intermeshed but also as designating two different movements towards world historical reality. Modernity on the one hand expresses the movement towards the control of historical presence, of what is claimed as “reality.” It determines the mechanisms of appropriation and representation that enable it to claim its monopoly over worlding the world. It refers to the appropriation and incorporation of human and non-human life, of Earth and all its heritage into the modern project of reality, the turning of lives and Earth into resources for the project of civilization. Such control over presence, or the attempt to monopolize world making, required the control over representation, the control of the naming and picture of the world. A case in point is the classification and racialization of the other as “indigenous,” “black,” etc., and in the case of the development discourse naming the other as “poor” or in need of “empowerment.” While modernity defines what has been produced as reality, coloniality denotes a historical movement of erasure, of the negation of other worlds of meaning and the occlusion of the plurality of the world, for example the systematic destruction of worlds of meaning through the extinction of languages and the dignity of other worlds of sense through the national school

66  Handbook on the politics of international development systems. First nations’ people theorizing on the national school system as a form of oppression, brings to legibility the coloniality of modernity, the processes of denigration, the violence that is implicated with many development process and that remains invisible and unintelligible when seen from within the discursive realm of modernity and development (e.g. Fregoso and Rueda, 2018; Tuck and Tuck, 2013). From this perspective, modernity is “the name and narrative that the western civilization project with totalizing pretensions gives to herself and to the representation of the world” while coloniality is “not a mere abstraction … is the group of historically concrete practices and forms of exclusion exercised by the modern/colonial project” (Vázquez, 2014, pp. 175–179). Thinking from coloniality implies a grounded thinking that is contextual, historical, situated practice. The decolonial critique of development brings to the fore the ways of worlding the world that have been annulled by the imposition of the dominant project of civilization and the reduction and consumption of life. For example, decolonial feminism teaches us how the enterprise of development is not just a geopolitical economic power that circulates at the level of institutions, but how it is a power that circulates through bodies (Icaza and Vázquez, 2016; Lugones, 2010a, 2010b) and that bodies are not only individual bodies but are territories-Earth. The transmogrification of the relational subject into the hollow body of the individualized homo economicus is a process that is vividly resisted by women and communities that are struggling for the radical freedom of living in autonomy and dignity. In our cosmovisions, we are beings coming from Earth, Water and Corn. We Lenca people are the ancestral guardians of rivers protected by the spirits of girls who teach us that giving our lives in multiple ways to defend the rivers is to give life for the well-being of humanity and this planet. Wake up, Wake up humanity! There is no more time! Our conscience will be shaken by the fact that we are only contemplating our own destruction by capitalist, racist and patriarchal predation. The Rio Gualcarque has called us, as well as the others rivers that are being seriously threatened around the world. We must go. The Mother Earth, militarized, enclosed, poisoned, where the elementary rights are systematically violated, requires us to act. (Berta Cáceres, COPINH, Goldman Environmental Award Ceremony, 2015)

These are the words of Lenca indigenous leader Berta Cáceres’ acceptance speech at the Goldman Environmental Award Ceremony of 2015.4 Berta leaded COPINH’s struggle – the Honduras based Consejo Civico de Organizaciones Populares e Indigenas5 – against the world’s largest dam construction “Agua Zarca Dam” in the Gualcarque River. Sadly, a few months after her speech at the Award Ceremony, Berta Cáceres was assassinated by members of the private security forces of DESA, the local owner and developer of the project. For some of us, Berta Cáceres’ struggle, together with many other people’s experiences of resistance to coloniality’s violence over racialized and dehumanized bodies-territories-Earth, through their lives and memories are vivid realizations of plural beings resisting and of their enfleshed knowledges challenging modern development agendas (Icaza, 2018; Suárez-Krabbe, 2016; Walsh, 2011). 4 This is the authors’ translation from Spanish to English. Source: https://​www​.youtube​.com/​watch​ ?v​=​AR1kwx8b0ms. 5 COPINH is an indigenous Lenca organization made up of 200 Lenca communities in the western Honduran states of Intibuca, Lempira, La Paz, and Santa Barbara. See http://​copinhenglish​.blogspot​.nl/​ p/​who​-we​-are​.html.

The politics of decolonizing development  67 Inspired by Berta Cáceres’ struggle, in what follows we formulate an invitation for a decolonial reading of development as a discourse belonging to modernity, hence to the geo-genealogy of the dominant West. Our aim is to present some elements in an effort to better understand development as an articulation of the modern/colonial divide.

2.

ELEMENTS FOR A DECOLONIAL CRITIQUE OF DEVELOPMENT

Before introducing some elements for a decolonial critique of development, it is important to first revisit the productive tensions between post-development and decoloniality. In the work of Arturo Escobar, we find the encounter between these two currents. In his book Designs for the Pluriverse Escobar surveys the whole trajectory of post-development with a critique of fundamental assumptions such as growth, progress and instrumental rationality (2018, p. 147). He shows that post-development and degrowth lead in their own way to the need for transitions, the need to go beyond the paradigm of development. When confronted with the need of overcoming the paradigm of development and more generally to go beyond modernity, decoloniality takes on a great importance. Decoloniality provides a radical critique of modernity, by affirming that there is no modernity without coloniality, thus the alternatives to development should not lead to a renewed configuration of modernity. Decoloniality reveals that to overcome the paradigm of development we also need to overcome the epistemic and aesthetic territory of modernity. Decoloniality signals a delinking grounded on the relational ontologies that have been dismissed or suppressed under the Western project of civilization. The decolonial horizons are non-anthropocentric, non-monocultural; they engage in recognizing and fostering relational worlds. Once we have briefly identified this key productive divergence in this section we introduce a decolonial method of research that has allowed us to understand both development as an articulation of the modern/colonial divide and the task of its decolonization. Our point of departure is that development as modernity has meant the imposition of a worldview and a reality making principle and processes that belong to the epistemology of the West and its ontology. More concretely, this worldview is built on three main assumptions: 1. The paradigm of economic growth assumed as the horizon for a good life (see Chapter 1 by Ocampo, and Chapter 26 by Rivarola Puntigliano in this volume) in contrast with Sumak Kawsay and Suma Qamaña which according to Fernando Huanacuni Mamani (2010, p. 7) translates as “vida en plenitud.” However, these Quechua and Aymara philosophies have been often (mis)translated as Buen Vivir especially in relation to recent constitutional reforms in Bolivia and Ecuador. In this chapter, we want to emphasize its provenance from the outside of both colonial languages, Spanish and English, to challenge our parameters of understanding and modernity’s semblance of totality while stressing Sumak Kawsay and Suma Qamaña as two horizons for good life that are not grounded on the separation of human and nature but on their relationality (Vázquez, 2012). 2. Anthropocentrism, that places the anthropos, the human, in a position of privilege and ownership over other living beings and over Earth. Anthropocentrism is enacted as an epistemology, economy and politics that bestow the human with the rights and the possibility

68  Handbook on the politics of international development to consume Earth. Anthropocentrism is realized through individuality and instrumental and networked systems in contradistinction with relational forms of living. 3. Nature is concurrently reduced to an object for the consumption of the human. Nature is classified as an object of science, is commodified as property of the economy, and defined as a resource under the logic of scarcity. Elsewhere we have conceptualized these three assumptions as the implementation of a relation to nature in which development comes to mean earthlessness, as the loss of the relation to Earth, the loss of the relation to others and the loss of the notion of the plenitude of life (Vázquez, 2017b). These are principles that are found in the philosophies of sumak kawsay, suma qamaña, jlekilaltik and buen vivir (among others) which are silenced in favor of an anthropocentric model of development. We could name this loss the coloniality of development. In a nutshell, considering development as articulating the modern/colonial divide, means considering the question of anthropocentrism, the imposition of Western epistemologies, and the question of earthlessness. The third moment, the decolonizing of development, calls for an intercultural humbling of development. As Escobar has already argued, this is not a call for alternative development but for alternatives to development. We understand that at one and the same time, development functions as a discourse through which it represents itself as economic growth and humanization, while it unleashes material processes of appropriation through destitution of natural and cultural spaces from the world’s social majorities. Next to development as a concrete historical expression of modernity’s control of historical presence through the movements of appropriation and representation, we need to understand development as a reality making process that has had effects not only in institutional arrangements and productive processes but also in the formation of subjectivities. A decolonial feminist engagement with thinking development critically would need to address development as a force of subjective formation, hence as a power that gains access to bodies-territories-Earth and that over-determines subjectivities. Building on critical feminist scholars in development studies, allows an understanding of development as a force of gendered subjective formation, hence as a power that gains access to feminized bodies and gendered subjectivities (Harcourt, 2009; Bergeron, 2006; Griffin, 2007). However, decolonial feminism (Lugones, 2010a, 2010b; Icaza and Vázquez, 2016) is concerned with the coloniality of gender, that is with how people are reduced to bodies for labor and subsumed under a gender structure that guards the access to socialization. Development’s access to bodies and their harnessing to economic processes cannot be separated from its implication with the coloniality of neoliberalism and the disposability of life for accumulation. Development has been implicated in placing people’s bodies, lives and habitats at the disposal of productivity and rendering them disposable, for example women working in maquiladoras (in-bond processing plants), rainforests for plantations, the mountains and rivers for mining and neo-extractivist economic drives. Ivan Illich shows us that Western modernity can be seen as a historical period dominated by the reduction of experience and the confinement of the subject into the homo economicus (Illich, 1992).

The politics of decolonizing development  69 We would like to indicate three levels of analysis that could contribute to the effort of decolonizing development: ● Development’s regulation of the relation between the consumer world and the world of work and exploitation, the so-called “North–South” divide, which is in fact a renewed expression of the colonial divide. ● Development’s power of anthropological transformation, its circulation through identity formation, libidinal structures and the disposition of bodies that it implies. ● Development’s regulation of the relation to Earth through the idea of sustainability that belongs to the genealogy of anthropocentric thinking. Furthermore, we see these three levels of analysis as a very much-needed route map for a critical dialogue with the post-development agenda. Furthermore, these three levels are also for us a much-needed diversion or rerouting towards an epistemic outside in which the realm of Earth and contextual historical experiences are recognized. We are also aware that these three levels constitute just as a first step into a larger path that includes the possibility of envisaging alternatives beyond critique and into decolonial movements.

3.

SEEING BEYOND THE CRITIQUE

From a decolonial perspective, the alternatives to development are not coming from a better adaptation of its discourse of prosperity and humanity, but from a delinking from its notion of humanity, from its articulation of modern-colonial divides and from its anthropocentric disposition of Earth. Social struggles are already delinking from the paradigm of development. The ongoing social and political struggles for autonomy, justice, dignity and Earth of the social majorities of the world cannot be seen only as struggles to access development or to become developed. The methodological elements that we schematically presented before allow us to also see these struggles as struggles to recover the freedom to live in plenitude, to assert relational worlds; these are the struggles of the social majorities for the freedom to become world, and, as the Zapatistas say, to belong to “a world in which many worlds fit.” Intercultural philosophy presents itself as a philosophy committed to the right of the different cultures to become worlds: in order to be a living place of identity for living beings, the culture of the other needs to become world to be world. The alternatives to development and not “alternative development” as stated by Escobar, mark a veritable anthropological, epistemological and ontological shift away from modern/ colonial monopoly over the real, over reality making processes such as subject formations, economic extraction, life disposition, etc. This shift is not a shift towards utopia, it is not a shift towards an “alternative modernity,” but rather, it is the outcome of the struggle for re-existence (Albán Achinte, 2009) of the worlds of meaning that have been and are being suppressed, consumed, disposed off by the dominant model of civilization. Positionality and contextual practices are articulating the responses that do not come from utopia, from projections into the future as transcendental ideals, but from situated knowledges, and most importantly from deep temporalities, they are enacting the mode of precedence as in the formation of pathways to overcome development (Vázquez, 2017a). The dignifying of the alternatives that have been suppressed comes with the struggle of communal histories that have been denied the possibility of making world of being world under the weight of domination.

70  Handbook on the politics of international development The notion of positionality of black, chicana, first nations and decolonial feminism (e.g. Gloria Anzaldúa, Maria Lugones, Leanne Betasamosake Simpson), as well as the notion of contextual histories of liberation, womanist, black and first nations’ theologies belong to an ongoing epistemic struggle to overcome the monocultural framework of the West and its position of “universal” abstraction by asserting complexity and truthfulness of located knowledges. The epistemic struggle brought to legibility and recognition the alternatives to development. Contextual theologies give a history, a place, a face and a name to the emptied neoliberal subject. They perform a parallel move to that of feminist thought that has been thinking the world from positionality. These epistemic moves regard the subject, her body, her community, her cosmogony as a locus of struggle facing the emptying of the present, the reduction of experience under the expansion of the hegemony of modernity and its world-system. Allow us to dwell on a fragment of the final message of the 5th Latin-American encounter of “Indian Theology” in 2006, as a token of the worlds of meaning that cannot be reduced to development alternatives but that are enacting modes of precedence that do not belong to the geo-genealogy of the West. Facing the neoliberal system that razes and destroys life, we, indigenous women and men, offer to the peoples of the world, as alternative, the wisdom with which we cultivate and care for nature, the traditional way of integral healing, the spiritual strength that will help us flourish in history. We call on all indigenous peoples to continue being the guardians and defenders of the seas and the wind, fish and birds, of seeds and fruits, of trees and animal, of rivers and mountains, of the pampas and fields, because the heart of the sky and the Earth have sown us in history to give joy and plenitude to the world and not to deaden it and destroy it. (Quoted in Estermann, 2014, pp. 148–149)

The resource war we are facing today is one in which first nations are struggling to preserve their lands, their water and mountains, their dignity, and their right to self-determination. The ecological frontier coincides with the epistemic human frontier, as the last resources are in first nation peoples’ land. COPINH and Berta Cáceres struggle to defend the Gualcarque River, Standing Rock Sioux people resist the Dakota Access Pipeline: their struggles cannot be only understood as struggles for the preservation of resources, but invite us to also see them as struggles for the preservation of the possibilities of plenitude of life, of being relational forms of worlding the world, of living in dignity and plenitude. These struggles bring to light the frontier between modernity and the communal, between development and non-anthropocentric forms of life, between the human as homo economicus and non-anthropocentric communal forms of life (Martínez Luna, 2010). In thinking the relation to the Earth and to others, we understand that development imposes a notion of nature as separated from the human, of the planet as an object, and nature as a mechanism. When environmental problems emerged diagnosing economic growth as one of its main causes, when the economic system and economic rationality were questioned for their impact on a responsibility for environmental degradation, the economic establishment responded asserting that “the environment is an externality of the economic system”. … [I]t was possible to begin an epistemological reflection in which the environment was defined as the true externality of economic rationality, as otherness to dominant scientific rationality. (Leff, 2012, p. 439)

Modernity, the Western project of civilization, is revealed as a Eurocentric and anthropocentric way of worlding the world. Anthropocentrism characterizes modernity as being based on the othering of nature and the formation of the human as an individual sovereign self.

The politics of decolonizing development  71 Eurocentrism characterizes modernity as being based on the othering of peoples and worlds as belonging to the past of Western world-history and its present stage of progress and as being at the margins of world-geography. The Western consumer becomes the standard of humanity, it is the human that is in the now of novelty and whose standing is structurally dependent in the anthropocentric consumption of Earth and the exploitation and consumption of the life of others, of the “social majorities.” The constitution of the consumer asa world-class of privilege is sustained in the negation of alterity, in the negation of Earth and other worlds of meaning. “From an epistemic and ontological perspective, globalization has taken place at the expense of relational and nondualist worlds, world-wide” (Escobar, 2015, p. 23). Therefore, a decolonial analysis of the development agenda, in its current form as the Sustainable Development Goals (see Chapter 20 by Currie-Alder in this volume), reveals that it cannot be seen in separation from modernity’s Eurocentrism and anthropocentrism. It is complicit with the expansion and the reduction of Earth to resource and the negation of relational forms of worlding the world. Let us hear the words of of Floriberto Díaz in relation to Earth, to see how relational worlds of meaning harbor alternative ontologies to that of modernity: In face of a common mother, the Mixe people feels like just one more next to the other living beings. … For the indigenous, Earth as territory has no relation whatsoever with the modern notion of the western nation-state. (Díaz, 2007, pp. 42–43)6

Western modernity’s transmogrification of Earth into an object of classification and trade, into a resource and commodity is not only putting at risk the material survival of Earth and its peoples, but also the spiritual survival of non-anthropocentric worlds of meaning. Manifold relational ontologies cannot understand human life in separation from Earth. Development as a powerful representation and world-making force is not a novel idea, but one that has been carefully advanced by post-development contributors. The coloniality of development brings forth the question of how it has functioned to further the erasure of worlds of meaning and the consumption of human and Earth life. A decolonial analysis of development has to look at its power effects, its world-making processes, at its coloniality, that is its implication in worldlessness, or the erasure of other worlds, and in earthlessness, that is in the anthropocentric consumption of Earth and the loss of the capacity of a contextual and enfleshed knowing (enfleshlessness). Finally, such an analysis has the task to listen to other geo-genealogies that can in their alternative ontologies and temporalities indicate radical alternatives to development and Western modernity. Decolonial thought is oriented towards contextual and grounded alternative worlds of meaning, towards the possibility of hope in the mode of precedence, through listening and hosting anew the temporalities that have been negated along the road into the future. The fundamental question is this: Can we envisage a way out of development to cultivate the possibility of a life in plenitude, of an ethical life that is not implicated in the consumption and suffering of Earth and proximate and distant others?

6 Our translation: “Frente a una madre común la gente mixe se siente como alguién más al lado de los seres vivos. … Para los indígenas, la Tierra como territorio no tiene relación alguna con la noción moderna de Estado-nación occidental.”

72  Handbook on the politics of international development We encounter development as a notion that articulates the modern/colonial divide, in other words, development functions to articulate the separation between those who consume the lives of others and of Earth and those who are consumed. From that perspective, development comes to mean the loss of worlds of meaning (worldlessness), the loss of the relation with Earth (earthlessness), the loss of the capacity of a contextual and enfleshed knowing (enfleshlessness) and the loss of our relations in time, of ancestrality, of communal memories (empty-timelessness). We see these losses as the coloniality of development. Therefore, to provide tentative decolonial orientations to the question above, it is necessary to foreground these losses in the analyses of development. In that sense, our politics of decolonizing development foregrounds the task of undoing the coloniality of development by engaging intellectually, epistemologically, affectively and politically with these losses. Engaging with the losses carries also the possibility of healing and delinking. From a decolonial perspective the alternatives to development have to overcome the relation between oppression and resistance and move towards coalitions (Lugones, 2003, p. 84) where other epistemologies and worlds can flourish.

REFERENCES Apffel-Marglin, Frédérique and Marglin, Stephen A. (eds.) (1996). Decolonizing Knowledge: From Development to Dialogue. Oxford: Oxford University Press. Bendix, D., Muller, F. and Ziai, A. (2020), Beyond the Master’s Tools? Decolonizing Knowledge Orders, Research Methods and Teaching. Lanham: Rowman & Littlefield. Albán Achinte, Adolfo (2009). Artistas indígenas y afrocolombianos: Entre las memorias y las cosmovisiones. Estéticas de la re-existencia. In Zulma Palermo (ed.), Arte y Estética en la Encrucijada Descolonial. Buenos Aires: Ediciones del Signo, 83–112. Bergeron, Suzanne (2006). Fragments of Development: Nation, Gender and the Space of Modernity. Ann Arbor: University of Michigan Press. Díaz, Floriberto (2007). Escrito, Comunalidad, energía viva del pensamiento mixe, Ayuujktsenaa’yen – ayuujkwenmaa’ny – ayuujk mek’ajten, ed. S. Robles Hernandez and R. Cardoso Jiménez. UNAM, Dirección General de Publicaciones y Fomento Editorial. Escobar, Arturo (1992). Imagining a post-development era? Critical thought, development and social movements. Social Text, Third World and Post-Colonial Issues, 31–32, 20–56. Escobar, Arturo (1995). Encountering Development: The Making and Unmaking of the Third World. Princeton: Princeton University Press. Escobar, Arturo (2007). World and knowledges otherwise: The Latin American Modernity/Coloniality Research Program. Cultural Studies, 21(2), 179–210. Escobar, Arturo (2015). Thinking-feeling with the Earth: Territorial struggles and the ontological dimension of the epistemologies of the South. Revista de Antropología iberoamericana, 11(1), 11–32. Escobar, Arturo (2018). Designs for the Pluriverse: Radical Interdependence, Autonomy, and the Making of Worlds. Durham, NC: Duke University Press. Estermann, Josef (2014). Cruz & Coca: Hacia la descolonización de religión y teología. Quito: Abya-Yala. Fregoso, Carlos Gisela and Rueda, Fortino Domínguez (2018). Cruce de vías: genealogías teóricas sobre el racismo para entender el problema de la educación en México. In Bruno Baronnet, Gisela Carlos Fregoso, and Fortino Domínguez Rueda (eds.), Racismo, Interculturalidad y Educación en México. Xalapa, Veracruz: Universidad Veracruzana, 17–37. Griffin, Penny (2007). Neoliberalism and the World Bank: Economic discourse and the (re)production of gendered identity(ies). Policy Futures in Education, 5(2), 26–38. Harcourt, Wendy (2009). Body Politics in Development: Critical Debates in Gender and Development. London: Zed Books.

The politics of decolonizing development  73 Huanacuni Mamani, F. (2010). Buen Vivir / Vivir Bien Filosofía, políticas, estrategias y experiencias regionales andinas. Coordinadora Andina de Organizaciones Indígenas – CAOI. Icaza, Rosalba (2015). The Permanent People’s Tribunals and indigenous people’s struggles in Mexico: Between coloniality and epistemic justice? Palgrave Communications, 1 (online). http://​ www​ .palgrave​-journals​.com/​articles/​palcomms201520. Icaza, Rosalba (2018). Social struggles and the coloniality of gender. In Robbie Shilliam and Olivia Rutazibwa (eds.), Handbook of Postcolonial Politics. Abingdon: Routledge, 58–71. Icaza, Rosalba (2021). Decolonial feminism and global politics: Border thinking and vulnerability as a knowing otherwise. In V. Browne, J. Danely and D. Rosenow (eds.), Vulnerability and the Politics of Care: Cross-Disciplinary Dialogues. Oxford: Oxford University Press, 43–59. Icaza, Rosalba and Vázquez, Rolando (2016). The coloniality of gender as a radical critique of developmentalism. In W. Harcourt (ed.), The Palgrave Handbook on Gender and Development: Critical Engagements in Feminist Theory and Practice. London: Palgrave Macmillan, 62–73. Illich, Ivan (1992). Needs. In Wolfgang Sachs (ed.), The Development Dictionary: A Guide to Knowledge as Power. London: Zed Books, 88–101. Leff, Enrique (2012). Latin American environmental thinking: A heritage of knowledge for sustainability. Environmental Ethics, 34(4), 431–450. Lugones, Maria (2003). Pilgrimages/Peregrinajes: Theorizing Coalitions Against Multiple Oppressions. Lanham, MD: Rowman & Littlefield. Lugones, Maria (2010a). The coloniality of gender. In W. Mignolo and A. Escobar (eds.), Globalization and the Decolonial Option. London: Routledge, 367–390. Lugones, Maria (2010b). Towards a decolonial feminism. Hypatia, 4, 742–759. Martínez Luna, J. (2010). Eso que llaman comunalidad. Oaxaca: Consejo Nacional para la Cultura y las Artes. Mignolo, Walter (2003). Historias locales/diseños globales: Colonialidad, conocimientos subalternos y pensamiento fronterizo. Madrid: Akal. Mignolo, Walter (2013). Dewesternization, rewesternization and decoloniality: The racial distribution of capital and knowledge. Public lecture given at the Centre for the Humanities, University of Utrecht, May 13. Mohanty, Chandra Talpade (2003). Under Western eyes: Feminist scholarship and colonial discourses. Signs, 28(2), 499–535. Palermo, Z. (2008). La opcion decolonial. In Diccionario del Pensamiento Alternativo I. Buenos Aires: Editorial Biblos Lexicón. Quijano, Anibal (2000). Coloniality of power, ethnocentrism, and Latin America. Nepantla, 1(3), 533–580. Radcliffe, Sarah (2012). Development for a postneoliberal era? Sumak kawsay, living well and the limits to decolonisation in Ecuador. Geoforum, 43(2), 240–249. Saunders, Kriemild (ed.) (2004). Feminist Post-Development Thought: Rethinking Modernity, Post-Colonialism and Representation. London: Zed Books. Simon, David (2006). Separated by common ground? Bringing (post)development and (post)colonialism together. Geographical Journal, 172(1), 10–21. Sousa Santos, B. de (2014). Epistemologies of the South: Justice against Epistemicide. Boulder, CO: Paradigm Publishers. Suárez-Krabbe, Julia (2016). Race, Rights and Rebels: Alternatives to Human Rights and Development from the Global South. Lanham, MD: Rowman & Littlefield. Tuck, Eve and Tuck, Beverly (2013). Making school more meaningful: Perspectives on the purposes of schooling from an Alaska Native context. In Jenice L. View, Daniel A. Laitsch, and Penelope M. Early (eds.), Why Public Schools? Voices from the United States and Canada. Charlotte, NC: Information Age Publishing, 13–20. Vázquez, Rolando (2009). Modernity, coloniality and visibility: The politics of time. Sociological Research Online, 14(4) Vázquez, Rolando (2011). Translation as erasure: Thoughts on modernity’s epistemic violence/ Journal of Historical Sociology, 24(1), 27–44.

74  Handbook on the politics of international development Vázquez, Rolando (2012). Towards a decolonial critique of modernity: Buen vivir, relationality and the task of listening. In R. Fornet-Betancourt (ed.), Capital, Poverty, Development. Aachen: Wissenschaftsverlag, 241–252. Vázquez, Rolando (2014). Colonialidad y relacionalidad. In M. E. Borsani and P. Quintero (eds.), Los desafíos decoloniales de nuestros días: pensar en colectivo. Neuquen, Argentina: EDUCO – Universidad Nacional del Comahue, 173–196. Vázquez, Rolando (2017a). Precedence, trans*, and the decolonial. Angelaki: Journal of Theoretical Humanities, 22(2), 39–45. Vázquez, Rolando (2017b). Precedence, Earth and the Anthropocene: Decolonising design. Design Philosophy Papers, 15(1), 77–91. Wainwright, Joel (2008). Decolonizing Development: Colonial Power and the Maya. Hoboken, NJ: John Wiley. Walsh, Catherine (2007). Shifting the geopolitics of critical knowledge: Decolonial thought and cultural studies ‘others’ in the Andes. Cultural Studies, 21(2–3), 224–239. Walsh, Catherine (2010). Development as buen vivir: Institutional arrangements and (de)colonial entanglements. Development, 53(1), 15–21. Walsh, Catherine (2011). The (de)coloniality of knowledge, life and nature: The North America-Andean Free Trade Agreement, indigenous movements and regional alternatives. In J. Shefner and P. Fernández-Kelly (eds.), Globalization and Beyond: New Examinations of Global Power and its Alternatives. University Park, PA: Pennsylvania State University Press, 228–249. Ziai, Aram (2004). The ambivalence of post-development: Between reactionary populism and radical democracy. Third World Quarterly, 25(6), 1045–1060.

5. The politics of developmental regionalism Helen E. S. Nesadurai

1.

INTRODUCTION: CONCEPTUALIZING DEVELOPMENTAL REGIONALISM AND ITS POLITICS

Scholars of regionalism often make a distinction between the ‘old regionalism’, an essentially state-driven product of the Cold War and the post-colonial move for a New International Economic Order (NIEO) from the more expansive ‘new regionalism’ that took off from the 1990s in the context of globalization and a post-Cold War neoliberal economic order. The new regionalism is itself characterized by “multidimensionality and pluralism”, with the “many regionalisms” worldwide, although mostly of the “open” variety, differing in terms of the scope of the regional agenda, the actors involved, their institutional forms, and the overlap between the “regions” constructed through these regionalist schemes (Söderbaum, 2012, p. 13). Given such diversity in regional dynamics, how do we make analytical sense of developmental regionalism as a specific form of regionalism that is linked to development? What are the politics surrounding developmental regionalism? Payne and Gamble’s definition of regionalism as a “states-led project designed to reorganize a particular regional space along defined economic and political lines” captures the common understanding of regionalism as a top-down strategy to achieve various nationally defined political or economic ends (Payne and Gamble, 1996, p. 2). Regions then are spaces, including cross-border spaces, that have become important for social relations and are governed in specific ways to bring “directed change to that domain” (Scholte, 2014, pp. 13–14). Development is one of those state-directed ends or changes for which regionalism may be designed. Development, however, is “an essentially contested concept”, reflected in diverse theories and strategies explaining what development is and how to get there (Scholte and Söderbaum, 2017, p. 2). At its most basic, however, development is, or rather, should be, rooted in a notion of material progress or improvement, concerned with both “the conditions of production” and its social consequences (Peet and Hartwick, 1999, p. 1). From their survey of development research and practice worldwide, Thurborn and Weiss (2020, pp. 62–63) point to the centrality of cultivating “productive capabilities” as the hallmark of development, enabling the improvement of mass living standards, structural economic transformation and allowing human capabilities to thrive. Although development is rooted in economic processes, it is, nonetheless, conceptually distinct from economic growth in that it pays particular attention to the provision, by states, of various conditions necessary for production. These can range from the material/technical (infrastructure, communication, research and development, finance, technical assistance), to social (health, education, training and other services supporting labour provision) and spatial conditions (cities and other spatial agglomerations) deemed necessary for economic, particularly capitalist, production (Pianta, 1989). Taking these insights together, particularly the importance of the spatial conditions of production, this chapter defines regionalism directed in the service of development, or 75

76  Handbook on the politics of international development ‘developmental regionalism’, as state-directed interventions designed to configure or reconfigure particular international or transnational spaces to generate those spatial conditions of production deemed vital to attain desired economic and social ends. Using this conception of developmental regionalism is analytically useful for three reasons. First, it directs attention to how governments use regional collective action to help them overcome what they perceive to be spatial constraints, or to create spatialized opportunities, to advance development goals that would not have been possible by states acting alone. Second, this conception does not set out, a priori, the meaning and goals of development or of specific regionalist configurations but allows for a consideration of a wider range of regionalist projects as development-focused if referred to or practised in those terms by decision-makers and other key actors. Third, such a conception also directs attention to the politics of developmental regionalism. Collective international projects such as developmental regionalism require an underlying set of shared interests and especially shared ideas and practices among participating states and other actors about how a regional project is to be constituted in order that it creates those conditions of production deemed vital to achieve desired development goals, giving rise to distinct and often politicized models for organizing and justifying development on a regional scale. The analytical focus on contestedness also locates the analysis within Acharya’s call for a Global International Relations (IR) that sees regionalisms and regions as “dynamic, purposeful, and socially constructed spaces” created through the exercise of agency by “Southern actors” that includes “resistance, normative action, and local constructions of global order” (Acharya, 2014, p. 650). Contestation of developmental regionalism may occur at three levels – at the global/international level when particular projects of developmental regionalism contend with hegemonic, liberal conceptions of development and the multilateral economic order; at the regional level when state-driven projects of developmental regionalism are challenged from within the region by other states advancing different conceptions of development and regional order; and at the transnational levels when state-led regionalist projects are contested by non-state, business or civil society actors advocating alternative projects of regionalism. Following on from the position that developmental regionalism is enacted through the reflexive agency of actors, three analytically distinct courses of action are possible although they may be difficult to distinguish in practice. Architects of developmental regionalism may choose modest, conformist actions that seek primarily to adjust to dominant international ideas, policies and practices. They may also be reformist in seeking to put in place different ideas, institutions, policies and practices to govern regional life. But actors with transformative intent who “judg[e] that better regions are possible and necessary … resist, unravel and transcend them with transformed institutions and structures” (Scholte, 2014, p. 19). In considering its transformative potential, this chapter asks if developmental regionalism, as it is constructed by states, poses a challenge to deeper social structures, particularly capitalism, nationalism or multilateralism.1 This chapter unfolds in four sections. Following this introduction, the second sections outlines the shifting contours of the international economic order against which developing countries have had to work in order to pursue their preferred paths to development. This discussion serves as a backdrop to the third section that identifies four variants of developmental 1 Scholte (2014, pp. 16–18) discusses a number of these deeper social structures from a sociological perspective while Ruggie (1992) discusses multilateralism as a generic institutional form in international relations.

The politics of developmental regionalism  77 regionalism in the Global South following the end of the Second World War. Beginning with the Marxist-inspired structuralist version of developmental regionalism, the discussion focuses on how this gave way to three forms of what look to be instances of ‘open’ regionalism but demonstrate significant variations. By focusing on broad trends in ideas, interests and practices and drawing on key examples from Latin America, Africa and East Asia where the intertwining of development and regional integration as well as their contestation are especially evident, this chapter identifies three variations of a fundamentally open form of developmental regionalism – neoliberal open regionalism, economic nationalist variants of open and developmental regionalism, and public goods regionalism. The concluding section draws out three key themes of state-led developmental regionalism from the preceding survey – that it offers state actors the political space to exercise agency through regional action in the attempt to create distinct regional orders that challenge to varying degrees universalized and, at times, regionalized paradigms of development. Nevertheless, developmental regionalism falls within the conformist to reformist spectrum of political action. Attempts by opposition political groups, scholars and civil society from within the region at transformative change through alternative regionalisms that better integrate social, environmental, justice and rights issues have been limited, often ignored or actively curtailed by state actors. In fact, the main contention of this chapter is that developmental regionalism reflects, is reinforced by, and sustains the capitalist and nationalist structures of international society and its commitment to multilateralism. Even variants of developmental regionalism that emphasize a key role for state intervention do so without undermining the liberal order’s emphasis on private capitalism. However, public goods regionalism differs in important respects from these other variants of state-led developmental regionalism. Because of its functional focus, it is also the most fluid form of regionalism in that its defined regional ‘space’ ranges from multilateral forms of regionalism to sub-regional development zones made up of sub-national spaces to hub-and-spoke types of bilateral relationships. While it does not undermine the capitalist structures of international society, public goods regionalism dominated by state capital from donor-investor countries investing in infrastructure and other development projects can reinforce the growing role of state capitalism in world politics and challenge the liberal international order centred on private market actors. The involvement of emerging powers as investors also renders this type of regionalism more open to the geopolitical agendas of, and competition between, donor-investor countries for influence and leadership.

2.

DEVELOPMENT AND THE INTERNATIONAL ECONOMIC ORDER

Projects of regionalism, including developmental regionalism, do not emerge in a vacuum. Empirically, the resurgence of regionalism in world politics from the late 1980s took place against the backdrop of globalization of the world economy. Globalization, particularly contemporary economic globalization is commonly understood as a historical expansion in the volume and depth of cross-border flows of trade, capital, finance, information and people across national borders as well as the worldwide reorganization of production in global production networks. However, late twentieth century globalization was also very much a political project by which advanced industrial states and global market actors sought to put in place

78  Handbook on the politics of international development a self-regulating market on a world scale that was quite different from the preceding development project that dominated in the two decades after the second world war (McMichael, 2000). The development project aimed to reproduce the Western experience of development and modernization using the state to support economic production, informed by prevailing (embedded) liberal ideas and supported by multilateral institutions like the World Bank (McMichael, 1996). State intervention was to be limited, however, to creating the internal conditions for production, including building a functioning market economy and securing social stability through employment creation and social welfare provision. Border barriers to trade were to be progressively reduced. Conceived against the backdrop of the unfolding Cold War and decolonization, the development project of the 1950s–1960s was “concerned with imposing order and forestalling social unrest” in an expanding international society of states (Nustad, 2004, p. 13). At the formal launch of the World Bank in January 1949, United States President Harry Truman also positioned Western development as the true path to development in contrast to the communist path (Nustad, 2004, p. 16). Development was, therefore, premised on the Western model and modernization theory, which posited that less developed and under-developed countries would eventually catch up with the advanced industrial states if they followed Western blueprints, including progressively opening up to the world economy. Importantly, barriers to development were identified as emanating internally from within these poorer states (see Chapter 26 by Rivarola Puntigliano in this volume). In contrast, the globalization project sought to institutionalize at the world scale neoliberal market reforms and the regulatory state, downplaying the role of industrial or manufacturing production in development (Thurbon and Weiss, 2020). Development, instead, would be achieved by integrating national economies with the global economy, allowing market-driven comparative advantage to determine areas of economic specialization that need not involve manufacturing production while emphasizing competitiveness and productivity (McMichael, 2000). Moreover, the focus by global and advanced country development agencies on good governance and human centred development, while normatively good things, elided the importance of production in achieving material progress (Thurbon and Weiss, 2020, p. 61). The package of neoliberal ideas and practices underpinning the globalization project – simply put, the nexus of liberalization, deregulation and privatization – came to be called the Washington Consensus because its key proponents, the World Bank, International Monetary Fund (IMF) and the US government operated out of Washington, DC. However, the Washington Consensus model did not go uncontested, nor was it adopted in toto worldwide. Most developing countries picked elements from the package to suit national development priorities, especially following a series of major financial crises since the late 1990s that had required state action to address the disruptions and failures of financial markets. With that came grudging acceptance that governments with the right capability could effectively direct and manage the economy through industrial policy for development purposes (Birdsall and Fukuyama, 2011, p. 46). But the second decade of the twenty-first century witnessed another important shift involving the (re-)assertion of the state in development, this time with the state as a market actor in its own right. State capitalism has become more pronounced in a range of developing countries and emerging powers, not only in traditional sectors like oil and gas and infrastructure, but in a wider array of traditional and newer, technologically advanced and service sectors, driven by mixed motives: instrumentally by governments seeking to retain and entrench political power, for national development purposes and to secure foreign policy goals (Bremmer, 2009).

The politics of developmental regionalism  79

3.

FOUR VARIANTS OF DEVELOPMENTAL REGIONALISM

As the discussion to follow shows, developmental regionalism has been part of both old and new regionalism although its contours have shifted across time as states actors rooted in national socio-political contexts craft regionalism in the service of development against the backdrop of the prevailing international economic order. Four variants of developmental regionalism are identified, based on how these collective projects have been designed and positioned to secure the conditions of production through regional cooperation. Shared ideas and models of development inform the overall institutional architecture of the regionalist project as well as its policies, rules and key practices. 3.1

Regional Industrial Planning and Revisioning International Order

The first wave of developmental regionalism from the 1950s to the 1970s is best exemplified through Latin American regionalism informed by the theoretical school of structuralism put forward by economist Raul Prebisch and the Economic Commission of Latin America and the Caribbean (ECLAC). The difficulties in achieving political integration in Latin America in the nineteenth century to consolidate the hard-won independence of regional states and reduce their vulnerability to external powers saw a shift to economic integration as the path to regional political unity, drawing initially on the functionalist ideas of David Mitrany (Mace, 1988). But structuralism and its associated dependency theory provided a decisive alternative approach to achieving the much sought after regional autonomy from the “world power centers” (Deciancio, 2016, p. 112). These economic ideas provided a seemingly clear explanation for Latin America’s lack of development. Structuralist thinking expected countries occupying the peripheries of the world economy to stagnate unless they could break their dependence on the rich, advanced core of industrial states through autonomous development. As largely exporters of primary commodities facing secular price declines, Latin American countries were thought to be doomed to under-development unless they were able to enter the more lucrative industrial sectors dominated by the industrialized countries. Regionalism was structuralism’s answer to this predicament (Deciancio, 2016, p. 112). Developmental regionalism took the form of regional import-substitution industrialization (ISI), using regional industrial planning and protection of the regional common market to create the spatial conditions for rapid industrialization while overcoming the limited size of national markets (Mace, 1988, p. 408). Development was, therefore, conceptualized differently in Latin American regionalism of that time from the liberal, pro-growth modernization paradigm that dominated development thinking. Importantly, and consistent with the ideas of structuralism and dependency, Latin American states also sought to reform the unequal structures of the prevailing international order through an activist foreign policy and the Third World’s move for a New International Economic Order (NIEO). In contrast to modernization theory that identified internal barriers to development, the underlying message of the structuralist brand of developmental regionalism attributed countries’ lack of development to external causes and showed how regionalism would enable their insertion on more favourable terms into an international system that did not at present work for these countries. Various regionalist projects were formed in Latin America based on these ideas and strategies such as the Latin American Free Trade Association (LAFTA), the Central American Common Market (CACM), the Andean Pact, and the Latin American Integration Association

80  Handbook on the politics of international development (LAIA). Although competition among member states for preferred industrial projects and concerns over the unequal distribution of gains from regional trade liberalization led to delays and revisions in these schemes, it was the advent of the Pinochet-led right-wing government and neoliberal ideational shift in Chile that disrupted the regional consensus on the structuralist causes of Latin America’s lack of development and the remedy of autonomous development through regional industrial policy behind tariff walls (Deciancio, 2016, p. 113). The material realities of the 1980s debt crisis reinforced this ideational dissensus. Many Latin American countries realigned with the USA, adopted economic policy stances that were pro-foreign direct investment (FDI) and pro-trade liberalization, and revised existing forms of regionalism (Tussie, 2009). The ISI type of developmental regionalism had also made a somewhat ambivalent appearance in Southeast Asia in the late 1970s under the auspices of the Association of Southeast Asian Nations (ASEAN) (Tongzon, 1998). The regional commitment to ISI was not as emphatic as in Latin America. Rather, economic regionalism was primarily driven by the political imperative to strengthen ASEAN unity among the then five ASEAN member states (Indonesia, Malaysia, Philippines, Singapore and Thailand) at the close of the Vietnam War in which neighbouring communist Vietnam prevailed over the USA. Moreover, Southeast Asian countries had also combined ISI with export-oriented industrialization as their pathway to development, with individual states eager to attract the labour-intensive, low wage and low value-added segments of manufacturing processes that multinational corporations (MNCs) were looking to relocate offshore (Stubbs, 2012, p. 92). Participation in the world economy was deemed crucial for economic survival, and although there was recognition that the terms of that participation could certainly improve, there was less concern in this part of the world with dependent development. Thus, when recession struck Southeast Asia in the early and mid-1980s, liberal economic reforms were fairly quickly adopted. 3.2

The Political Limits of Open, Neoliberal Regionalism as a Development Strategy

The new liberal trend would soon lead to the worldwide phenomenon of ‘open regionalism’ by the late 1980s and 1990s unfolding against the post-Cold War liberal triumph. Open regionalism embraced explicit integration with the world economy as the path to economic prosperity informed by neoliberal ideas. Trade and investment liberalization, internal deregulation of economies to unleash efficiency gains, and a marked reduction in the state’s role in the economy became the dominant paradigm for growth and development. In fact, there seemed to be little or no distinction made between growth and development. Although projects of open regionalism were soon emerging in Latin America, Southeast Asia and in the Asia-Pacific, their neoliberal underpinnings were, nevertheless, conditional, and would soon face resistance from within the region as other regional projects were designed that better spoke to states’ development needs and preferred practices. In Latin America, regionalist projects such as Mercosur, or the Southern Common Market established in 1991, exemplify regionalism’s initial alignment with neoliberal policies (Tussie, 2009, p. 174). While the aim was still for insertion on more favourable terms into the world economy, that process was now to be achieved through deregulation and liberalization. Over time, market-led regionalization strategies of domestic and foreign firms created regionalized business structures and networks of market interactions. Such regionalization dynamics

The politics of developmental regionalism  81 worked to reinforce Mercosur even when it began to face competition from the more encompassing US-led hemispheric initiative, the Free Trade Agreement of the Americas (FTAA) that offered Latin American states and firms access to the large US market (Phillips, 2003). The FTAA, in fact, was the pinnacle of the neoliberal shift in Latin America, culminating in the 1994 Summit of the Americas (Tussie, 2009, p. 176). Soon after, however, economic crises faced by Mexico (1995), Brazil (1999), and Argentina (2001) led to a rethink in Latin America of the neoliberal underpinnings of development and open regionalism. Mercosur itself was reconstituted in 2000 to leverage on the scale economies of the Mercosur region to both attract foreign investment inflows and aid domestic firms to regionalize their activities and gain global competitiveness (Phillips, 2003, pp. 228–231). It was in East Asia that the challenge to the neoliberal version of open regionalism would centre around a regionally specific development model. The case of Asia Pacific Economic Cooperation (APEC), a highly diverse regional grouping whose members could be said to subscribe to two broadly distinct approaches to economic governance reveals paradigm contestation in sharp relief. Although there had been disquiet among a number of its East Asian members when the APEC proposal had been mooted, these countries overcame their reservations to support APEC’s formation in 1989, somewhat assuaged by its less intrusive approach to regional liberalization on the basis of consensus decision-making and voluntary commitments and compliance (Ravenhill, 2001). APEC, moreover, having been initiated at a time of upheavals in the world economy was seen as an insurance plan against protectionism and closures in the world economy. Aside from concerns that the North American Free Trade Agreement and the Single European Market would herald a world of closed regional blocs, the Uruguay Round of multilateral trade talks had stalled while the USA, which was an integral security and economic partner for many states in East Asia, seemed poised to turn inwards. APEC would constitute a “mechanism … to advance global liberalization … to enhance region-specific cooperation … and defend existing market access arrangements, particularly those enjoyed by Asian economies in the United States” (Bisley, 2012, p. 352). However, APEC faced a more pronounced internal challenge within a few years of its formation when its advanced country members pressed forward on a comprehensive neoliberal agenda for free and open trade in the APEC region complete with clearly set out targets. This became a point of concern for most of APEC’s East Asian members. At stake also was their preferred model of state-directed development, notwithstanding their contingent embrace of liberal economic reforms, which, like regionalism, were pragmatic paths to help states meet economic as well as nation- and state-building goals (He, 2004). Aside from adopting various strategies within APEC to mitigate or block the proposed neoliberal agenda, these states also supported proposals for an East Asian regionalism rooted in quite distinct ideas and practices of state-led development (Bisley, 2012, pp. 353–358). East Asian regionalism eventually saw institutionalization as the ASEAN Plus Three grouping and later the East Asian Summit. However, that two forms of East Asian regionalism were institutionalized reveals the extent to which region-building is contested in East Asia. Despite a shared commitment to state-led development, political conflicts over who was in and who would be excluded from these East Asian groupings took centre-stage, especially the contest between Japan and China over regional leadership in East Asia. Since 2020, that contest has become more pronounced in the context of the US–China ‘cold war’ that has drawn in US allies like Australia and Japan (Walt, 2020). Part of that strategic confrontation plays out through conflicts over the global reach of Chinese state-owned or state-supported firms that in turn make China’s state-capitalist

82  Handbook on the politics of international development development model an integral part of these competitive dynamics (see Chapter 3 by Gabusi in this volume). 3.3

Economic Nationalist Variants of Open and Developmental Regionalism

Although undergirded by liberal economic ideas, open regionalism became repurposed in various parts of the world to serve what could be deemed nationalist goals. One of those goals would be to “redirect beneficial global capital to the region … through the carrot of the single regional market” while a second would be to create the wider regional space that would enable domestic firms to emerge as regional and eventually global multinationals (Nesadurai, 2003, p. 39). By the late 1980s, FDI had become a crucial source of growth in much of the developing world and developing countries were engaged in a fierce competition for foreign investment (Mittelman, 2000, p. 13). They were, however, also concerned that emerging domestic firms in favoured strategic sectors would be unable to compete with global MNCs if investment was fully liberalized. These regionalist projects are motivated by the kinds of economic nationalist imperatives that had been central, though not identical, to the (East Asian) developmental state. Despite these competitive dynamics, states were nonetheless prepared to cooperate to pool their individual smaller markets in order to form a larger regional production space to which foreign investors would be attracted (Nesadurai, 2008, p. 149). By making an analytical distinction between a neoliberal and an FDI variant of open regionalism, Nesadurai (2003, pp. 41–42) shows how different instruments were adopted to achieve quite distinct purposes. The FDI variant, which does not “encompass the strong liberalisation and deregulatory agenda associated with neoliberal regionalist projects driven by efficiency concerns”, is purposefully interventionist in the global competition to attract FDI (Nesadurai, 2003, p. 40). ASEAN’s own economic regionalist project, the ASEAN Free Trade Area (AFTA) as well as many others worldwide such as the reconstituted Mercosur fall within this category of developmental projects that utilize a limited rather than extensive set of neoliberal policy instruments to strategically create the spatial conditions necessary to support FDI-led regional production networks. The second economic nationalist variant of regionalism outwardly resembles the first wave of ISI-led regionalism but is best regarded as a variant of open regionalism in view of its mix of liberal and protectionist policy instruments and the end goals to which they are directed. Strategic trade theory from the international economics discipline and the East Asian developmental state model provide theoretical support for this variant of ‘developmental regionalism’ in which a combination of liberal and protectionist instruments create the conditions through which to build up the capacity of domestic firms to become internationally competitive (Nesadurai, 2003, pp. 41–42). According them temporary and selective protection or privileges in an expanded regional market enables domestic firms to reap the economic gains from scale economies and learning-by-doing.2 This model of developmental regionalism explains regionalist schemes like AFTA that were both open and incorporated what looked to 2 Paul Krugman (1986) shows that import protection can theoretically generate scale and learning economies for firms and lead to export promotion. In developmental states, state intervention in markets is not always about protecting inefficient firms but at picking and supporting export winners (see Stubbs, 2012).

The politics of developmental regionalism  83 be protectionist elements in other component programmes like investment liberalization that temporarily privileged domestic firms over foreign investors. Even if they did not adopt the same policy tools as ASEAN states did, the nationalist orientation of developmental regionalism as a mechanism to attract foreign MNCs and to advance the regional expansion of domestic firms is evident in most regionalism schemes elsewhere. In addition to Mercosur, both the Southern African Development Community (SADC) and the Economic Community of West African States (ECOWAS) have prioritized regionalism to both attract foreign MNCs and enable local African firms and business groups to expand across these respective regional markets (Taylor, 2002, p. 191; Qobo and Motsamai, 2014, p. 355; Iheduru, 2014, p. 139). In effect, these regionalist schemes are focused on the developmental task of improving the global market position of the corporations operating within those economies, using a pragmatic mix of both liberal and protectionist instruments, much like the East Asian developmental states. 3.4

Public Goods Regionalism and the Connectivity Imperative

A fourth variant of regionalism, also prominent from the 1990s focuses on the provision of various public goods to build the capacity of countries, sectors and firms to take up the opportunities created by regional liberalization policies. Because of its functional focus, it is also the most fluid form of regionalism in that its defined regional ‘space’ ranges from multilateral forms of regionalism made up of participating states to sub-regional development zones made up of sub-national spaces, to hub-and-spoke types of bilateral relationships. Referring to these as ‘public goods regionalism’ draws attention to its primary underlying logic of overcoming developmental asymmetries within regions by supplying relevant public goods that markets are unable to adequately provide. Since the 2000s, a connectivity dimension has been appended to these projects, especially when roads, rails and ports or regional energy grids are envisaged as part of the spatial conditions needed to support industrial and other economic agglomerations. In this regard, while the state provision of public goods to correct market failures is part of liberal economic theorizing, it is also consistent with the national development quest to build competitive advantage rather than accept a market allotted comparative advantage. Infrastructure and other forms of physical connectivity as well as integrated energy systems are common examples of regional public goods projects necessary for development. In Southeast Asia, ASEAN’s Initiative for ASEAN Integration (IAI) in 2000 and ASEAN’s Connectivity Master Plans 2010 and 2025 are aimed at closing development gaps within ASEAN, catalysing new growth zones and development corridors within the region as well as to connect ASEAN externally to sites and regions beyond ASEAN’s outer territorial borders, particularly into southern China. In this regard, the regional development bank, the Asian Development Bank, remains a strong proponent of regional public goods provision, engaged in infrastructure connectivity projects, regional capital market development, and sub-regional development projects in service of integrating regions across Asia, particularly East Asia (Dent, 2008). Similar instances of public goods regionalism supported by regional development banks are found in Latin America, with projects such as the Initiative for the Integration of the Regional Infrastructure of South America (IIRSA) (Bruszt and Palestini, 2016, p. 379). The United Nations Conference on Trade and Development (UNCTAD) incorporates a strong public goods element in its three-part definition of ‘developmental regionalism’ that it

84  Handbook on the politics of international development advocates for African states to drive regional integration and enhance the competitiveness of African economies (United Nations, 2013). Sub-regional forms of developmental regionalism are a special configuration of public goods regionalism with a connectivity dimension, bringing together contiguous sub-national spaces where cooperation on cross-border connectivity is aimed at reaping development and security gains from building closer economic and people-to-people links in these zones. East Asia boasts a number of these sub-regional development zones emphasizing regional connectivity as a key agenda, notably the Greater Mekong Sub-region (GMS) cooperation (between Cambodia, China, Laos, Myanmar, Thailand and Vietnam) and various other growth triangles linking sub-regional spaces between the ASEAN states (Dent, 2008). In these zones, transport and infrastructure connectivity is combined with other development projects to create the necessary conditions to support and upgrade production processes. This combination is regarded as vital for the creation of genuine development zones and corridors able to catalyse industrial development in its environs. The Maputo Corridor in southern Africa is an exemplar of this model of sub-regional development corridors because its infrastructure development and connectivity have been explicitly linked to specific regional industrial development programmes, including private sector capacity building (United Nations, 2013). With an agenda that is clearly functional, public goods regionalism can appear to be technocratic, aimed at delivering goods that may be collectively enjoyed and, therefore, regarded as distributively neutral. In reality, this type of developmental regionalism is as political as, or possibly even more so than, the other types discussed in this chapter, particularly in the case of infrastructure provision that requires considerable funding. In such situations, developmental questions become intimately tied up with political questions of who funds what public good involving what type of conditionalities and trade-offs (Kuik, 2020). When funders are powerful countries or emerging powers, recipient countries can become entwined with the geopolitical agendas of their funding partners. Rüland’s (2019) analysis of a variety of public goods development projects in Asia, although not all of them are instances of regionalism, illustrate the conflicts and adverse consequences associated with these mixed motives. In Africa, the contested nature of donor-focused partnerships was very much in evidence with the design of the New Partnership for African Development (NEPAD) launched by the African Union in 2001. Incorporating a broad public goods agenda that combined transport connectivity, energy security, state capacity building and market development with good governance and democratization, African leaders sought, through NEPAD, a new global partnership, or more to the point, a bargain between African states and overseas donors principally from the advanced industrial countries. In exchange for more aid, African countries would commit to economic and political reform (Taylor, 2006). But NEPAD’s political bargain with potential Western donors was criticized within the region for not taking sufficient stock of the failures of ‘Western development models’ in Africa, for subscribing yet again to a liberal modernization paradigm in its quest for a new global partnership, and for failing to advance truly authentic models of development relevant to the African experience and context (Amuwo, 2002, p. 65). Critical African voices have cautioned against blindly adopting Western good governance reforms towards democracy, human rights, peace and development if these goals are not sufficiently embedded in local perspectives and social realities (Maloka, 1997, p. 41). While NEPAD sought to frame its regional development agenda in terms that would resonate with the liberal political ideals of potential advanced country donors, public goods regionalism in East Asia reinforces the East Asian emphasis on multiple paths to development, and thus

The politics of developmental regionalism  85 of “multiple modernities” (Lee, 2020, p. 459). China’s growing leadership in various forms of public goods regionalism is premised on such a philosophy and enacted through Beijing’s emphasis on the principle of non-interference in the internal affairs of its partner countries (see Chapter 7 by Lin in this volume). To be sure, a good part of this commitment is to address disquiet over China’s growing dominance in such regionalist schemes. Nonetheless, Beijing’s disavowal of conditionalities and adoption of ‘non-interference’ in its various bilateral and regional engagements reflects its historical emphasis on pluralism in economic development pathways. But the embrace of pluralism is not without political intent and consequences. The case of GMS development cooperation illustrates these dynamics. From a once largely diplomatic initiative, the GMS became vital as a geo-economic project for China, aiding the regional expansion of Chinese state capital as one way to address issues of investment overcapacity within China. Making the ‘non-interference’ norm central to GMS practice is said to depoliticize the use of Chinese investors and state firms to finance various infrastructure and connectivity projects (Tubilewicz and Jayasuriya, 2015, p. 188). Non-interference is a fairly standard multilateral norm, one that is also central to ASEAN regional processes and with strong resonance in developing countries reluctant to engage in intrusive cooperation ventures that impose unwelcome political conditionalities. The explicit or implicit incorporation of the non-interference norm into the GMS, and in China’s expanding Belt and Road Initiative (BRI) may speak to these concerns, facilitating the external expansion of Chinese state capital (Chacko and Jayasuriya, 2019, pp. 96–97) (see Chapter 29 by Cunha Leite et al. in this volume). State capital plays a significant role in the BRI’s focus on “connectivity cooperation” through which “loans, investments, technical assistance and capacity enhancement” from China support the development of physical and other forms of infrastructure in Africa, Asia and Europe (Kuik, 2020, p. 76). However, translating that economic presence into China’s regional political influence is anticipated to be more difficult in some parts of the world, like Southeast Asia, than in others (Kuik, 2020).

4.

DEVELOPMENTAL REGIONALISM AND ITS CONTESTATION IN PERSPECTIVE

Three key themes emerge from this chapter’s survey of developmental regionalism. First, the four waves or varieties of developmental regionalism discussed above reveal how state actors exercised agency through regional action in relation, or as a reaction, to prevailing international economic orders. All four forms of developmental regionalism work to insert the region and its participating states into the world economy but the terms on which that engagement takes place are linked to the preferred development model and practices of participating states, in turn shaping the policy and regulatory tools used in regionalism. Even the first wave of what is commonly thought of as ‘closed’ regionalism underpinned by structuralist ideas of (under) development did not seek complete delinking from the world economy but instead, sought to reform the centre–periphery structure of the international economic system through regional industrial development and international negotiations. The conformity of open regionalism with the neoliberal ideas of the post-Cold War international economic order is more evident. Yet, even here, open regionalism has been modified into distinct variants that, though rooted in engagement with the world economy, nonetheless seek to define the terms of that engagement in ways that resonate with domestic development

86  Handbook on the politics of international development imperatives. Although resisting the strict version of neoliberal models, these variants, nevertheless, are broadly liberal in their orientation to economic openness, strengthening markets and competitiveness. Yet, these regionalist projects accept the need for state direction of the economy while a nationalist preoccupation with achieving autonomy and prosperity amidst global market competition also directs that intervention externally, using regionalism as a collective tool in concert with other states to redirect beneficial global capital flows to the region and to nurture domestic firms to become regionally and globally competitive. A second, and related theme is the way in which developmental regionalism leads to the creation of distinct regional orders. In constructing alternative paths to development, the architects of developmental regionalism challenge prevailing paradigms of development using regionalism in order to accomplish that goal. As noted in this chapter, many regional projects have challenged global hegemony or hegemonic tendencies centred around neoliberal conceptions of development. Latin American developmental regionalism informed by structuralist ideas constituted a distinct Latin American regional order in contradistinction to the prevailing liberal international economic order. ASEAN’s open and developmental regionalism challenge key elements of the neoliberal orthodoxy and are aligned to an East Asian developmental state order while retaining a strong orientation towards economic openness. Regionalism in Africa likewise is strategically positioned to harness the world economy to serve domestic and regional development priorities. Even the public goods regionalism in East Asia endorses the principle of multiple development pathways, notwithstanding the political logics underlying this commitment to pluralism in development. The third theme relates to the different degrees of contestation associated with developmental regionalism. While most such projects were designed to resist, to varying degrees, the hegemonic structures and processes of the (neo)liberal international economic order, that challenge has been far more measured since the 1990s. Yet, as described above, regional tensions with other state actors advancing different conceptions of development and regional order continue. This was evident in Latin America and East Asia/Asia Pacific where overlapping and competing regional projects emerged because participating states subscribed to quite different models of development and/or were at very different levels of development. Although regionalist projects have often been reinforced by business actors and their regionalization activities, civil society actors have, at times, supported state-led regionalism and at other times they have challenged state projects of developmental regionalism. In some cases, alternative agendas to state-led developmental regionalism have been proposed. However, alternative regionalisms incorporating human-centred and good governance understandings of development have not had much success even if state actors have paid increased attention to such issues within existing projects of developmental regionalism. In Southeast Asia following the 1997 Asian financial crisis, regionalism formally incorporated a social development agenda through the ASEAN Community project adopted in 2003 that boasts three pillars: a political and security community, an economic community and a socio-cultural community. But ASEAN’s development priority has always been focused on its economic community pillar in which trade liberalization, regional integration and the expansion of production and investment are central while relegating social inclusion to the socio-cultural pillar. Regional civil society has contested this approach, articulating an alternative regionalism that centres social development and inclusion, human security and rights-based community building within the economic pillar but state elites, always cautious of civil society advocacy, have developed mechanisms to deflect such calls (Nesadurai, 2012).

The politics of developmental regionalism  87 Likewise in southern Africa, civil society calls for alternatives to SADC that focus on social welfare and the trade–justice nexus have seen limited success (Godsater, 2014). For a short period, it appeared that once again Latin America would ‘do development differently’ with the distinct shift towards a developmental regionalism that emphasized a strong social development agenda when left-wing political parties came into power across most of the continent beginning in 1998 until the mid-2010s. This fundamental shift in domestic politics saw two new regionalist projects that articulated a strong social inclusion and welfare agenda – the Bolivarian Alliance for the Americas (ALBA) created in 2004 and the Union of South American Nations (UNASUR) created in 2007 (Bilotta, 2018). Although this turn to alternative forms of developmental regionalism in Latin America has been described as post-hegemonic or post-liberal as they seemed to signal the end of the neoliberal era (Deciancio, 2016, p. 114), their future remains uncertain given the return of right-wing governments in key states from 2016.

5. CONCLUSION From the preceding analysis, it would appear that despite the, at times, contested nature of developmental regionalism, it remains broadly speaking within the conformist to reformist spectrum of political action. Even variants of developmental regionalism that emphasize a key role for state intervention do so without undermining the liberal order’s emphasis on private capitalism. Attempts by opposition political groups, scholars and civil society from within the region to advance alternative regionalisms that better integrate social, environmental, justice and rights issues have been limited, often ignored or actively curtailed by state actors. These calls for alternative regionalisms in different parts of the world raise important questions about why developmental regionalism has not always delivered on these concerns. But this is a question that is beyond the scope of this chapter. The main contention of this chapter is that developmental regionalism as it has been constructed so far reflects, is reinforced by, and sustains the capitalist and nationalist structures of international society as well as its commitment to multilateralism. It is, however, public goods regionalism that is distinct. Although this category of developmental regionalism does not undermine the capitalist structures of international society, the involvement of significant state capital supporting public goods projects reinforces the resurgence of state capitalism in world politics and challenges the liberal international order’s emphasis on private market actors. Moreover, the direct involvement of emerging powers using state capital as investors renders this type of regionalism more open to the geopolitical agendas of, and competition between, different donor and investor countries for influence and leadership in different parts of the world.

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88  Handbook on the politics of international development Bilotta, Nicola (2018). The legacy of post-neoliberal integration in South America: The cases of ALBA and UNASUR. IAI Papers, 18 (20 December). Birdsall, Nancy and Francis Fukuyama (2011). The Post-Washington Consensus: Development after the crisis. Foreign Affairs, 90(2), 45–53. Bisley, Nick (2012). APEC: Asia-Pacific economic cooperation. In Mark Beeson and Richard Stubbs (eds.), Routledge Handbook of Asian Regionalism. London and New York: Routledge, 350–363. Bremmer, Ian (2009). State capitalism comes of age: The end of the free market? Foreign Affairs, 88(3), 40–55. Bruszt, Laszlo and Stefano Palestini (2016). Regional development governance. In Tanja Borzel and Thomas Risse (eds.), The Oxford Handbook of Comparative Regionalism. Oxford: Oxford University Press, 374–404. Chacko, Priya and Kanishka Jayasuriya (2019). A capitalising foreign policy: Regulatory geographies and transnationalised state projects. European Journal of International Relations, 24(1), 82–105. Deciancio, Melisa (2016). International relations from the South: A regional research agenda for global IR. International Studies Review, 18, 106–119. Dent, Christopher (2008). The Asian Development Bank and developmental regionalism in East Asia. Third World Quarterly, 29(4), 767–786. Godsater, Andreas (2014). Regionalization “from below” in Southern Africa. In Lorenzo Fioramonti (ed.), Civil Society and World Regions: How Citizens Are Reshaping Regional Governance in Times of Crisis. Lanham, MD: Lexington Books, 123–136. He, Baogang (2004). East Asian ideas of regionalism: A normative critique. Australian Journal of International Affairs, 58, 105–125. Iheduru, Okechukwu C. (2014). Civil society and regional integration in West Africa. In Lorenzo Fioramonti (ed.), Civil Society and World Regions: How Citizens Are Reshaping Regional Governance in Times of Crisis. Lanham, MD: Lexington Books, 137–160. Krugman, Paul (1986). Introduction: New thinking about trade policy. In Paul Krugman (ed.), Strategic Trade Policy and the New International Economics. Cambridge, MA: MIT Press, 1–22. Kuik, Cheng-Chwee (2020). Connectivity gaps: The bridging links and missed links of China’s BRI in Southeast Asia. In Maria A. Carrai, Jean-Christophe Defraigne, and Jan Wouters (eds.), The Belt and Road Initiative and Global Governance. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, pp. 76–95. Lee, Yong Wook (2020). Performing civilisational narratives in East Asia: Asian values, multiple modernities and the politics of economic development. Review of International Studies, 46(4), 456–476. Mace, Gordon (1988). Regional integration in Latin America: A long and winding road. International Journal, 43(3), 404–427. Maloka, Eddy (1997). Ideology and the left: African renaissance – reactionary? The African Communist, 147(3), 37–43. McMichael, Phillip (1996). Globalisation: Myth and realities. Rural Sociology, 61(1), 25–55. McMichael, Phillip (2000). Globalisation: Trend or project? In Ronen Palan (ed.), Global Political Economy: Contemporary Theories. London and New York: Routledge, 100–113. Mittelman, James (2000). The Globalization Syndrome: Transformation and Resistance. Princeton, NJ: Princeton University Press. Nesadurai, Helen E. S. (2003). Globalisation, Domestic Politics and Regionalism: The ASEAN Free Trade Area. London and New York: Routledge. Nesadurai, Helen E. S. (2008). Economic nationalism and the limits of globalization. In Terence Chong (ed.), Globalization and its Counter-forces in Southeast Asia. Singapore: Institute of Southeast Asian Studies (ISEAS), 134–168. Nesadurai, Helen E. S. (2012). The ASEAN People’s Forum (APF) as authentic social forum: Regional civil society networking for an alternative regionalism. In Mark Beeson and Richard Stubbs (eds.), Routledge Handbook of Asian Regionalism. London and New York: Routledge, 166–176. Nustad, Knut G. (2004). The development discourse in the multilateral system. In Morten Boas and Desmond McNeill (eds.), Global Institutions and Development: Framing the World? London and New York: Routledge, 13–23.

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PART II DEVELOPMENT AND CONTESTED GLOBALIZATION

6. The global governance of development Axel Marx and Kari Otteburn

1. INTRODUCTION The idea that the economic advancement of poorer countries and the promotion of living standards for the citizens of these countries ought to be pursued at a global level came about gradually. Today, however, it is more or less undisputed, and development governance is now conducted by a wide variety of actors and institutions, including financing institutions, international organizations (IOs), non-governmental organizations (NGOs) and other private initiatives, public–private partnerships and unilateral state-sponsored aid. Since the establishment of the first international development institutions (see Chapter 26 by Rivarola Puntigliano and Ocampo in this volume) a great deal has changed in the global governance of development. Though, for decades, development governance was driven and funded by the United Nations and so-called ‘Bretton Woods institutions’ – the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank) – alongside a few long-standing regional development banks (see Chapter 28 by Palestini in this volume), these institutions now share an increasingly crowded field with other institutions and actors. New investment banks such as the Chinese-led Asian Infrastructure Investment Bank (AIIB) have recently become major development actors throughout the globe. Alongside these developments, the drivers, conditions and objectives for development governance have evolved and diversified over time, responding to geopolitical and economic changes and as new actors enter the governance field. The mainstream approach to development pursued by advanced economies and led by the World Bank focused originally on economic growth and gradually evolved to prioritize the eradication of poverty (see Chapter 23 by Mendes Pereira in this volume). As the downsides of unchecked economic growth – like environmental degradation or exploitative social conditions – became apparent, the emphasis shifted to sustainable and socially inclusive development, most recently articulated as the Sustainable Development Goals (SDGs) set by the United Nation’s 2030 Agenda for Sustainable Development (see Chapter 15 by Newell and Chapter 20 by Currie-Alder in this volume). However, as the balance of global political and economic power has shifted, the ‘traditional’ leaders in development governance are joined by new leaders, especially China, that take a different approach to development – one that appears to prioritize geopolitical and economic aims over sustainable and social outcomes. Additionally, a groundswell of regional, national and private initiatives pursue a great diversity of individual objectives (see Chapter 12 by Irrera and Chapter 30 by Seyedsayamdost in this volume). The result is that what was once a relatively unified and hierarchical governance regime is becoming increasingly fragmented global governance regime. This chapter will begin by introducing the concept of global governance and identifying two key components to understand the evolution of global governance, namely the proliferation 91

92  Handbook on the politics of international development in type of actors and the presence of soft law types of commitments. Next we identify and discuss three main developments in the global governance of development. First, there is the expansion of the development agenda to a broad global agenda on sustainable development. Second, we discuss the emergence of new actors which are relevant for development with a specific focus on informal intergovernmental initiatives and voluntary sustainability standards. Third, we discuss the changing nature of the global development regime from one which was dominated by major international organizations to one which sees the emergence of new development banks.

2.

WHAT IS GLOBAL GOVERNANCE?

There is no canonized definition of global governance. James Rosenau (1995), one of the founding fathers of the concept of governance, in the inaugural issue of the journal Global Governance, argued that the management of international affairs occurs not only through formal international institutions and organizations but also through many other initiatives and ‘channels’ in the form of goals and objectives framed, directives issued, and policies pursued. According to Rosenau “[g]lobal governance is conceived to include systems of rule at all levels of human activity—from the family to the international organization—in which the pursuit of goals through the exercise of control has transnational repercussions” (1995, p. 13). Rosenau identifies different mechanisms which he captures under the term global governance and which include inter alia private transnational regulatory mechanisms (such as initiatives developed by private volunteer and profit-making organizations, and social movements) and public–private initiatives. The importance of Rosenau’s contribution lies in the recognition that international affairs crosses governmental boundaries and that international cooperation also occurs in other fora and is pursued by non-state actors. This approach was further explored by Thomas Weiss (2000). For Weiss, global governance is the sum of laws, rules, norms and institutions that define trans-border relations between states, intergovernmental organizations, NGOs, market actors and citizens. In this vein, global governance is “the complex of formal and informal institutions, mechanisms, relationships, and processes between and among States, markets, citizens and organizations, both inter- and non-governmental, through which collective interests on the global plane are articulated, rights and obligations are established, and differences are mediated” (Thakur and Van Langenhove, 2006, p. 233). Besides the emergence of new actors in the international rule-making arena, global governance scholars have also stressed the emergence of new instruments to govern transnationally. An important distinction which emerged in this context is the distinction between ‘hard’ and ‘soft’ law in international governance (Abbott and Snidal, 2000), in essence referring to mandatory versus voluntary rules. Abbott et al. (2000), in addition, argue that this distinction between hard and soft law is not static but dynamic. There is no rigid distinction between soft and hard law and soft law can ‘legalize’ and become hard law. This discussion highlights a few defining issues. Global governance focuses on the achievement of goals by different types of actors which operate on a transnational scale. Traditionally global governance research focuses on two levels of analysis. One focuses on different types of actors in global governance and the other focuses on how these actors interact and engage with one another in a so-called global governance regime (Abbott, 2012a) or global

The global governance of development  93 governance complex (Eilstrup-Sangiovanni and Westerwinter, 2021). We discuss some major developments in each of these components: goals, actors and regime.

3.

DEVELOPMENT 1: AN EXPANDING GLOBAL DEVELOPMENT AGENDA

Traditionally, development has been, and continues to be, very much seen in a strict economic sense – as rising per capita income. In the last decades the agenda has expanded to include the concept of sustainable development. The first explicit common reference to sustainable development was in the 1987 Report of the United Nations’ World Commission on Environment and Development, known as the “Brundtland Report”. In this report, sustainable development was defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations, 1987). It emphasized the intergenerational aspect and the fact that the natural resources of our planet are finite. Hence development should proceed in such a way in which these natural resources are not depleted or rendered unusable for future generations. This remained the dominant understanding of sustainable development until the Millennium Development Goals. In 2000, 189 countries signed the Millennium Development Goals (MDGs) following the Millennium Declaration. These goals were the first international attempt to set ambitious goals and targets on poverty to a goal-based system with a specific timeframe, from 2000 to 2015. The MDGs comprised eight goals and were primarily concerned with eradicating extreme poverty and introduced the first set of measurable global targets to do this. The other targets also included aspects of education, gender equality, infant mortality, maternal health, HIV/AIDS, the sustainability of the environment, and global partnerships for development. Essentially, these goals aimed to improve the quality of life for those of the poorest and least developed regions of the world. The MDGs expanded the development agenda further. It was clear that a new approach also including intragenerational equity concerns could be more far-reaching and effective at different spatial scales, from the global to the local. This new direction was necessary to expand the notion of sustainable development to make more explicit the interrelationship between social, economic, environmental and political factors. This renewed definition is crucial to the idea of sustainable development, as it no longer only focuses on resources and intergenerational responsibility, but also on core socio-political concerns, including issues of needs, development, democracy, participation, justice, and equity across and within different generations. The various sustainability dimensions, comprising social inclusion, economy, environment and governance, became the foundations for the 2015 Sustainable Development Goals. In September 2015, the General Assembly adopted the 2030 Agenda for Sustainable Development that includes 17 Sustainable Development Goals with 169 targets. The SDGs, or “Agenda 2030”1 as it is also often called, represents an ambitious effort by the global community to ensure that ‘no one is left behind’ as it emphasizes a holistic approach to achieving sustainable development for all. The 17 goals focus on: no poverty; zero hunger; good health and well-being; quality education; gender equality; clean water and sanitation; affordable 1 Transforming our World: The 2030 Agenda for Sustainable Development (https://​su​stainabled​ evelopment​.un​.org/​post2015/​t​ransformin​gourworld/​publication).

94  Handbook on the politics of international development and clean energy; decent work and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate action; life below water; life on land; peace, justice and strong institutions; partnerships for the goals. While the earlier MDGs set for 2015 prioritized the reduction of poverty together with progress primarily applied to low and middle-income countries, the 2030 Agenda is universal, expanding to countries of all income levels. The SDGs constitute a non-binding framework which uses aspirational language to set its goals and specific targets. Encouraging such a broad and ambitious agenda would be virtually impossible to turn into legally binding conventions or instruments. However, it is clear that the SDGs refer to several international agreements and conventions and, in this way, try to further implement existing international law. For example, several International Labour Organization (ILO) conventions, as laid out in the Decent Work Agenda by the ILO, are included in the remit of SDG 8 on decent work and economic growth. These conventions include the prohibition of child labour and forced labour. Therefore, while the SDGs cannot be described as binding or as legal tools, they do reinforce multilateral agreements. Moreover, sometimes the SDGs feed into new international agreements. For example, goal 13 on climate change explicitly encourages the pledge to mobilize 100 billion USD by 2020 for climate financing. This pledge was eventually enshrined in the Paris Agreement of 2015. By emphasizing this crucial aspect of tackling climate change through financing, the SDGs make a vital link with both the spirit and contents of this subsequent agreement. This expansion of the global development agenda results in the fact that more and more actors become involved in the development regime.

4.

DEVELOPMENT 2: THE INTEGRATION OF NEW TYPES OF GLOBAL GOVERNANCE ACTORS IN THE DEVELOPMENT REGIME

Development cooperation has always been characterized by the many public and private actors involved in developing and implementing programmes and projects. In a sense, the development regime consists of a number of well-established international governmental and non-governmental organizations. Formal international intergovernmental organizations are formed by intergovernmental treaty or multilateral agreement voluntarily signed by sovereign states in order to collectively solve problems or meet needs that are not limited to a specific state and are, rather, regional or global in nature. The largest and most well-known of the IOs make up the foundational pillars of the multilateral development system, including, inter alia, the UN, the IMF, and the World Bank. Within the realm of development there are also regional development banks which play an important role in development policies (see Chapter 28 by Palestini in this volume). Besides IOs, international NGOs are also well established and have a long-standing role as service providers and project implementers (see Chapter 12 by Irrera in this volume). Some NGOs in development cooperation such as Oxfam, Action Aid and Médecins Sans Frontières operate in multiple countries and are multinational organizations in their own right (Weiss, 2013). For a long time many different types of NGOs have been involved in development including BINGOs (Business-friendly international NGOs), DONGOs (Donor-organized NGOs), GONGOs (government-organized non-governmental organizations), MANGOs (Market advocacy NGOs), NGDOs (Non-governmental develop-

The global governance of development  95 ment organizations), PVDOs (Private voluntary development organizations), QUANGOs (Quasi-autonomous NGOs) and TANGOs (Technical assistance NGOs). These NGOs mainly focus on implementation and service delivery. In recent years some new types of organizations are involved in development. We identify and discuss two: informal intergovernmental organizations and voluntary sustainability standards. 4.1

Informal Intergovernmental Organizations

Informal intergovernmental organizations (IGOs) such as the “G groups” are increasingly important. While these bodies may lack institutional structure, clear rules, enforcement mechanisms and formal (treaty-based) authority, they nevertheless have a number of advantages and a unique role to play in global governance. First, IGOs offer states a forum for dialogue and consensus-building that is less restrictive of state sovereignty. As such, a greater number of states may be willing to participate, which can be important for the provision of some public goods, particularly those for which decisions must be made by a great variety of actors unsuited to centralized and formal international decision-making (Wouters and Odermatt, 2014). Further, IGOs can be more flexible and nimble in responding to crises or abrupt changes (Vabulas and Snidal, 2013), in addition to being able to take on a wider variety of topics that might fall outside the mandate of a formal IO. While IGOs vary in terms of formality and function, Vabulas and Snidal (2013, p. 197) define IGOs as organizations with following attributes: “1. An explicitly shared expectation—rather than a formalized agreement—about purpose 2. With explicitly associated state “members” who 3. Participate in regular meetings but have no independent secretariat or other significant institutionalization such as a headquarters and/or permanent staff”. Roger (2020) takes a similar approach, defining IGOs as organizations that are (i) created by states, (ii) with “very limited institutional structures”, and that (iii) are constituted by an agreement that is non-binding and therefore does not impose legal obligations, such as a memorandum of understanding (see Roger, 2020, pp. 26–29). Though broadly in agreement with the basic criteria outlined by Vabulas and Snidal, Roger’s conceptualization differs from that of Vabulas and Snidal in how these criteria are elaborated in two ways. First, Vabulas and Snidal limit their definition to organizations for which states are the key players, represented at the “ministerial or executive level” (Vabulas and Snidal, 2013, p. 199), whereas Roger allows for the inclusion of all state-based actors, including those at lower-level departments or state-based actors outside the government (Roger, 2020, p. 28). Second, while Vabulas and Snidal’s conceptualization strictly excludes organizations that have any kind of secretariat, Roger argues that “this is more of a matter of degree” (Roger, 2020, p. 29) and therefore accepting that some IGOs may indeed have limited institutional structures. Of particular relevance for development governance are the Group of Seven (G7) and the Group of Twenty (G20). Responding to the financial crisis that erupted in the early 1970s, six of the world’s largest economies – the United States, United Kingdom, France, Germany, Italy, and Japan – founded the Group of Six in order to coordinate policy in response to the economic crisis of the 1970s, holding its first summit in France in 1973 (Prodi, 2016). Canada joined in 1977, making it the G7, and then Russia in 1994, forming the Group of Eight (G8), though the group once again became the G7 in 2014 when Russia’s membership was suspended in response to its annexation of Crimea. Similarly, the G20 was also formed in response to an economic crisis (Cammack, 2012). In an attempt to coordinate a response to the so-called ‘Asian Financial Crisis’, the G20 was

96  Handbook on the politics of international development established in 1999 to bring together finance ministers and central bank governors from all of the G8 countries plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Republic of Korea, Saudi Arabia, South Africa, Turkey, and the EU. Following the 2008 financial crisis, the G20 was elevated to include the heads of state of its member states. Moreover, due to what was seen as a failure of the IMF to coordinate policy in the 1990s, the G20 was seen as the only viable institution through which the global coordination of macroeconomic policy could be achieved (Bird, 2017). As a result, at the 2009 G20 Pittsburgh Summit, the leaders declared the G20 to be the “premier forum for our international economic cooperation” (G20, 2009, 3), effectively replacing the G8 as the most authoritative platform for international economic governance. Nevertheless, the G7 continues to meet and has retained relevance for Western allies to coordinate on other governmental issues and to seek a common Western position (Prodi, 2016). As IGOs, both the G7 and the G20 have limited institutionalization and no permanent secretariat, but they are nevertheless characterized by a high degree of continuity and exercise authority in a wide range of governance areas. Summits are held by both groups annually, coordinated by a rotating president. Although the decisions reached by the groups are not legally enforceable, when a consensus is reached by the group, it carries considerable normative authority and the decisions reached by the groups are often legally articulated in decisions made by relevant international organizations. While both the G7 and G20 were originally formed to deal with matters of economic governance – and still do – both groups’ agendas have expanded considerably (Prodi, 2016) and now include a variety of governance issues including inter alia trade, environmental issues, development, security and climate change. Thus, the groups, and especially the G20 since 2009, have been widely considered to have taken on the role of ‘global steering committees’ within several areas of global governance (Bradford and Lim, 2011; Bradford, 2016; Cammack, 2012). As early as the Pittsburgh Summit in 2009, the newly elevated G20 put development and poverty reduction on its agenda by including these issues as major goals for its Framework for Strong, Sustainable and Balanced Growth (Cammack, 2012). This commitment to development and poverty reduction was further articulated in the Seoul Action Plan, the Seoul Development Consensus for Shared Growth (Seoul Development Consensus) and the Multi-Year Action Plan on Development adopted at the Seoul Summit in 2010 (Cammack, 2012). By bringing together several emerging economies together with advanced economies to establish a common agenda, the Seoul Development Consensus seeks to leverage the G20’s authority and influence to coordinate policy through many international organizations relevant to development governance, including the World Bank, the World Trade Organization (WTO), the UN Conference on Trade and Development (UNCTAD), and the UN Development Progamme (UNDP), among others (G20, 2010). Notably, the Seoul Development Consensus integrates the UN MDGs into the G20’s development agenda. In 2016 at the Hangzhou Summit, following the adoption of two major development agendas – the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda of the Third International Conference on Financing for Development – by the UN General Assembly in 2015, the G20 adopted the G20 Action Plan on the 2030 Agenda for Sustainable Development to integrate these instruments (G20, 2016). Many scholars see the G20 as a critical player in development governance due to its membership comprising the world’s leading developed and emerging economies, its involvement of key world leaders, and its influence in other international fora. As Bradford argues, “Neither

The global governance of development  97 the climate change nor the social, economic and environmental sustainability objectives in the UN 2030 Agenda can be achieved unless the G20 countries are involved in the domestic implementation of SDGs and the Paris Climate Agreement” (2016, p. 339). Nevertheless, the G20 faces considerable challenges which ultimately impact its ability to meet its governance goals. First, scholars and others have long criticized the legitimacy of the G7 and G20 (Slaughter, 2013; Berger et al., 2019), which face serious challenges associated with the “trade-off between achieving legitimacy as a representative body and achieving legitimacy as an effective body” (Bradford and Lim, 2011, p. 3). With regard to the former, the groups are seen as unrepresentative due to the exclusivity of membership. Though the membership of the G20 is much more inclusive than that of the G7, both groups exclude a large majority of the world’s countries despite their influence on global policy that affects all the countries of the world – a fact which is resented by many of those who are not represented in the ‘exclusive club’ (Hilbrich and Schwab, 2018; Bradford and Lim, 2011; Slaughter, 2013). Despite such exclusivity of membership, however, the groups nevertheless face difficulties in reaching decisions and achieving a common position on many important governance challenges, leading to the groups setting increasingly vague agendas (Berger et al., 2019) and with negative impacts on the groups’ effectiveness. This is especially true for the G20 with its more diverse membership with heterogeneous interests, and this challenge has increased in recent years. Although the 2008 financial crisis had brought about a broad consensus among the G20 members with regard to the need to achieve sustainable economic growth and even some consensus on the requisite macroeconomic policy, this consensus was short-lived and the group has faced increasing difficulties in decision-making over the past decade (Bird, 2017). Despite the introduction of the Mutual Assessment Process (MAP) in the G20’s 2009 Framework for Strong, Sustainable and Balanced Growth, some members, such as China, India, Indonesia and Turkey relatively quickly re-established high rates of economic growth, while others, such as several member states of the EU, struggled to stimulate economic growth in the years following the financial crisis, resulting in unequal levels of motivation to coordinate economic policy and differences of opinion as to the proper direction of economic policy. Indeed, subgroups, such as that comprised of Brazil, Russia, India, China and South Africa (BRICS), have taken positions that are different from those of other members of the G20 and have begun to pursue policy coordination amongst themselves, leading to further difficulties in achieving consensus at the G20 level (Bird, 2017). Tensions between individual members of the G20, such as between the US and China or the US and Mexico, have also exacerbated divisions within the G20 (Bird, 2017). Furthermore, while the G7 comprises more like-minded countries and therefore has generally faced fewer hurdles in achieving consensus, this too has changed in recent years, with tensions between members and some members’ apparent turn away from multilateralism (Berger et al., 2019). Moreover, the groups are seen as lacking accountability (Slaughter, 2013; Hilbrich and Schwab, 2018), which is hampered by a lack of transparency. In large part by design, the G7 and the G20 conduct much of their negotiations ‘behind closed doors’ to allow the leaders to engage in frank discussions and streamline the negotiation process. However, this has the unintended side effect of contributing to “skepticism about the aims and contents of the discussions” (Hilbrich and Schwab, 2018, pp. 14–15). The groups’ built-in accountability mechanisms are also seen as falling short. For example, the G20’s formal accountability process consists of reports compiled by working groups that assess implementation of the

98  Handbook on the politics of international development commitments they generated, often with input from or cooperation from the most relevant IOs for a given issue area (such as the WTO, Organisation for Economic Co-operation and Development and UNCTAD for trade and investment-related reporting). However, these reports vary considerably from working group to working group, there is no overall publicly available annual review, and past reports are not readily available to the public (Hilbrich and Schwab, 2018). Additionally, the reports on the G20’s development-related commitments, such as the “Development Working Group Comprehensive Accountability Report” and the “Development Working Group Annual Progress Report” are compiled by the Development Working Group alone (see Table 2 in Hilbrich and Schwab, 2018, p. 17). These reports thus rely on self-assessment and are therefore not impartial and may understate challenges and failures. 4.2

Voluntary Sustainability Standards

The expansion of the development agenda has resulted in the emergence of new private and public–private actors in development. Some of these actors use the rise of global value chains (Ponte, 2019) as mechanisms through which to pursue and engage with sustainable development. A first new relevant actor in this context are initiatives such as the Forest Stewardship Council, the Marine Stewardship Council, Fair Wear Foundation and more than 400 other certification schemes which contribute to several SDGs such as decent work and economic growth (SDG 8), life below water (SDG 14) and life on land (SDG 15) (UNFSS, 2013). They are currently better known as ‘Voluntary Sustainability Standards’ (VSS). The United Nations Forum on Sustainability Standards (UNFSS) defines VSS as “standards specifying requirements that producers, traders, manufacturers, retailers or service providers may be asked to meet, relating to a wide range of sustainability metrics, including respect for basic human rights, worker health and safety, the environmental impacts of production, community relations, land use planning and others” (UNFSS, 2013, p. 3). VSS develop sustainability principles, often based on existing national and international laws and operationalize these principles in specific standards and benchmarks. These benchmarks contain more specific criteria which are related to each of the broad principles. Each of these benchmarks is in turn further defined and operationalized into measurable indicators. The latter allows for conformity or compliance assessment. To assess conformity VSS apply a range of monitoring instruments such as audits and complaint mechanisms (Marx and Wouters, 2016). The rise and proliferation of these VSS has been spectacular. In recent years, however, they have also been confronted with some challenges. A first challenge has to do with legitimacy and credibility which emerged after claims that some VSS (or eco-labels) were a form of ‘greenwashing’, i.e. governance instruments with no impact. Marx (2013) shows, on the basis of an analysis of 426 VSS, that many VSS differ in how they are designed and that quite a number of them lack any credible enforcement architecture. So, in the population of VSS there are indeed some VSS which are pure greenwashing and which undermine the credibility of all similar initiatives as a governance instrument. This is confirmed by an analysis on a smaller sample by Fiorini et al. (2016) and Collins et al. (2017). A second related challenge has to do with proving the effectiveness of these initiatives. This has two dimensions. First, VSS need to create sufficient impact on the ground to be a genuine governance tool. There are quite a few studies analysing the impact of VSS and the degree to

The global governance of development  99 which they contribute to sustainable development.2 These studies show mixed results in terms of impact. Some show positive impacts and others show little or sometimes even negative impact. Results are often very context specific. However, one result, which is quite consistent, is that it is difficult for VSS to perform equally well on all dimensions of sustainability. Maybe it is also too much to expect standards to deliver on all dimensions of sustainability, even if that is the stated goal. Standards typically have a strong impact on some sustainable development indicators but less on others. For example in relation to labour rights protection, VSS can have a positive impact on some labour rights such as working hours, wage and safety requirements but less on others such as freedom of association. A second dimension related to effectiveness focuses on the degree to which standards are adopted. Some scholars focus on adoption by companies and other organizations, other scholars look at adoption on the level of countries. Concerning the latter, one can observe that in some countries only a few VSS are active while in others many more are active (Marx and Wouters, 2015). In relation to specific VSS, Marx and Cuypers (2010) and Marx and Wouters (2016) find a ‘stuck to the bottom’ problem for some least developed countries which are not involved in any way in VSS dynamics. This creates a challenge of exclusion and limited adoption of these transnational governance initiatives. In order to have a significant impact, the use of many of these governance systems should be scaled up. A third main challenge which emerges has to do with coordination and cooperation between the many existing initiatives. Due to the proliferation of many initiatives the policy or governance space is currently very crowded and there is only a limited degree of cooperation between many different initiatives. In the next section we will delve deeper into the issue of institutional complexity. In relation to private and public–private initiatives the lack of cooperation is very outspoken and creates different types of problems. Marx and Wouters (2016) aimed to capture the degree of cooperation between VSS by looking at the use of mutual recognition as a mechanism to coordinate different initiatives. They found that mutual recognition between VSS is very low. This creates two types of problems. First, it creates confusion for consumers who want to use these VSS as a means to make sustainable purchases. Second, for producers who need to comply with VSS requirements, it creates additional costs since they sometimes need to comply with multiple VSS. The lack of cooperation between systems is due to several factors such as different strategies and objectives, different procedures to assess conformity with VSS or plain competition.

5.

DEVELOPMENT 3: THE CHANGING NATURE OF THE DEVELOPMENT REGIME

A third development relates to how the development regime is evolving. Though for much of its history, development governance was carried out within the boundaries, norms and objectives set by a small and relatively unified group of actors, led by the World Bank, the global governance of development now includes a wide range of different institutions and approaches – from a handful of formal international organizations set up by national governments to hundreds, if not thousands, of voluntary standards set and implemented by private actors. 2 Many of the leading impact studies are brought together on the Evidensia website: https://​www​ .evidensia​.eco/​.

100  Handbook on the politics of international development None of these institutions works alone – each may build on, reference, compete with, antagonize or substitute one another, and in many cases, more than one of these interactions occur simultaneously. This dizzying array and diversity of approaches and institutions is uniquely interlinked within the development governance regime complex. Furthermore, in many cases, the objectives and rules set by one institution are carried out, directly or indirectly, through other institutions that function as intermediaries. Regime complexity results from the proliferation of actors and institutions involved in a regime and the (occasionally resulting) absence of central coordination of these actors. This decentralization often leads to disaggregated decision making (Raustiala and Victor, 2004), or fragmented or polycentric governance, which means that the “responsibilities for tasks such as adopting rules and funding public goods are shared among multiple organizations that have diverse memberships and operate at different scales” (Abbott, 2012a, p. 571). There has been significant scholarly discussion on the concept of the ‘regime complex’. Keohane and Victor (2011) and Abbott (2012a, 2012b) define the regime complex as a pool of nested, overlapping or parallel actors or institutions engaged in a variety of governance functions for a given global issue area with a limited hierarchical core. Though, as Alter and Meunier (2009) and Alter and Raustiala (2018) convincingly argue, there is no single international authority that can step into to resolve conflicts between different rules or decisions promulgated by different institutions making up a governance regime, one could argue that hierarchy, too, can exist in degrees, and that very often a governance regime complex will have one or more institutions with at least limited hierarchy over other institutions. Indeed, such hierarchy is more or less implied in the concept of ‘nested’ institutions (Aggarwal, 1998). The degree of complexity and nature of the regime complex matters – the regime architecture can have significant consequences for the overall governance capacity and effectiveness of the global governance regime. Depending on the structure and how the different actors, policies and institutions relate to one another, interactions between different institutions and rules can have effects that are positive, negative or neutral (Nilsson et al., 2012) and that can push and pull governance outcomes in different directions and towards different goals, ultimately affecting the legitimacy and effectiveness of the regime. Throughout the twentieth century, the development regime remained largely hierarchical and could well have been considered ‘nested’ for much of its history. The leading international organization for development cooperation is the World Bank, which comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The Bank’s purpose is to support economic development by financing primarily government projects through loans and grants to states. While the IBRD is self-sustaining and provides non-concessional loans to credit-worthy states (usually middle-income), the IDA provides low- and no-interest loans and grants to the world’s poorest states (75 states qualified for IDA assistance in 2018) and is financed by the Bank’s member states (World Bank, 2018, p. 85). Both institutions also contribute their considerable expertise to development projects, risk management, and reform efforts (Wouters and Odermatt, 2014) and extensively collect and disseminate data on a large variety of topics related to development. The first of the two, the IBRD, was set up in 1944 in the aftermath of the Second World War at the UN Monetary and Financial Conference in Bretton Woods, United States with the purpose to assist, inter alia, with post-war reconstruction and development and the restoration of economies as well as to promote private investment and the growth of international trade

The global governance of development  101 (see Chapter 23 by Mendes Pereira in this volume) (IBRD, 2012, Article I). The IDA followed in 1960, with the purpose of promoting economic development, increasing productivity and raising standards of living in underdeveloped states. Now with 189 member states, it is the world’s largest development bank: in 2015 the Bank made commitments totalling 60 billion USD (World Bank, 2019b). The Bank works closely with its counterpart Bretton Woods institutions, particularly the IMF, with which it cooperates on members economies’ reform and poverty reduction (see Wouters and Odermatt, 2014, p. 74). The World Bank has evolved to making the elimination of poverty a major priority, in addition to stepping in to manage and resolve macroeconomic crises when they arise. The Bank has played a major role in integrating a majority of states into the world economy (Woods, 2014) and contributes substantially to global economic governance. In doing so, the Bank has – for better or worse – gained influence over member states through conditionality (Wouters and Odermatt, 2014), or what the Bank calls “policy-based lending” (World Bank, 2005). As “an early convert to neo-liberalism” (Mahon, 2010, p. 174), since the 1980s the World Bank has generally required borrowers to adopt structural adjustment programmes that involve implementing fiscal austerity measures (including the roll-back or elimination of state-run social welfare programmes), maintaining low rates of inflation, deregulation and privatization of the market, and liberalization of trade and capital flows (Hart, 2001; Pieterse, 2012; Mahon, 2010). Thus, for much of its history, the Bank has been considered one of the primary institutions behind the promotion of neoliberal globalization and propagating the so-called ‘Washington Consensus’ (Hart, 2001; Pieterse, 2012; Mahon, 2010). The Bank has shifted away from financing infrastructure projects (from 70 per cent in 1950s and 1960s to 19 per cent in 1999) (Wang, 2017, p. 3) to focusing primarily on projects related to poverty reduction and good governance initiatives (Braithwaite, 2008, pp. 25–26). However, the dominant position of the World Bank in the development regime has recently been challenged by a number of developments. First, the Bank’s governance structure has been under scrutiny for favouring the interests of advanced Western economies by linking the number of a country’s votes to their capital contributions (Wang, 2017; Wouters and Odermatt, 2014; Ocampo, 2016). Additionally, some critics see the World Bank as an American tool of foreign policy (Mahon, 2010; Woods, 2010) – a critique that is not mollified by the fact the Bank’s president has always been an United States citizen, or the fact that the appointment of the World Bank’s president has been criticized for being “secretive, overly political partisan and illegitimate” (Woods, 2010, p. 52). In response, the World Bank has undertaken voting reforms to address the concerns of legitimacy and its perceived democratic deficit, but these reforms have been considered incomplete (Ocampo, 2016; Wouters and Odermatt, 2014) or deliberately misleading (Vestergaard and Wade, 2015), with the voting power of developing countries changing very little as a result. Still, the World Bank’s broad membership and quota-based voting system appears to be something of a middle ground between the exclusionary systems of the UN Security Council and the G7 and the G20 on one hand, and the more inclusive, one state-one vote and consensus-building models of the UN General Assembly on the other, which struggle to make decisions at all. In other words, the somewhat confusing quotas system at the World Bank still represents a compromise in the debate between legitimacy and effectiveness (Bradford and Lim, 2011; Ocampo, 2016). Second, in recent years, the World Bank has also faced new challenges by other development actors. For instance, the Bank has recently had greater competition for funding since the establishment of the UN Multi-Partner Trust Fund in 2004 allowed donors to contribute

102  Handbook on the politics of international development to the UN as a whole (Jenks, 2016, p. 161). Additionally, as the locus of economic power has become divided, new multilateral development banks – led by countries of the global East and South – have emerged or grown in prominence. The New Development Bank (NDB) based in Shanghai and the Asian Infrastructure Investment Bank based in Beijing are two that have inspired significant controversy and anxiety among Western commentators, with some policymakers expressing concern about the role these banks will play vis-à-vis the World Bank (see Wang, 2017). The emergence of the AIIB has been particularly noteworthy in recent years. Proposed and spearheaded by China, the AIIB officially commenced operations in January 2016 with 57 member countries and $100 billion in subscribed capital (AIIB, 2016). It progressed rapidly thereafter (Chin, 2019) and as of June 2020, the AIIB’s membership includes 102 countries (AIIB, 2020a), collectively accounting for more than 78 per cent of the world’s population and 63 per cent of the global GDP (AIIB, 2019). Moreover, since roughly half are from outside the region, the AIIB can be considered a global multilateral development bank like the World Bank (Chin, 2019). Indeed, despite its regional focus, the AIIB charter allows for up to 15 per cent of the bank’s lending to fund projects outside Asia, as long as the projects benefit Asia in some way (Lichtenstein, 2019). To achieve its “mission to improve social and economic outcomes in Asia” (AIIB, 2020a), the AIIB focuses on addressing an estimated $21 trillion infrastructure financing gap in the region by financing and facilitating infrastructure improvement through the provision of capital loans and technical services (AIIB, 2017). Three thematic priorities – sustainable infrastructure, cross-border connectivity and private capital mobilization – guide the AIIB’s portfolio and business activities (AIIB, 2017). As the largest shareholder in the AIIB contributing nearly 31 per cent of the bank’s total subscribed capital ($29.8 million), China has the largest voting share of over 26.6 per cent, followed by India with a 7.6 per cent voting share (AIIB, 2020b). Because major changes – such as adjusting the capital shares of members or increasing the capital base – require 75 per cent of total votes, China therefore has de facto veto power (Morgan, 2018). The rise of multilateral development banks like the AIIB coupled with the increasing economic power of emerging economies has implications for the ability of the World Bank through conditionality to effect governance changes in borrower countries: countries that formerly had no choice but to accept strict conditions may be less reliant on World Bank lending or can ‘shop around’ (Wang, 2017; Woods, 2010). As a result, the world of development banks is expanding and is developing into a multi-polar system instead of a system dominated by one major organization. Hence, global governance regime complexes are not static but constantly evolving. The development regime today is characterized by a great deal more complexity than when the leading IOs were established after the Second World War. Though the World Bank continues to hold its position at the top of the regime’s hierarchy, as a result of the proliferation of new institutions, the regime itself has changed and begun to flatten out. New regime leaders such as the AIIB have succeeded in claiming territory that was once the domain of the World Bank, resulting in a regime that is less hierarchical and institutions which do not keep neatly within old regime confines. The development regime complex has begun a process of ‘de-nesting’, and there are significant implications for global governance. As the regime becomes de-nested, authority becomes less hierarchically concentrated in a single (set of) institution(s) and becomes more evenly distributed horizontally. The resulting fragmentation further opens the field up to new players and increases opportunities for interactions

The global governance of development  103 between different institutions and rules, creating additional obstacles for governance. Perhaps more importantly, whereas the development regime was previously guided by a more or less uniform set of objectives, as the regime becomes increasingly de-nested, objectives are set by more institutions and are increasingly at odds with one another. These developments in the development regime take place in a context in which more and more countries are integrated in the world economy and this integration in the world economy is seen as a key enabling condition for further development. In this sense the distinction between development and trade is blurring and initiatives such as Aid for Trade and the Belt and Road Initiative (BRI) add to the fragmentation of the global development regime. The Global Aid for Trade (AfT) initiative aims to help less developed countries to better access the market by “building productive capacity”, “trade-related infrastructure”, “trade policy and regulations”, and other “trade related adjustment” (Hynes and Lammersen, 2017). The BRI was proposed by Chinese President Xi Jinping in 2013. The BRI intends to connect Asia with Africa and Europe via land and maritime networks with the aim to achieve policy coordination, infrastructure connectivity, unimpeded trade, financial integration and closer people-to-people ties with other countries. According to a World Bank research report, the initiative could help 7.6 million people out of extreme poverty and 32 million out of moderate poverty (World Bank, 2019a). It is expected to increase trade in participating countries by 2.8 to 9.7 per cent, global trade by 1.7 to 6.2 per cent and global income by 0.7 to 2.9 per cent (World Bank, 2019a).

6. CONCLUSION In this chapter we identified some key developments in the global governance of development. We focused on the expansion of the development agenda, the entrance and increasing prominence of new actors and the changing nature of the development regime. For much of its history, the global governance of development was shaped by a small set of primarily Western institutions that shared a similar normative understanding of what development should consist of, how it should be pursued, and for whom. These institutions now share an increasingly crowded field with other major actors and have had to cede some of their normative authority to these other actors along the way. It is no longer primarily the World Bank that is capable of shaping the globe’s development priorities; informal international organizations such as the G20, private actors and voluntary approaches like the VSS, and new multilateral banks and the AIIB in particular exert increasing influence and authority within the development regime. While development governance once seemed to be the project of advanced, predominantly Western economies, many others have taken up the mantle, especially economies of the Global East and South. The ‘original’ approach to the global governance of development as it was first articulated through the Bretton Woods institutions focused on economic growth as the foremost path to development and providing funding for infrastructure was seen as a primary means to achieve this. Then, as we saw above, this approach evolved over the years and these institutions began to give more focus to sustainability and socially inclusive development projects – a shift in focus that was (at least in part) responsible for a marked decrease in infrastructure investment by multilateral development banks. Now facing a perceived lack of infrastructure funding, some of the new development actors, such as the AIIB, have returned to the original plan.

104  Handbook on the politics of international development While some (especially in the West) have criticized these actors’ lack of emphasis on socially inclusive and sustainable development, others have welcomed the much-needed renewed attention to the more urgent infrastructure and connectivity needs of developing countries. Indeed, there may well be space for both.

REFERENCES Abbott, Kenneth W. (2012a). The transnational regime complex for climate change. Environment and Planning C: Politics and Space, 30(4), 571–590. Abbott, Kenneth W. (2012b). Engaging the public and the private in global sustainability governance. International Affairs, 88(3), 543–564. Abbott, Kenneth W., Robert O. Keohane, Andrew Moravcsik, Anne-Marie Slaughter, and Duncan Snidal (2000). The concept of legalization. International Organization, 54(3), 401–419. Abbott, Kenneth W. and Duncan Snidal. (2000). Hard and soft law in international governance. International Organization, 54(3), 421–456. Aggarwal, Vinod K. (1998). Reconciling multiple institutions: Bargaining, linkages, and nesting. In V. K. Aggarwal (ed.), Institutional Designs for a Complex World: Bargaining, Linkages, and Nesting. Ithaca, NY: Cornell University Press, 1–31. AIIB (2016). Annual Report 2016: Connecting Asia for the Future. Beijing: AIIB. https://​www​.aiib​.org/​ en/​news​-events/​news/​2016/​annual​-report/​.content/​download/​Annual​_Report​_2016​.pdf. AIIB (2017). 2017 Business Plan and Budget: Summary. Beijing: AIIB. https://​www​.aiib​.org/​en/​policies​ -strategies/​_download/​business​-plan​-2017/​aiib​-2017​-business​-plan​-and​-budget​.pdf. AIIB (2019). AIIB Reaches 100-Member Milestone. https://​www​.aiib​.org/​en/​news​-events/​news/​2019/​ AIIB​-reaches​-100​-member​-milestone​.html. AIIB (2020a). Introduction – Who We Are – About AIIB. https://​www​.aiib​.org/​en/​about​-aiib/​index​.html. AIIB (2020b). Members and Prospective Members of the Bank. 1 June. https://​www​.aiib​.org/​en/​about​ -aiib/​governance/​members​-of​-bank/​index​.html. Alter, Karen J. and Sophie Meunier (2009). The politics of international regime complexity. Perspectives on Politics, 7(1), 13–24. Alter, Karen J. and Kal Raustiala (2018). The rise of international regime complexity. Annual Review of Law and Social Science, 14, 329–349. Berger, Axel, Andrew F. Cooper, and Sven Grimm (2019). A decade of G20 summitry: Assessing the benefits, limitations and future of global club governance in turbulent times. South African Journal of International Affairs, 26(4), 493–504. Bird, Graham (2017). Assessing the G20’s mutual assessment process: A MAP but little direction. World Economics, 18(2), 83–106. Bradford, Colin I. (2016). G20 Hangzhou Summit: A possible turning point for global governance. China Quarterly of International Strategic Studies, 2(03), 327–346. Bradford, Colin I. and Wonhyuk Lim (2011). Toward the consolidation of the G20: From Crisis Committee to Global Steering Committee. In C. I. Bradford and W. Lim (eds.), Global Leadership in Transition: Making the G20 More Effective and Responsive. Seoul and Washington, DC: Korea Development Institute and Brookings Institution Press, 1–10. Braithwaite, John (2008). Regulatory Capitalism. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing. Cammack, Paul (2012). The G20, the crisis, and the rise of global developmental liberalism. Third World Quarterly, 33(1), 1–16. Chin, Gregory T. (2019). The Asian Infrastructure Investment Bank – new multilateralism: Early development, innovation, and future agendas. Global Policy, 10(4), 569–581. Collins, Ben, Amelia Evans, Madeline Hung, and Suzanne Katzenstein (2017). The New Regulators? Assessing the Landscape of Multi-Stakeholder Initiatives. Durham, NC: MSI Integrity and Kenan Institute for Ethics. https://​msi​-database​.org/​data/​The​%20New​%20Regulators​%20​-​%20MSI​ %20Database​%20Report​.pdf.

The global governance of development  105 Eilstrup-Sangiovanni, Mette and Oliver Westerwinter (2021). The global governance complexity cube: Varieties of institutional complexity in global governance. Review of International Organizations. https://​link​.springer​.com/​article/​10​.1007/​s11558​-021​-09449​-7. Fiorini, Matteo, Bernard M. Hoekman, Marion Jansen, Philip Schleifer, Olga Solleder, Regina Taimasova, and Joseph Wozniak (2016). On the Accessibility of Voluntary Sustainability Standards for Suppliers. Working Paper. International Trade Center. G20 (2009). Leader’s Statement: The Pittsburgh Summit. Pittsburgh: G20. https://​www​.oecd​.org/​g20/​ summits/​pittsburgh/​G20​-Pittsburgh​-Leaders​-Declaration​.pdf. G20 (2010). Seoul Development Consensus for Shared Growth. https://​www​.mofa​.go​.jp/​policy/​ economy/​g20​_summit/​2010​-2/​annex1​.pdf. G20 (2016). G20 Action Plan on the 2030 Agenda for Sustainable Development. Hangzhou: G20. http://​ www​.g20​.utoronto​.ca/​2016/​g20​-action​-plan​-on​-2030​-agenda​.pdf. Hart, Gillian (2001). Development critiques in the 1990s: Culs de sac and promising paths. Progress in Human Geography, 25(4), 649–658. Hilbrich, S. and J. Schwab (2018). Towards a more accountable G20? Accountability mechanisms of the G20 and the new challenges posed to them by the 2030 Agenda. Vestnik Mezhdunarodnykh Organizatsii/International Organisations Research Journal, 13(4), 7–38. Hynes, William and Frans Lammersen (2017). Facilitate Trade for Development: Aid for Trade. ADBI Working Paper Series. Asian Development Bank Institute. https://​www​.adb​.org/​sites/​default/​files/​ publication/​229981/​adbi​-wp670​.pdf. IBRD (2012). IBRD Articles of Agreement. https://​www​.worldbank​.org/​en/​about/​articles​-of​-agreement/​ ibrd​-articles​-of​-agreement/​article​-I. Jenks, Bruce (2016). UN development cooperation: The roots of a reform agenda. In J. A. Ocampo (ed.), Global Governance and Development. Oxford: Oxford University Press, 136–167. Keohane, Robert O. and David G. Victor (2011). The regime complex for climate change. Perspectives on Politics, 9(1), 7–23. Lichtenstein, Natalie (2019). AIIB at three: A comparative and institutional perspective. Global Policy, 10(4), 582–586. Mahon, Rianne (2010). After neo-liberalism? The OECD, the World Bank and the child. Global Social Policy, 10(2), 172–192. Marx, Axel (2013). Varieties of legitimacy: A configurational institutional design analysis of eco-labels. Innovation: The European Journal of Social Science Research, 26(3), 268–287. Marx, Axel and Dieter Cuypers (2010). Forest certification as a global environmental governance tool: What is the macro-effectiveness of the Forest Stewardship Council? Regulation & Governance, 4(4), 408–434. Marx, Axel and Jan Wouters (2015). Is everybody on board? Voluntary sustainability standards and green restructuring. Development, 58(4), 511–520. Marx, Axel and Jan Wouters (2016). Redesigning enforcement in private labour regulation: Will it work? International Labour Review, 155(3), 435–459. Morgan, Peter J. (2018). China’s emerging global role. In Steven Brakman, Charles van Marrewijk, Peter J. Morgan, and Nimesh Salike (eds.), China in the Local and Global Economy: History, Geography, Politics and Sustainability. Abingdon: Routledge, 307–327. Nilsson, Måns, Tony Zamparutti, Jan Erik Petersen, Björn Nykvist, Peter Rudberg, and Jennifer McGuinn (2012). Understanding policy coherence: Analytical framework and examples of sector– environment policy interactions in the EU. Environmental Policy and Governance, 22(6), 395–423. Ocampo, José Antonio (2016). Global economic and social governance and the United Nations system. In J. A. Ocampo (ed.), Global Governance and Development. Oxford: Oxford University Press, 3–31. Pieterse, Jan Nederveen (2012). Twenty-first century globalization: A new development era. Forum for Development Studies, 39(3), 367–385. Ponte, Stefano (2019). Business, Power and Sustainability in a World of Global Value Chains. London: Zed Books. Prodi, Romano (2016). Global governance and global summits from the G8 to the G20: History, opportunities and challenges. China & World Economy, 24(4), 5–14. Raustiala, Kal and David G. Victor (2004). The regime complex for plant genetic resources. International Organization, 58(2), 277–309.

106  Handbook on the politics of international development Roger, Charles B. (2020). The Origins of Informality: Why the Legal Foundations of Global Governance Are Shifting, and Why It Matters. Oxford: Oxford University Press. Rosenau, James N. (1995). Governance in the twenty-first century. Global Governance, 1(1), 13–43. Slaughter, Steven (2013). Debating the international legitimacy of the G20: Global policymaking and contemporary international society. Global Policy, 4(1), 43–52. Thakur, Ramesh and Luk Van Langenhove (2006). Enhancing global governance through regional integration. Global Governance, 12(3), 233–240. UNFSS (2013). Voluntary Sustainability Standards: Today’s Landscape of Issues and Initiatives to Achieve Public Policy Objectives. Geneva: United Nations Forum on Sustainability Standards. United Nations (1987). Report of the World Commission on Environment and Development: Our Common Future (Brundtland Report). New York; United Nations. https://​www​.are​.admin​.ch/​are/​ en/​home/​nachhaltige​-entwicklung/​internationale​-zusammenarbeit/​agenda​-2030​-fuer​-nachhaltige​ -entwicklung/​uno​-​_​-meilensteine​-zur​-nachhaltigen​-entwicklung/​1987​-​-brundtland​-bericht​.html. Vabulas, Felicity and Duncan Snidal (2013). Organization without delegation: Informal intergovernmental organizations (IIGOs) and the spectrum of intergovernmental arrangements. The Review of International Organizations, 8(2), 193–220. Vestergaard, Jakob and Robert H. Wade (2015). Protecting power: How Western states retain their dominant voice in the World Bank’s governance. In Dries Lesage and Thijs Van de Graaf (eds,), Rising Powers and Multilateral Institutions. Basingstoke: Palgrave Macmillan, 175–196. Wang, Hongying (2017). New multilateral development banks: Opportunities and challenges for global governance. Global Policy, 8(1), 113–118. Weiss, Thomas G. (2000). Governance, good governance and global governance: Conceptual and actual challenges. Third World Quarterly, 21(5), 795–814. Weiss, Thomas G. (2013). Humanitarian Business. Cambridge: Polity Press. Woods, Ngaire (2010). Global governance after the financial crisis: A new multilateralism or the last gasp of the great powers? Global Policy, 1(1), 51–63. Woods, Ngaire (2014). The Globalizers: The IMF, the World Bank, and Their Borrowers. Ithaca, NY: Cornell University Press. World Bank (2005). Review of World Bank Conditionality. Washington DC: Operations Policy and Country Services. http://​siteresources​.worldbank​.org/​PROJECTS/​Resources/​40940​-1114615847489/​ web​Conditiona​litysept05​.pdf. World Bank (2018). Annual Report 2018. Washington, DC: World Bank. World Bank (2019a). Belt and Road Economics: Opportunities and Risks of Transport Corridors. Washington, DC: World Bank Group. World Bank (2019b). History. https://​www​.worldbank​.org/​en/​about/​history. Wouters, Jan and Jed Odermatt (2014). Comparing the ‘four pillars’ of global economic governance: A critical analysis of the institutional design of the FSB, IMF, World Bank, and WTO. Journal of International Economic Law, 17(1), 49–76.

7. The China model of development as solidarity Xi Lin

The ‘China Model’ as a term has been invented to describe China’s stunning record of development in the past few decades, covering such areas as politics (Ding, 2011; Bell, 2015; Nie, 2017; Chin, 2018), economic development (de Rambures, 2015; Chen, 2016), social governance (Ding, 2015; Guo and Jiang, 2017), business (Paulet and Rowley, 2017), urban management (Li and Liu, 2018), the law (Peerenboom, 2007), and the banking sector in the ‘Belt and Road Initiative’ (Gransow and Price, 2019; Zhao et al., 2019), to name just a few. How can we assess the role of China’s cultural traditions in our discussions of a possible, China-characteristic model of development? How can China’s cultural traditions help to inform current social theories concerning development? This chapter aims to discuss a possible China Model from the perspective of ‘development sociology’,1 informed by a dialectical diagnosis of China’s development experiences and a cultural reconstruction of socio-theoretic understanding of what this model might entail for future development. To begin with, this chapter outlines a dialectical approach to development.

1.

THE DIALECTICS OF DEVELOPMENT

For Sen, the significance of development lies in extending the range of liberties available to individuals, without which development for its own sake will be rendered meaningless (Sen, 1999, pp. 4–5). The Senian conception of development aims at removing such elements as constrain our freedom, be it famine, violation of human rights, ignoring the rights of women and sexual minorities, or pollution that endangers our environment – all of which constitute in no uncertain terms a deprivation of individual liberty. The exercise of individual rights and liberties depends to a large extent upon the basic social structure, the general politico-economic milieu, and institutional arrangements within a given nation (Rawls, 1971, pp. 31–32). The extent to which a given society offers opportunities to its members is one benchmark with which to measure the level of development thereof. In the light of this scheme of thought, there is a direct, positive correlation between the level of development and the scope of freedom available to individuals, where a higher social development entails a greater scope of freedom, and vice versa. For this very reason, development is committed to advancing individual liberties – a commitment that should become the core value of development. Liberty, especially in substantia, should become the sole and overwhelming standard to measure the achievement of development within a given society. Only through the exercise of individual rights and

1 This paradigm of the ‘sociology of development’ refers to an academic interest to study changing social patterns, behaviours, and actions in a state of flux when the society is experiencing large-scale social, economic, and political disruptions. See Harrison (1988, p. 155). Cf. Webster (1990); Long (1990); Portes (1997).

107

108  Handbook on the politics of international development liberties will it be possible for us to choose in accord with our competence a long-term rational life plan (lebensplan) and our own conception of a good life (bona vita) (Sen, 1999, p. 285). Sen’s very optimistic account of development may present only one facet of the issue, however, in that development may just as much enlarge the scope of individual freedom as engender a series of side effects – a point that is well summarized by Eric Fromm (1965). His analysis of the pathology of modern society, especially as regards the emergence of radicalism in various forms,2 focuses on such side effects accompanying the liberation of individuals from traditional yokes, such as loneliness, insignificance, and insecurity. Modernity does grant individuals with greater liberties, indeed. If we adopt a holistic approach to the issue of development by combining the arguments of Sen and Fromm, these two perspectives cease to be contrary to each other, and can be seen to form a unity based on complementarity – a unity we can refer to as the ‘dialectics of development’ (Entwickslungdialektik). This can open up a question of significant social-theoretic import: considering the liberty-cum-anxiety predicament as brought to fore by development, how will it be possible to retain the fruits and remedy the vices thereof? This is a highly pertinent question in our age of religious disenchantment and re-enchantment after the 9/11 terrorist attacks. According to Royce (1995, pp. 10–11, 158, 173), the meaning of human life is not normatively prescribed by existence, but by values that are deemed worthy of pursuit and human effort (e.g. money, power, status, wisdom, and reputation).3 All these values may be referred to as the primary goods in modern political philosophy (Rawls, 1971, ch. 15), namely the legitimate life goals allowable within the framework of a constitutional state (Rechtsstaat). These life goals are legitimate in the sense that that their pursuit can be carried out nowhere else but in the social world which we cohabit, and not according to the natural world governed by the laws of the jungle. The desirability of these goals as ends, the means of pursuing them, and the enjoyment thereof, has to be normatively prescribed within the framework of common rules rationally agreed upon by all stakeholders in a given society. These social norms play the role of legitimating, regulating, and arbitrating these life goals, including their desirability, pursuit and use within human society, which otherwise will degenerate into a vicious circle of interpersonal competition, escalating into a disorderly bellum omnium contra omnes.4 For Royce, to dedicate oneself to the pursuit of such legitimate life goals is the very cause that serves as the fountainhead giving meaning to our lives. The reason to call it a cause lies in its role as principia differentia distinguishing us as homo sociologicus from a state of animalistic existence. This dedication occurs and acquires significance only within a human-inhabited social world, from which we derive the meaning of our personal life. The reason that we draw on this discussion of value and the meaning of life (Lebensbedeutung) lies in the very fact that development cannot be detached from its purpose or end result. Development for the mere sake of development is deprived of moral worth if it wholly ignores human well-being in the process. Therefore, the value of development is derivative to the 2 Fromm was mainly concerned with the rise of fascism in Germany after the First World War, which indeed was intertwined with his personal experiences. Nevertheless, his diagnosis can be extended to other forms of radicalism. 3 Royce (1912, p. 12) holds that a supreme aim in one’s life is salvation. Although Royce’s main concern here is religious, the idea of life goals is an indispensable part of our worldviews (weltsanschauung) and applies to other non-religious areas as well. 4 This is the “war of all against all”, the ferocity and atrocity in human nature when in a state of nature (status naturalis). See Hobbes (1998, pp. 29–30).

The China model of development as solidarity  109 extent that it will have to fulfil a certain purpose – of which the end lies in nowhere else but in the human social world. It is closely knit with our conception of a good life and the meaning of life constructed in the social world. The sweeping transformation of Chinese society resulting from its process of Reform and Opening-Up which began in 1978 has ushered in an era of value pluralization. Rapid urbanization in the past three decades has allowed an increasingly pluralized value landscape to devour one region after another in China. As far as the economy is concerned, the introduction of market principles, though imperfect, has liberated economic forces from the previous straitjacket of planned economy, by enabling people to take an active part in self-regulated market-oriented production. By the same token, politically the subsystem operates according to its own logic of state civil office examination, the professionalization of bureaucrats, and the building of democratic participatory mechanisms. However, similar to the previous diagnoses, the substantial progress made in the field of economy and politics has been coupled with a significant loss of meaning in the field of social life, where rapid social transformation and urbanization have not only increased the rich–poor gap, but resulted in a large proportion of the population being marginalized in the process. Socially vulnerable groups apparently have not benefited from the rapid development in the past few decades generating a loss of meaning in the lives of many. Such loss of meaning actually cuts across the population along the lines of age, gender, geographical location, and class. For instance, in rural China, due to the migration of young and capable workers into urban areas, there remain in local regions only the aged, sick, disabled, and the very young – in a word, the socially marginalized, economically disadvantaged, and politically ignored groups. Among all these groups, the swelling ageing population in rural China is confronted with the serious issue of old-age care. Unless the family economically can sustain the cost of age- and health-care, the elderly may experience serious illness or malnutrition. Under these circumstances, many of the elderly choose to commit suicide. According to Liu’s studies (2013, 2014), the cause for such suicidal wave may stem from two factors, namely the inaccessibility of resources and the lack of emotional gratification. On the one hand, the elderly, either on their own or through their family members, may find the market-based care services inaccessible due to affordability, geographical distance, or lack of information. This under-resourced situation can exacerbate the psycho-physiological discomfort experienced by the left-behind elderly.5 On the other hand, the absence of the majority of family members from home increases intersubjective relational distance and leads to emotional loneliness on the part of the elderly (Yue et al., 2011). The physical company of children and grandchildren is an indispensable ingredient of the mental well-being of the elderly in China. However, with an export-oriented economy that draws heavily on the supply of rural surplus labour, the elderly in rural China suffer not only geographical segregation from their grown-up children, but an increasing emotional aloofness across the generations. Under this circumstance, the traditional expectation of age-care provision by one’s offspring gradually is undermined. Such a rapid social transformation is referred to as “a fragmented society” by Liu (2014), namely the social structure being stuck in this ‘transitioning’ period, where the demise of the old structure is not accompanied by the arrival of a new one that is still in the process of unfolding. According to Liu’s estimate (2014), in the next two decades, there may emerge 5 For a detailed study on the causal relations between geographical proximity and emotional intimacy, see Victor et al. (2009, pp. 25–30).

110  Handbook on the politics of international development a further wave of rural elderly suicide in China. Elderly suicide in rural China testifies to the paradox of development in a rapidly transitioning society. Where individuals enjoy greater liberties and opportunities, there may in all probability emerge during this process certain social groups disadvantaged due to lack of access to cultural, economic or social capitals. The fruits of development thus are not shared equitably across all social strata. The marginalization of certain groups in this process is a no small issue if we compound it with the negative effect of development upon the subjective well-being of individuals. This development-cum-anxiety-an d-marginalization paradox reminds us that development is never a matter of unidimensional progress with pure good and free from limitations.

2.

DEVELOPMENT AS SOLIDARITY

This section addresses this issue by suggesting a possible solution to the paradox in the dialectics of development. To begin with, Durkheim once proposed a dichotomy between “mechanical solidarity” (solidarité mécanique) and “organic solidarity” (solidarité organique) based on his observation of the experiences of social development in France. For him, at the lower level of social development, the bond between and among individuals mainly consists of prebirth, given relations such as clan, blood, family and caste. The solidarity thus generated is similar to a mechanical melange of different raw materials – a solidarity different in essence from the organic union of different functional parts of a living organic being. Organic solidarity among functional parts such as those of an organic body can occur only in a highly differentiated society. By way of contrast, in a society with a high level of interpersonal differentiation, individuals are encouraged to cultivate sui generis idiosyncrasies, where a greater scope of liberty is institutionally sanctioned by an increasingly civil law system. Against this general picture of discrete individuals highly differentiated from each other, there nevertheless exists an invisible cord that runs through the whole society, as the overwhelmingly binding force that unites each and every individual into a solid commonwealth. This invisible cord, as the basis of such an organic society, comes from the compartmentalization of individuals into different professions, careers and positions – a compartmentalization comparable to the segmentation of different functional parts of an organic species, in that separate as they are, they nevertheless form an indivisible unity via coordinating their complementary roles.6 From such solidarity there arises a general consensus (consensus général) in the process (Durkheim, 1984, pp. 60–61, 84–85, 102–103, 123, 126). Durkheim’s assessment was concerned with the features of France as a transitioning society at the turn of the nineteenth and twentieth century, where the demise of traditional order was not yet accompanied by a well-formed new one. Where traditional bonds of solidarity were broken and new ones still in the process of unfolding, this ‘in-between’ situation led to an increase in suicide in general (Durkheim, 2005). As a matter of fact, the rise in suicide rate

6 An important variant of the organic solidarity is the contractual solidarity (solidarité contractuelle), to the extent that the increasing division of labour in society cannot bypass the very issue of social exchange between and among different sectors within the society. A free expression of individual will, manifested in legal format, is the contract. Therefore, solidarity can manifest itself in a variant contractual form, which bespeaks of the very necessity of mutual complementarity on the part of different social segments. See Durkheim (1984, pp. 139–141, 316–317).

The China model of development as solidarity  111 is just one of the pathological manifestations of the dialectics of development, which may include, but are certainly not limited to, a hollowed-out mental well-being, submission to totalitarianism, blind obeisance to authority, and the lack of moral bottom lines. All these manifestations can be seen in today’s China, which indeed are typical symptoms of a society experiencing rapid changes in all aspects. Notwithstanding Durkheim’s valid assertion that an insufficient play of solidarity would lead to a multitude of development-related issues, his prescription of nurturing organic solidarity via a greater division of social labour and more professional corporations may not be the answer a modern society seeks. It is worthwhile to note that this Durkheimian prescription is based on the assumption that each and every one of us knows well enough our own gift, talent or merit. Everyone not only possesses such knowledge of his/her own skills and talents, but enjoys equal opportunities to give a full play to these talents and skills. Durkheim assumes that with a greater division of social labour, we will finally arrive at an Aristotelian moment of ideal social situation, where everyone undertakes a career that best suits his/her capability and talents to the extent that each individual enjoys this career as they perform their skills.7 In the light of this explanation, to exercise our powers, whether natural or acquired, can bring pleasure and enjoyment. Everyone should have the opportunity to not only develop his/her faculties, but exercise them to their highest pitch (Rawls, 1971, p. 426, note 20). Combining these two accounts by Field and Rawls, we may propose an ideal Aristotelian Moment of Social Solidarity by extrapolating the Durkheimian thesis of “professional corporations contributing to organic solidarity”: All things considered, everyone has equal opportunity to develop his/her natural powers, faculties or interests up to the point that s/he enjoys equal access to discrete professional organisations or corporations on the basis of his/ her exercising of greater faculties at more complex discriminations. The more that individuals develop their skills and exercise their faculties, the greater complementarity will arise between and among these individuals, and henceforth an increasing sense of communal solidarity will spread through individual consciousness. In the end, a greater degree of organic solidarity shall prevail in the society. In spite of the regulative power of such an ideal social condition as is contained within this Aristotelian Moment of Social Solidarity, this assumption has an apparent defect in that empirically such a condition may never be arrived at. Apart from a certain proportion of the population who are lucky enough to work in jobs to their own satisfaction and to the best of their abilities, for the majority, a job is no more than a means to make ends meet. Through this critique of the ideal theory as suggested by Durkheim, Field and Rawls we may propose a replacement of a non-ideal conception to help us to better comprehend and diagnose the social ills of modernity. Such a non-ideal conception will have to incorporate both empirical historical experiences and the abstractness of regulative theories. From this, we shall now move to the concept of civitas homini that may possess universal application in spite of its theoretical resources drawn in part from the Chinese cultural traditions.

7 As Field (1921, p. 76) explains this Aristotelian principle, “[t]he possession of goodness is different from the use of it; and the latter is in its nature more desirable than the former. It is not enough to have all our qualities and capacities trained and developed up to the highest pitch if we remain passive through life. The very fact of having our faculties so developed will make us want to use them, and we should not be satisfied unless we could do so. We should not, perhaps, even value very greatly the possession of the highest faculties unless they were going to be used”.

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3.

CIVITAS HOMINI

In the light of this non-ideal theoretical approach, we hereby suggest an alternative concept, namely civitas homini (a humane community) as the anchoring notion for building organic solidarity in our modern society. By definition, civitas homini suggests the linking of individuals to each other in particular and to society in general via voluntary associations based on such multiple cohesive factors as religion, family, race, geographical location, culture, talents, skills, interests, and concerns, to name just a few. It emphasizes the respecting of individual rights to choice and liberties based on informed reasoning faculties. Different forms of civitas homini, when combined, can reach a stage of res publica latium (commonwealth) that ensures both individual liberties and social solidarity, with different communities entering into terms of intersubjective recognition, tolerance and peaceful coexistence. By comparison, this conception of civitas homini is richer in connotations, broader in scope, and wider in extension, than the Durkheimian notion of professional corporations. As a concept, it can cover the four major types of social organs as discussed by Durkheim, namely family, political unit, religion, and career. This ‘quadchotomy’ as proposed by Durkheim has one defect in that from the perspective of topography, there exists no clear inner logical relations between and among these four types. As a matter of fact, Durkheim offers no explanation for this. The quadchotomy thus remains as much a mystery back then as in our contemporary age. To theoretically account for such topographical distinction becomes imperative should we wish to engage Durkheim in our contemporary discussions. Therefore, our new concept will need to offer a topography with greater logic persuasion. To begin with, we can turn to a suggestion of four types of human relations as proposed by Fiske. For Fiske (1991, pp. 13–38), the four modes of human relations in society are communal sharing, emphasizing collective unity, community belonging, membership, and fraternity among members, of which the typical example is be clan, family, or consanguinity; authority ranking, referring to the institutionally bound asymmetric differences between ranks within a given hierarchy, which is based on positions, titles, status, or precedents, with such accompaniments as command, respect, and obeisance; equality matching, a one-to-one relationship centred on an equal footing of all parties involved, such as symmetric reciprocity, equal share, compensation or remuneration in equitable amount, or taking turns in certain undertaking; and market pricing, pointing to rational calculation of market values that are realized during market exchange. By way of contrast, this quadchotomy can also incorporate and rework the Confucian quinchotomy of human relations.8 This quinchotomous schema has an apparent bias towards the ethics of clan-consanguinity, where communal sharing (i.e. parent–child, siblings, and husband–wife) claims the greatest amount of importance and priority in the lexical order of these five relations. Furthermore, it has this all-encompassing function to absorb the other relations. For instance, the sovereign–subject relation is compared to that between blood relatives, as seen in such notions of jiatianxia (all under heaven as a big family) and fumuguan (official-cum-parent) (Ch’u, 1962, pp. 14–15). By the same token, the relations among friends are modelled upon those between and among siblings. Apparently, this quinchotomous

8 This is referred to as wulun in Chinese, namely the essential five human relations: sovereign– subject, parent–child, siblings, husband–wife, and friends. See Tu (1998).

The China model of development as solidarity  113 schema can no longer account for the complex relations arising in modern society, such as the political ones via the medium of democracy and power, or the economic ones via that of market and money. These modern relations are not included in the original Confucian quinchotomy (Dallmayr, 2003). For this very reason, the meaning of civitas homini first draws on Fiske’s quadchotomy, suggesting that crucial to the construction of communal solidarity in our modern society are the four major types of human relations that cover politics, economy, family and socialization. Indeed, to make this conception fit for our globalized world, we need to extend its scope of application further than Fiske does, as his quadchotomy is still first and foremost a conceptualization set within definite spatio-temporal bounds – most of the time nation-states (Volksstaat). For this very reason, we need to bring in a Kantian, cosmopolitan dimension of envisioning a global community consisting of the whole of mankind, which should be an indispensable part and parcel of this conception of citivas homini. This dimension can be referred to as that of universal community identification,9 which transcends the narrow boundary of nation-state, advocating for emotional empathy and rational communication with members of the global village across cultures, geographical locations, races, and languages. An example par excellence of such cross-boundary interaction is the global environmental movements. These movements draw on local and global resources in advancing welfare not only for local residents, but also for communities across the world that share this planet (Duara, 2014, ch. 7). Such movements can also transcend temporal bounds by extending our care for next generations, as there is no better gesture to demonstrate our love to children than a committed protection of the Earth that will help to ensure an agreeable environment for the generations to come (Ferry, 2012, ch. 2). Therefore, this cosmopolitan dimension of universal community identification, hand in hand with Fiske’s quadchotomy, forms the core of civitas homini, as the basis of new forms of solidarity in our contemporary age. This can be referred to as the neo-quinchotomy of human relations (xin wulun) in modern society. From this neo-quinchotomy, it can be seen that the civitas homini aims to include reasonableness (Vernünftigkeit) and rationality (Rationalität) – the two fundamental aspects of human mentality, and the double pillars of sense and sensibility in basic human needs (Bedürfnisnatur) (Toulmin, 2003, pp. 2–21). In this, reasonableness emphasizes a shared human sensitivity, especially with regard to the emotional engagement in collective life for homo sociologicus. Alongside this demand for sympathetic company from a fellow citizen, this dimension also points to the inner emotional needs within personal subjectivity. On the other hand, rationality can cover both purpose rationality and instrumental rationality as suggested by Weber. Rational individuals exercise in a full manner their rational faculties of calculation, planning and reasoning, on the basis of which to achieve their legally allowable, legitimate life goals. The rational means available to individuals can be the “strategies and maxims for how best to take advantage of the [constitutive rules of an institution regarding legally established rights and duties] for particular purposes, [as they] are based upon an analysis of which permissible actions individuals and groups will decide upon in view of their interests, beliefs, and conjectures about one an­other’s plans” (Rawls, 1971, p. 56). 9 This notion draws on an essential cosmopolitanism advocated by Kant. “The peoples of the earth have thus entered in varying degrees into a universal community, and it has developed to the point where a violation of rights in one part of the world is felt everywhere” (Kant, 1991, pp. 107–108, emphasis original).

114  Handbook on the politics of international development In the light of this bifurcation, the Durkheimian topography can be absorbed into the different aspects of human needs. For instance, family and religion answer the human needs in emotion, spirituality, and transcendence, while political and professional corporations cater to human needs in rationality. Durkheim assumes that these two basic human needs occupy different ranks within the evolutionary path of human beings, where rationality will prevail over human emotional demands and the rationality-based career ties will become the main, overwhelmingly important base for building social solidarity in a society of highly sophisticated labour division. Contrary to Durkheim’s assumption that has failed to become a reality in the past century, our conception of civitas homini emphasizes the complementarity between these two fundamental needs, where only a simultaneous presence and satisfaction of both can help to construct a complete, full conception of good life. That this civitas homini is capable of advancing the formation of organic solidarity lies precisely in its respect to individual rights and liberties. Civitas homini includes multiple forms of solidarity and human relations and owes its inclusiveness precisely to its recognition of individuals’ critical mental faculty and rational capacity of making decisions on their own. Individual experiences in social life are based on a few major elements, namely natural attributes (e.g. sex, race, blood type, family, geographical location, and class background), personal diligence (training, education, and career development), and fortune and contingencies. While natural attributes we cannot choose, and fortune and contingencies are circumstance-dependent and thus outside personal control, personal diligence is within the grasp of our rational power and competence. What needs to be emphasized here is that in spite of the givenness as regards natural attributes and the complex of fortune and contingencies, in the formation of solidarity ties, individual rights to choice and deliberation should be given top priority in the lexicography of importance (Rawls, 1971, pp. 41–44). We cannot force individuals to join certain collectives for the mere reason of natural attributes or the fortune-contingencies complex, which would constitute in no uncertain terms a violation of individual rights and freedom of informed choice based on critical deliberation. For instance, the mere fact that the physiological sex of a person is male at birth constitutes in no way a valid reason to prevent him from sex-change via surgery, should he so desire upon reaching the level of maturity corresponding to making an informed choice out of rational considerations at a later stage in his life. An external social organ, be it derived from family, religion, or geographical locality, has no valid claim whatsoever to superimpose upon this very individual its own preference contrary to his personal wish. By the same token, this attitudinal prescription is applicable to other sexual minority groups10 in particular, and minority groups in general. Our institutional guarantee of individual rights and liberties, as the core element of organic solidarity, is not a simple repetition of liberalist cliché, as if a mere repetition of past arguments could do all the work of justification. On the contrary, this normative requirement of assigning first-rate importance to the protection of individual rights of critical reflection and deliberate choices is grounded firmly in a psychological motivation that is indispensable to the forging of organic solidarity. For one thing, only on the basis of a full respect for individual rights and liberties of critical reflection and deliberate choices will it be possible for one individual to have a genuine psychological identification with a corporation upon his/her joining it. When

This can include, but is not limited to, homosexuals or the sadism-masochism community.

10

The China model of development as solidarity  115 individuals are given full rights and liberties in making informed choices on which, when and how to join a social organization, they will seek out one another through a most rational consideration of interests, desires, and talents. This exercise of faculties of critical reasoning and rational deliberation will no doubt bring about a sense of fulfilment, pleasure and enjoyment. Through such uncoerced association, “[i]ndividuals are linked to one another who would otherwise be independent; instead of developing separately, they concert their efforts. They are solidly tied to one another and the links between them function not only in the brief moments when they engage in an exchange of services but extend considerably beyond” (Durkheim, 1984, p. 21). This sense of interdependence as a result of free association and integration is rooted in a deeper condition than a coercive blending into one union by external forces, as it is now ingrained into our deepest consciousness of ourselves, others, and the relations thereof. Such is the birth of solidarity in its most organic form, where we choose to bond willingly and voluntarily with the Other who complements us and greets us as part of an inseparable One (Levinas, 1971, pp. 273–274). “Thus [the Other] becomes an integral, permanent part of our consciousness, to such a degree that we can no longer do without it” (Durkheim, 1984, p. 22). For this very reason, to prevent the collective from encroaching in substantia upon individual rights in the name of corporate interests can help to ensure that individuals make choices in a state of freedom from external pressures. Such liberated choice, as well as the social integration thus ensuing, is a form of solidarity that has a firmer psychological ground in human nature, which also is an enhanced version of the Durkheimian notion of organic solidarity. Finally, civitas homini is based on the premise of intersubjective recognition between and among different associations.11 The corporations formed out of human interests, concerns and powers should follow the principle of “live and let live”, which is a fundamental sense of justice that binds us to enter into fair terms of social cooperation to reciprocal advantage for all stakeholders involved (Rawls, 1996, pp. 44–48). These terms of fair cooperation include mutual recognition, tolerance, and equitable share of advantage. The reason for us to propose this stipulation lies in the fact that in human experience, there exist many associations founded on such exclusionary and intolerant doctrines as racism, terrorism, homophobia, and misogyny. These organizations follow unreasonable doctrines, with a mission to exclude, denigrate or even annihilate others (Rawls, 1971, ch. 35). They thus violate the basic principles of liberties and rights, which render them unfit for our conception of civitas homini. However, in the foreseeable future, these illiberal associations will continue to exist and remain active in multiple forms, which will inevitably pollute our public life. Under this circumstance, there is a greater need of the principle of intersubjective recognition as an antidote to such intolerance and public pollution. Only through a civil repair of such pollutions will it be possible to arrive at a moment of greater social justice (Alexander, 2006, pp. 81, 208).

11 This notion is borrowed by Habermas (1981) from Husserl and Habermas uses it to suggest a tolerant attitude between and among individuals. In our context, it is used rather to suggest a group-oriented mentality that advocates mutual tolerance.

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4. CONCLUSION The China Model should focus on contributing to the paradigm of ‘development as solidarity’ derived from the notion of civitas homini. Sen and Fromm can inform our pathological diagnosis of development as a double-faced process, while the derived notion of the ‘dialectics of development’ leads us to probe the same question that perplexed Durkheim more than a century ago, “How can he become at the same time more of an individual and yet more linked to society?” (1984, Preface to the First Edition, p. xxx). Durkheim’s prescription of social solidarity as an antidote to individual loneliness and the social ills of modernity still resonates with a powerful force in today’s world. Civitas homini, as a non-ideal theory drawing on Fiske and Confucius, aims to continue the inquiry started by Durkheim by looking into a reinvented Confucian tradition of human relations, a balanced consideration of both rationality and reasonableness, the priority of individual rights and liberties, and intersubjective recognition between and among voluntary associations. Far from proposing a perfect, unassailable theory, this chapter aims to offer a positive assertion of cultural and intellectual resources that have the cosmopolitan potentiality to be reinvigorated for our globalized and yet troubled world.

REFERENCES Alexander, Jeffrey C. (2006). The Civil Sphere. Oxford: Oxford University Press. Bell, Daniel A. (2015). The China Model: Political Meritocracy and the Limits of Democracy. Princeton: Princeton University Press. Chen, S. F. (2016). The China model and global political economy: Comparison, impact, and interaction. Journal of Chinese Political Science, 21(2), 273–275. Chin, J. J. (2018). The longest march: Why China’s democratization is not imminent. Journal of Chinese Political Science, 23(1), 63–82. Ch’u, T’ung-tsu (1962). Local Government in China under the Ch’ing. Cambridge, MA: Council on East Asian Studies/Harvard University Press. Dallmayr, Fred (2003). Confucianism and the public sphere: Five relationships plus one? Dao, 2(2), 193–212. de Rambures, Dominique (2015). The China Development Model: Between the State and the Market. Basingstoke: Palgrave Macmillan. Ding, S. (2015). Civil society under authoritarianism: The China model. Journal of Chinese Political Science, 20(3), 351–353. Ding, Xueliang 丁学良 (2011). On the China Model (Bianlun zhongguo moshi 辩论中国模式). Beijing: China Social Sciences Academic Press (Shehui kexue wenxian chubanshe 社会科学文献出版社). Duara, Prasenjit (2014). The Crisis of Global Modernity: Asian Traditions and a Sustainable Future. Cambridge: Cambridge University Press. Durkheim, Emile (1984). The Division of Labour in Society, trans. W. D. Halls. London: Macmillan. Durkheim, Emile (2005). Suicide: A Study in Sociology, trans. John A. Spaulding and George Simpson. London and New York: Routledge. Ferry, Luc (2012). De l’amour. Paris: Editions Odile Jacob. Field, G. C. (1921). Moral Theory: An Introduction to Ethics. London: Methuen. Fiske, Alan Page (1991). Structures of Social Life. New York: Free Press. Fromm, Erich H. (1965). Escape from Freedom. New York: Henry Holt and Company. Gransow, B. and Price, S. (2019). Social risk management at AIIB: Chinese or international characteristics? Journal of Chinese Political Science, 24(2), 289–311. Guo, S. J. and Jiang, T. Y. (2017). China’s “new normal”: From social control to social governance. Journal of Chinese Political Science, 22(3), 327–340.

The China model of development as solidarity  117 Habermas, Jürgen (1981). Theorie des kommunikativen Handelns, Band 2, Zur Kritik der funktionalistischen Vernunft. Frankfurt am Main: Suhrkamp. Harrison, David (1988). The Sociology of Modernisation and Development. London and New York: Routledge. Hobbes, Thomas (1998). On the Citizen, ed. and trans. Richard Tuck. Cambridge: Cambridge University Press. Kant, I. (1991). Political Writings, trans. H. B. Nisbet. Cambridge: Cambridge University Press. Levinas, Emmanuel (1971). Totalité et Infini. Paris: Martinus Nijhoff. Li, Xuefeng and Liu, Xuke (eds.) (2018). Green Development Model of China’s Small and Medium-Sized Cities. Singapore: Springer. Liu, Yanwu (2013). Suicide among the rural elderly and crisis intervention: 1980–2009 (Nongcun laonianren zisha jiqi weiji ganyu: 1980–2009). Southern Demography (Nanfang renkou), 2. Liu, Yanwu (2014). A Study of Suicide in Rural China (Nongmin zisha yanjiu). Beijing: Social Sciences Documents Press. Long, Norman (1990). From paradigm lost to paradigm regained? The case for an actor-oriented sociology of development. European Review of Latin American and Caribbean Studies/Revista Europea de Estudios Latinoamericanos y del Caribe, 49, 3–24. Nie, Huihua (2017). Collusion, Local Governments and Development in China: A Reflection on the China Model, trans. Haifeng Li and Ping Chen. Basingstoke: Palgrave Macmillan. Paulet, Elisabeth and Rowley, Chris (eds.) (2017). The China Business Model: Originality and Limits. Kidlington, Oxford: Chandos Publishing. Peerenboom, Randall (2007). China Modernizes: Threat to the West or Model for the Rest? Oxford: Oxford University Press. Portes, Alejandro (1997). Neoliberalism and the sociology of development: Emerging Trends and unanticipated facts. Population and Development Review, 23(2), 229–259. Rawls, John (1971). A Theory of Justice. Cambridge, MA: Harvard University Press. Rawls, John (1996). Political Liberalism. New York: Columbia University Press. Royce, Josiah (1912). The Sources of Religious Insight. New York: Scribner and Sons. Royce, Josiah (1995). The Philosophy of Loyalty. Nashville, TN: Vanderbilt University Press. Sen, Amartya (1999). Development as Freedom. New York: Alfred A. Knopf. Toulmin, Stephen E. (2003). Return to Reason. Cambridge, MA: Harvard University Press. Tu, Weiming (1998). Probing the “three bonds” and “five relationships” in Confucian humanism. In Walter H. Slote and George DeVos (eds.), Confucianism and the Family. Albany, NY: State University of New York Press, 121–136. Victor, Christina, Scambler, Sasha, and Bond, John (2009). The Social World of Older People: Understanding Loneliness and Social Isolation in Later Life. Maidenhead: Open University Press. Webster, Andrew (1990). Introduction to the Sociology of Development (2nd edition). New York: Macmillan. Yue, Zhenzhu, Feng, Cong, Zhou, Xinyue, and Gao, Ding-Guo (2011). Being lonely in a crowd: Population density contributes to perceived loneliness in China. In S. J. Bevinn (ed.), Psychology of Loneliness. New York: Nova Science Publishers, 137–149. Zhao, J. Z., Gou, Y. N., and Li, W. Y. (2019). A new model of multilateral development bank: A comparative study of road projects by the AIIB and ADB. Journal of Chinese Political Science, 24(2), 267–288.

8. The politics of crime, law and development in historical perspective Tom Chodor and Jarrett Blaustein

1. INTRODUCTION The significance of crime and law is recognized in the contemporary development agenda, as illustrated by Sustainable Development Goal (SDG) 16, which urges the international community to “promote peaceful and inclusive societies … provide access to justice for all and build effective, accountable and inclusive institutions” (UN, 2020a). This stems from what is referred to as the ‘crime–development nexus’, the belief that crime, violence, corruption, and the absence of rule of law represent significant obstacles to development, by undermining citizen security, decreasing trust in governments and hampering growth and investment (Blaustein et al., 2020). As a result, development institutions such as the United Nations Development Program (UNDP), the World Bank, and the United Nations Office on Drugs and Crime (UNODC) all promote the ‘rule of law’ and ‘good governance’ as essential to achieving sustainable development. As this chapter highlights, this agenda can be traced back to the aftermath of the Second World War and is rooted in dual, albeit complementary, aims. The first of these involves constructing the legal systems necessary for capitalist development in the developing world. The second seeks to address the criminogenic consequences of this development and, from the 1990s onwards, their impact on the global economy. This chapter considers how this agenda evolved over three eras of development: the Cold War, the neoliberal period, and the current era of human development. Across these eras, the understanding of the relationship between law, crime and development was framed through the dominant development theories of the time, from modernization theory, through neoliberalism and now human development, which themselves were shaped by the evolving material, ideological and institutional structures of the international system (Cox, 1987; see also Chapter 1 by Ocampo and Chapter 26 by Rivarola Puntigliano in this volume). However, as this chapter highlights, there have also been some important continuities across this period. In particular, the international community has overwhelmingly approached crime and ineffective (or corrupt) governance as problems that disproportionately affect the developing world, and which should be addressed using knowledge, expertise, and resources that overwhelmingly originate in the core. Relatedly, these problems have consistently been treated not only as obstacles to the successful integration of developing countries into a global capitalist economy, but perhaps more significantly, as potential threats to global liberal order, both economic and political in nature. In short – as with the rest of the development project – the efforts to promote the rule of law and combat crime have been more about the interests of the core, than those of the periphery, a dynamic which continues to shape the efficacy of these efforts. This remainder of this chapter is divided into three main sections, corresponding to the three eras of development. First, it examines the Cold War era, during which the ‘law and development’ movement aimed to transform ‘traditional’ legal systems in the periphery into 118

The politics of crime, law and development in historical perspective  119 ‘rational’ and predictable ‘modern’ ones that would uphold contracts and property rights and foster economic growth and industrialization. This was coupled with a focus on rising crime in the Third World, which was thought to open the door to a communist takeover, prompting development actors to promote ‘social defence’ projects to modernize and strengthen criminal justice systems and foster new normative systems of control. The failure of both projects led to the neoliberal era of development, which is examined in section 3. In this period, law reform was redefined to creating legal systems that would facilitate private market transactions and limit the state’s interference in the economy, in order to make developing countries more attractive to foreign capital. In this context, little attention was paid to crime, as it was assumed that the explosion of economic growth resulting from neoliberal reforms would resolve all developmental problems, including crime. Instead, the growth never materialized while crime rates exploded, again leading to concerns of a social breakdown and backlash against neoliberal globalization. This resulted in the current era of human development, which is examined in section 4. In this era, the law and crime projects have converged and become central to the Sustainable Development Agenda, with development actors stressing the significance of ‘rule of law’ and ‘good governance’ not only for attracting investors and fuelling economic growth, but also to protecting human rights, democracy and justice. Similarly, rule of law is seen as central to addressing crime and violence and enabling citizens to enjoy ‘freedom from fear’, with development projects promoting community-based justice and anti-crime programs, and criminal justice and security sector reform. The chapter concludes by considering the efficacy of these projects.

2.

CRIME, LAW AND DEVELOPMENT DURING THE COLD WAR ERA

The development project which began after the Second World War was premised on spreading capitalist modernity to the newly independent states of the ‘Third World’. This was part of a broader Cold War struggle between the United States and the Soviet Union, in which the former utilized its aid programme and international organizations to promote capitalist development as an antidote to communism, which was understood to thrive amid poverty and instability. The intellectual underpinning of this project was ‘modernization theory’, encapsulated by the work of Walt Rostow (1960) which held that development was a linear process, progressing through a set of stages from traditional society to the age of mass consumption. Modernization theory was based on an idealized version of Western history, with Western states drawing on their own experiences and expertise to assist their developing counterparts through close political, economic and cultural ties, with ‘modernity’ diffusing to them in the process. International organizations were a crucial part of this diffusion, providing aid and technical assistance to facilitate modernization. Modernization theory was never fully accepted in the Third World and various indigenous theories such as structuralism and dependency theory identified the need for a much more prominent role for the state in driving the development process, in particular industrialization (Sunkel and Paz, 1970; Furtado, 1976; Frank, 1967). These ideas found some purchase in organizations such as the UN Economic Commission for Latin America and the Caribbean (ECLAC) and the UN Conference on Trade and Development (UNCTAD), and contributed to the emergence of the Import Substituting Industrialization (ISI) development model,

120  Handbook on the politics of international development under which state-led industrialization and the creation of a domestic market were conducted behind tariff walls. Although the ISI model differed in its prescriptions for stimulating economic development, like modernization theory, it was committed to the project of capitalist modernity. Law was an important part of this project. This stemmed from a theoretical tradition which began with Max Weber (2012), who argued that the rule of law and a rational justice system were the necessary prerequisites for capitalism, given they provided the high degree of predictability and calculability necessary for entrepreneurs to invest in capital accumulation. Later, American sociologist Talcott Parsons (1966) argued that a rational legal order was a defining feature of modernity, contrasted with traditional societies where law was applied arbitrarily and underpinned by political or religious authority. These ideas were central to Rostow’s (1960) work, who saw a stable, rational legal system – styled on the American model – as intrinsic to modernization (Krever, 2018, pp. 185–188). These theoretical claims were put into practice by the ‘law and development’ movement in the 1950s and 1960s when US development agencies including USAID, private bodies like the Ford Foundation, and US law schools teamed up to develop and implement law reform projects in the developing world (Messick, 1999, p. 125). These identified the ‘traditional’ legal systems – where laws were often ill-defined, poorly enforced and lacked legitimacy – as a key obstacle to development, because they failed to offer economic actors the certainty and predictability necessary to invest and stimulate economic growth (Trubek, 2006, p. 76). Accordingly, capitalist development in the Third World was seen to necessitate the creation of rational and predictable legal systems that would uphold contracts and property rights, and therefore attract foreign investment to stimulate industrialization and economic growth. In practice, this entailed efforts to reform legal systems along American lines based on the belief that transplanting US institutions to the Third World “would hasten progress towards modernity” (Krever, 2018, pp. 188–189). Specific projects sought to reform courts and legal procedures to make them more efficient, and to professionalize judges and lawyers to enhance the impartiality and legitimacy of the legal system (Tiede, 2018, p. 416). At the same time, the movement highlighted the crucial role of law in macroeconomic coordination for development. Given the centrality of the state in ISI, law and regulation were seen as crucial instruments to steer economic actors – public and private – towards its goals. Accordingly, law and development projects focused on training programmes in universities and legal schools to encourage policy-oriented lawyering (Trubek and Santos, 2006, p. 5). The aim was to create a new type of ‘modern’ lawyer: a pragmatic, instrumental problem solver, who would help policymakers develop and enforce laws and regulations, advise state-owned enterprises on how to realize their goals, and counsel private clients on how to operate within the developmental parameters established by the state (Trubek, 2006, p. 75). Law was treated as central to development, an instrumental tool to transform society by removing ‘traditional’ barriers to modernity, with lawyers the social engineers carrying out this process (Messick, 1999, p. 126). Once successful, this ‘legal development’ would result not only in economic growth, but also secure the broader benefits of modernity, such as democracy, human rights and freedom (Gupta, 2015, p. 329). While the law and development movement championed the importance of a modern legal system for stimulating economic growth, the international community also recognized that crime represented a potential consequence of modernization. As they launched ambitious developmental projects, Third World countries saw an increase in recorded criminal activity.

The politics of crime, law and development in historical perspective  121 For example, between 1962 and 1978, crimes against the person in the developing world increased by 444 per cent, while property crimes increased by 523 per cent (Arthur and Marenin, 1995, p. 196). The attribution of this increase to economic development was once again influenced by modernization theory, and the work of American criminologists and sociologists who were themselves influenced by Emile Durkheim’s work on anomie (Durkheim, 2014; see also Blaustein et al., 2018). The fundamental idea was that as societies industrialized and became more complex, traditional bonds of solidarity broke down in new urban centres, while new normative systems of social control lagged behind. Accordingly, people’s aspirations and goals, increasingly influenced by consumerism, were not effectively regulated by traditional societal norms, and ultimately exceeded society’s capacity to satisfy them. Criminality was thus understood to represent one possible response to the social disorganization and the strains created by modernization (Clinard and Abbott, 1973; Shelley, 1981). The concern was that a significant increase in urban criminality would further hamper economic and social development, as failure to provide law and order drained support for the state, and scared away domestic and foreign investment. As the Kenyan government observed in 1969: “without internal security, it is not possible to maintain an atmosphere conducive to rapid development” (cited in Clifford, 1973, p. 6). Underpinning this concern was a deeper fear that criminality and the breakdown of law and order would lead to social collapse, thus opening the door to a communist takeover, as citizens grew frustrated with the failure of modernization to deliver not only prosperity, but also security. In this regard, American sociologist Robert Merton (1938) noted that rebellion represented another possible adaptation to material strain, one that involved rejecting culturally defined goals and replacing social and economic institutions. Despite these potential instabilities, however, International Financial Institutions (IFIs) like the World Bank argued that security and public order were issues of national sovereignty, and thus outside of its remit, and focused instead on channelling investment into infrastructure projects (Krause, 2014, p. 382; see also Chapter 23 by Mendes Pereira in this volume). Consequently, the issue was left to the UN which established a small Social Defence Section consisting of Western criminological experts in the Secretariat in 1947 (Walters, 2001, p. 211). In 1953, the Section was specifically directed by the UN Economic and Social Council to examine “prevention strategies of types of criminality resulting from social changes and accompanying economic development in less developed countries” (United Nations, 1960, p. 1; Blaustein et al., 2021) The resulting research report echoed the Durkheimian characterization of rising criminality as stemming from urbanization and industrialization, and set out a set of measures to help developing countries confront this problem (Panakal and Khalifa, 1960). These were inevitably based on the Western experience, reflecting modernization theory’s linear approach to development, with the UN seeking to “assist … the underdeveloped countries through making available to them the experience of countries more advanced in the prevention of crime” (United Nations, 1954, p. 262). Through research and quinquennial Congresses, the Section called for technical assistance to modernize and strengthen criminal justice systems in the developing world. This included better coordination and planning between the different institutions of the system, including the police, prisons, courts, probation and parole services, so as to increase its efficiency in preventing crime (Clifford, 1973, pp. 27–28). Particular attention was paid to juvenile delinquency, which was seen as driving the explosion of criminal activity (Blaustein et al., 2018, p. 209). In response, the Section called for investment in education, childcare and welfare to break the cycle of delinquency

122  Handbook on the politics of international development early, while also promoting programmes with religious and community groups to develop new normative systems of control to restrain potential young offenders (Clifford, 1973, p. 30; Walters, 2001, p. 214). Finally, the Section also stressed the need for robust planning of urbanization, to avoid the uncontrolled and rapid growth of slums, which were seen as engendering criminality (Clifford, 1973, pp. 14–15). However, despite the Section’s advocacy for criminal justice reforms, these rarely eventuated. Indeed, both social defence and law and development had lost their lustre by the 1970s. In relation to the latter, many law and development practitioners grew increasingly frustrated as their reforms failed to have the desired effect. Legal institutions turned out to be resistant to ‘modernization’ and ‘rationalization’, with local elites rejecting reforms which undermined their power. More worryingly for the movement, when reforms were implemented, there was often little diffusion of the other aspects of modernity such as democracy or human rights. Instead, law and development practitioners found that legalism, instrumentalism and authoritarianism made for a stable combination (Trubek, 2006, p. 79). Likewise, the movement faced criticism for simply transplanting American legal institutions to the developing world, with critics accusing it of ‘legal imperialism’ carried out by ‘legal missionaries’, who sought to remake developing countries without sufficient knowledge of local conditions (Gupta, 2015, p. 329). This was a broader problem with modernization theory and its linear notion of progress and development. It was also an issue for the social defence approach, with dependency scholars pushing back against the Durkheimian analysis to argue that high levels of crime were the result of unequal power relations caused by global capitalism and colonial criminal law systems, and that crime represented a form of resistance by the marginalized masses (Odekunle, 1978; Sumner, 1982). The influence of dependency theory on the international crime policy agenda is uncertain but social defence projects seemingly had little effect, and the UN shifted its focus to ‘international crime’ as developing countries descended into the ‘lost decade’ of the 1980s. Moreover, by then, the state-oriented approach to economic development came to be seen as anachronistic in the new era of neoliberalism.

3.

CRIME, LAW AND DEVELOPMENT IN THE NEOLIBERAL ERA

The neoliberal turn in development emerged throughout the 1980s, as part of ‘Structural Adjustment Programmes’ (SAPs) promoted by the IFIs in response to the 1982 debt crisis, which required drastic cuts to welfare spending, rolling back the state’s role in the economy, liberalization of trade and investment, and privatization of state-owned enterprises. These measures converged into a ‘Washington Consensus’, which stressed a minimalist state, free markets, and integration with the global economy via comparative advantage as the means to development (Williamson, 1990). While the neoliberal model abandoned modernization theory’s acknowledgement of the role of the state in promoting capitalist modernity, it retained many of its core features, not least a belief in the linear nature of development, with Western (idealized) economic models set as examples for developing countries to follow. Moreover, the end of the Cold War and the US–Soviet rivalry meant that – in Margaret Thatcher’s words – “there [was] no alternative” to the neoliberal model, especially with many parts of the Third World – now referred to as the Global South – mired in economic crisis. Likewise, globalization meant that developing countries were increasingly reliant on foreign investors

The politics of crime, law and development in historical perspective  123 and transnational corporations, which demanded a ‘business friendly environment’ to provide the capital and technology necessary for development. Once again, law reform was an important part of this project. In the neoliberal conception, the economy consisted of a market where individuals used resources efficiently in response to price signals. Thus, law was necessary to facilitate private market transactions between individuals, and to limit the state’s ability to interfere with them (Krever, 2011, p. 298). Consistent with the theoretical tradition of free market capitalism championed by neoliberals such as Friedrich von Hayek, the neoliberal model held that capitalism depended on a legal system where property rights are enforced and the executive operates within a predictable framework (Messick, 1999, p. 122). These ideas were further developed by the New Institutional Economics approach of Douglass North, who argued that free markets were underpinned by institutions – especially formal rules such as constitutions, laws and property rights – which were necessary to facilitate economic exchange. Indeed, North argued, the absence of the effective means of enforcing contracts “was the most important source of both historical stagnation and contemporary underdevelopment in the Third World” (North, 1990, p. 54). Similarly, Williamson argued a ‘high-performance economy’ required a well-functioning legal system conducive to long-term contracts lest firms circumvent the judicial system (Williamson, 1995, p. 181). In this context, the role of law reform projects changed from establishing the administrative state to promoting legal reforms that would encourage private transactions and protect property rights (Trubek and Santos, 2006, p. 2). This focused on the promotion of judicial independence, as independent courts were seen as a check against a strong state, preventing expropriation or arbitrary policy changes that would harm investor interests. Thus, judicial independence was seen as a means of building trust with foreign capital, which would encourage investment (Tiede, 2018, p. 416). Accordingly, legal reform became increasingly common in aid and development projects, aiming to “make the legal systems in developing countries and transition economies more market friendly” (Messick, 1999, p. 118). The US again took the lead, developing projects in Central and Latin America which were subsequently extended to Eastern Europe and the post-Soviet sphere after the Cold War. In total, USAID spent around $200 million on such projects during the 1990s, with other institutions, such as the Justice and Commerce Departments, and even the Securities and Exchange Commission, also getting in on the act (Messick, 1999, p. 117; Carothers, 1998, pp. 103–104). Similarly, the World Bank began to include law reform in its SAPs, beginning with Argentina in 1989, focusing on reforming court administration to increase its efficiency (Ayres, 1998, p. 22). Between 1994 and 1999, the World Bank, the Inter-American Development Bank and the Asian Development Bank, provided $500 million in loans for judicial reform projects in 26 countries, and by the end of the decade the majority of developing and post-Soviet countries were receiving assistance to reform their legal systems (Messick, 1999, p. 117). These focused primarily on increasing judicial independence, speeding up processing of cases, increasing access to alternative dispute resolution and professionalizing judges and lawyers (Messick, 1999, p. 119). Thus, the focus was on civil and commercial law, which the Bank argued fell within its remit of promoting economic growth (Ayres, 1998, p. 22). To illustrate this, the Bank’s research found that of 3,600 firms in 69 countries, 70 per cent complained that an ‘unpredictable judiciary’ was a major problem, and that the level of confidence in the legal system was correlated with levels of investment and economic growth (Messick, 1999, p. 122).

124  Handbook on the politics of international development In this context, little attention was paid by the IFIs to crime. As noted, institutions such as the World Bank saw criminal justice as beyond their remit, while Northern aid programmes focused on promoting neoliberal transformation, with the expectation that the resulting explosion of economic growth would solve all sorts of economic and social problems, including crime. Meanwhile, the Social Defence section at the UN underwent multiple transformations during the 1970s and 1980s, with its focus eventually shifting to the governance and prevention of transnational crime (Blaustein et al., 2021, pp. 440–445). This reflected an emerging belief amongst Northern countries that globalization was contributing to an explosion of transnational crime which threatened state sovereignty and licit global markets (Andreas and Price, 2001). And yet, the neoliberal era saw an explosion of domestic manifestations of crime and violence in many parts of the Global South. Already high, homicide and robbery rates in Eastern Europe, Latin America and Central Asia doubled between the early 1980s and early 1990s, as the SAPs increased poverty and inequality (Bourguignon, 2000, p. 203). By the late 1990s, research indicated a clear relationship between rising crime and poverty and inequality, and linked these to structural adjustment (McIlwaine, 1999, p. 459). Even the World Bank could no longer ignore this, and in 1998 published a report acknowledging that the contraction of jobs and wages, decline of public spending and deterioration of infrastructure were leading to a social breakdown, and forcing people – especially young males – to turn to crime as a ‘way out’ (Ayres, 1998, p. 10). Echoing elements of modernization theory, the report warned that this corroded support for and legitimacy of the state, highlighting the dissatisfaction with judicial systems across Latin America and the Caribbean, with between 55 and 75 per cent of citizens holding a ‘very low opinion’ of it. This was a problem most pronounced amongst low-income citizens, with only 9 per cent of Chile’s urban poor rating the judicial system ‘good’ or ‘very good’ (Ayres, 1998, p. 21).1 While the end of the Cold War meant the fear that such discontent would lead to communism faded, the concern remained that a backlash against the neoliberalism in the periphery could nevertheless threaten the project. These concerns were heightened by the fact that the Washington Consensus had not only resulted in rising poverty and inequality throughout the Global South, but was also failing to deliver on its main goal: economic growth. Between 1979 and 2000, the average annual global per capita growth rate was 1.5 per cent, compared to the 2.7 per cent between 1960 and 1978 (Milanovic, 2005, p. 34). This provoked a search for answers with corruption identified as one of the main culprits, as it scared away the investment necessary to stimulate growth (Mauro, 1995). Corruption was also presented as the cause of the failures of structural adjustment, particularly in the post-Soviet sphere, which saw widespread looting of public wealth during privatization (Shelley, 1998). Likewise, after the Asian financial crisis, commentators pointed to ‘crony capitalism’ as a major cause of the crisis (World Bank, 1998; Krugman, 1998). More broadly, neoliberals now began to consider crime and violence in the developing world as an obstacle to growth, as they scared away investment, destroyed public infrastructure and eroded human and social capital (Ayres, 1998, pp. 7–8). Researchers thus increasingly sought to quantify the cost of crime in terms of lost GDP. For example, a UNODC and World Bank 1 Chile is an interesting example to consider because it was an early adopter of neoliberal policies. At the time of publication, it was considered one of the safest countries in Latin America; however its economic and social successes came at the expense of political liberties and widespread human rights violations (including mass atrocities) during the 1970s and 1980s.

The politics of crime, law and development in historical perspective  125 report found that the total cost of crime in Jamaica in 2001 was J$12.4 billion, or 3.7 per cent of GDP, with 39 per cent of business reporting that they were less likely to expand because of crime (UNODC and World Bank, 2007, p. vii). Another study found that gross capital formation in Colombia was 38 per cent lower than it would have been if the country’s homicide rates remained at the 1970s level (Ayres, 1998, p. 7). Coupled with a renewed focus on crime was a growing critique of the law reform projects part of the SAPs. Critics pointed out that these repeated the mistakes of the first law and development era by seeking to transplant legal (and economic) institutions from the North to the South with little consideration of local conditions, or proof that these produced growth. This was especially jarring as countries which avoided such reforms, like the Asian Tigers, experienced growth and prosperity during this era (Gupta, 2015, pp. 332–333). This challenged the neoliberal notion that all that was necessary to facilitate growth was a legal system which would constrain the state and uphold private contracts (Trubek and Santos, 2006, p. 6). It also echoed a larger critique of the Washington Consensus from scholars such as Joseph Stiglitz, who argued that enthusiasm for the free market needed to be tempered with a more prominent role for the state in correcting market failures and regulating economic activity (Stiglitz, 2002). It was also around this time that scholars such as Amartya Sen called for the international development community to look beyond economic growth and focus on ‘human development’ (Sen, 2001). Both critiques would subsequently extend into the understanding of the relationship between law, crime and development in the post-neoliberal era.

4.

LAW AND CRIME IN THE HUMAN DEVELOPMENT ERA

The current era of development represents recognition of the failures of neoliberalism, combined with an enduring commitment to free markets and globalization. Concerns that the neoliberal tide was not ‘lifting all the boats’ led the proponents of the Washington Consensus to propose ‘bringing the state back in’, recognizing that for markets to work, the state needed to create the underlying institutional environment for them (Kuczynski and Williamson, 2003). This ‘post-Washington Consensus’ argued that the key missing ingredient in the pursuit of development was ‘good governance’: “a predictable and transparent framework of rules and institutions for the conduct of private and public business” (World Bank, 1994, p. vii). Thus, development, according to Bank President James Wolfensohn, required an “effective state” that could correct market failures and “encourage and complement the activities of private businesses and individuals” (cited in Krever, 2011, p. 305). At the same time, there was an attempt to broaden the definition of development to the more encompassing notion of ‘human development’, which the UNDP defined as “a process of enlarging people’s choices … to lead a long and healthy life, to be educated, and to enjoy a decent standard of living” but also as “political freedom, guaranteed human rights and self-respect” (UNDP, 1990, p. 10). Human development thus had political and social dimensions, involving respect for human rights, the promotion of gender equality and environmental sustainability (Thérien, 2014, pp. 278–279). Such an approach offered an attractive alternative to the Washington Consensus, because its expanded definition of development did not challenge the overall focus on markets or global economic integration, aiming instead to promote “globalisation with a human face” (UNDP, 1999). As such, it was quickly embraced by developmental institutions and incorporated into

126  Handbook on the politics of international development both the Millennium Development Goals (MDGs) in 2000 and the Sustainable Development Goals in 2015. Against this backdrop, the two agendas converged through what Carothers (1998) described as the ‘rule of law revival’. The World Bank identified rule of law as the foundation for good governance, consisting of a situation “where the government itself is bound by the law, every person in society is treated equally under the law, the human dignity of each individual is recognized and protected by law, and justice is accessible to all”. This required “transparent legislation, fair laws, predictable enforcement and accountable governments to maintain order, promote private sector growth, fight poverty and have legitimacy” (World Bank, 2004, pp. 2–3). While this was partially the continuation of the neoliberal agenda, rule of law was framed as a multifaceted concept which also emphasized commitments to human security and human rights. This was reflected in the UN Secretary-General’s definition of it as “a principle of governance in which all persons, institutions and entities, public and private, including the state itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human rights norms and standards” (UN Secretary-General, 2004, p. 4). Therefore, rule of law entailed not only judicial independence, but also a commitment to political liberty, democracy and justice (Krever, 2011, p. 311). In doing so, it reflected the liberal conception of the state, under which law makes possible the individual rights at the core of democracy, with the government’s respect for the sovereignty of the individual based on its acceptance of law (Carothers, 1998, p. 97). Nevertheless, the appeal of rule of law was that it appeared non-ideological and technical, all the while promoting Western conceptions of democracy and capitalism (Carothers, 1998, p. 99). As a result, global development institutions increased their focus on rule of law. By 2004, the World Bank had approximately 600 projects on legal and judicial reform, with its expenditure on governance and rule of law programmes almost doubling between 2001 and 2006, amounting to $4.6 billion in 2006 (Desai, 2018, p. 221; World Bank, 2004, p. 3). While framing these as empowering the poor and crucial to sustainable development, their actual content continued to reflect neoliberal assumptions about the need to create the ‘right’ conditions for economic growth, with a focus on judicial independence and increasing the efficiency of the court systems (World Bank, 2004, p. 6). A more expansive approach was taken by the UN, particularly its crime programme, which was transformed into a standalone organization – the UNODC – in the late 1990s. During the 2000s, UNODC framed good governance, the rule of law, the absence of corruption and human safety as the ‘software’ of development, necessary to complement the traditional focus on infrastructure (or ‘hardware’), and pushed for these to be included on the Sustainable Development Agenda (Blaustein et al., 2020). In this, it found collaborators including World Bank and Northern member states, which also championed the importance of good governance and the rule of law for development (Bergling and Jin, 2015). The culmination of this was SDG 16, which includes a number of targets relating to promoting the rule of law, fighting corruption, increasing the effectiveness, accountability and transparency of institutions, ensuring public access to information and protecting fundamental freedoms (UN, 2020a). The UN refers to SDG 16 as an ‘enabling’ goal, highlighting the centrality of the rule of law for the whole Agenda (UN, 2020b). The impact of the rule of law agenda also extends to the issue of crime, with human development proponents arguing that if citizens are vulnerable to crime and violence, the possibility of upholding property rights or contract enforcement is unlikely (Tiede, 2018, pp. 411–412).

The politics of crime, law and development in historical perspective  127 Reinforcing this link, a 2005 UNODC report invoked Sen to argue that ‘freedom from fear’ was as important as ‘freedom from want’, and that it was “impossible to truly enjoy one of these rights without the other” (UNODC, 2005, 101). This echoed the emerging consensus that security was central to sustainable development, encapsulated in Kofi Annan’s In Larger Freedom report, which warned that “we will not enjoy development without security, we will not enjoy security without development, and we will not enjoy either without respect for human rights” (UN Secretary-General, 2005, p. 6). This approach built on the neoliberal era critiques which framed crime as an obstacle to development, by adding the human development dimension to it, with research illustrating that those regions facing the greatest development challenges were also plagued by conflict, crime and insecurity (Krause, 2014, p. 384). One of the most significant was the World Bank’s 2011 World Development Report, which noted that no low-income, fragile or conflict-affected country had achieved a single MDG, and that countries experiencing major violence had a poverty rate 21 per cent higher than those that saw no violence. This, the Bank warned, had not only economic but also human security consequences, creating a situation where “everyday experiences … become occasions for fear”. Echoing modernization arguments, the Bank noted the self-fulfilling nature of these situations, with the absence of growth, employment and prosperity fuelling resentment and grievance against the state and society, driving youth to join gangs and organized crime groups (World Bank, 2011, pp. 5–6). In this context, the Bank concluded, sustainable development was impossible, and there was a need to build up the resilience of societies from crime and increase the legitimacy of state institutions (World Bank, 2011, pp. 7–8). Consequently, the human development era has seen a renewed focus on combating crime and violence. At the core of this is SDG 16, which includes a number of targets on reducing violence and death rates from crime, preventing trafficking and violence against children and combating organized crime (UN, 2020a). These provide an overarching framework through which development projects attempt to tackle the issue at both community and national level. In relation to the former, projects promote community-based programmes for violence prevention, access to local justice, dispute resolution, and service delivery in insecure communities. There is also a focus on what the World Bank calls ‘back to basics job creation’, namely public works to provide employment in the most impoverished communities, in order to prevent youth in particular from turning to crime. On the other hand, projects also seek to reform criminal justice systems to improve their capabilities, including improving caseload processing and investigation and arrest procedures, and increasing awareness of legal rights amongst citizens (World Bank, 2011, pp. 18–19). They also attempt to increase transparency and oversight of security forces, often overlapping with security sector reform and state-building projects, which aim to enhance the effectiveness and accountability of security institutions. This often includes efforts to build up coalitions with non-state actors – including civil society and business – to put pressure on the state to confront crime (Reitano, 2018a, p. 118). The overall aim of these projects is to rebuild trust and confidence in the state as an effective actor that can combat crime and violence. This is part of a broader international push to shore up ‘fragile’ states, with concerns that citizens are turning against their governments and towards crime and violence (Reitano, 2018b, pp. 29–30). As the World Bank warns, these risks are not confined to the developing world, inevitably spilling across borders and having regional and global repercussions, via reduced trade, higher costs of doing business, increased refugee flows, or terrorist attacks (World Bank, 2011, p. 5). Accordingly, just as during the previous eras, the inclusion of law and crime in development projects is more about the inter-

128  Handbook on the politics of international development ests of the Global North – whether in terms of securing the right environment for capital, or precluding the backlash against the dominant development models – than those of the world’s most vulnerable.

5. CONCLUSION This chapter has examined how the agendas of law promotion and social crime prevention unfolded during three eras of development. In the first instance, it accounted for the influence of modernization theory on the efforts to transform ‘traditional’ legal systems in the periphery into ‘rational’ and predictable ‘modern’ ones. This was coupled with a focus on rising crime rates in the Third World, understood to be the natural outcome of development, as modern societies destroyed old social bonds and normative systems of social control. The failure of both projects led to the second, ‘neoliberal’ era of development, during which law reform was redefined as creating legal systems that would facilitate private market transactions and limit the state’s interference in the economy. In this context, little attention was paid to crime, as it was assumed that the economic growth resulting from market liberalization would reduce it. When the growth failed to materialize and crime rates exploded, concerns with a backlash against neoliberal globalization resulted in the current era of ‘human development’ in which the law and crime projects have converged and become central to the Sustainable Development Agenda. Accordingly, today’s development projects promote ‘rule of law’ and ‘good governance’, not only as a means to attract investors and fuel economic growth, but also to protect human rights, democracy and justice. Similarly, rule of law is seen as central to addressing crime and violence, with development actors highlighting the importance of ‘freedom from fear’. The efficacy of these projects remains to be seen, but given their focus on protecting the interests of the Global North, they are unlikely to address the persistence of crime, violence, corruption, and the absence of rule of law in the developing world.

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The politics of crime, law and development in historical perspective  129 Bourguignon, François (2000). Crime, violence, and inequitable development. In B. Pleskovic and J. E. Stiglitz (eds.), Annual World Bank Conference on Development Economics 1999 (Washington, DC: World Bank), 199–224. Carothers, Thomas (1998). The rule of law revival. Foreign Affairs, 77(2), 95–106. Clifford, William (1973). Development and Crime (Chichester: Barry Rose Publishers). Clinard, Marshall B. and Daniel J. Abbott (1973). Crime in Developing Countries: A Comparative Perspective (New York: Wiley). Cox, Robert W. (1987). Production, Power, and World Order (New York: Columbia University Press). Desai, Deval (2018). Power rules: The World Bank, rule of law reform, and the World Development Report 2017. In C. May and A. Winchester (eds.), Handbook on the Rule of Law (Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing), 217–234. Durkheim, Emile (2014). The Division of Labor in Society (New York: Free Press). Frank, André Gunder (1967). Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil (New York: Monthly Review Press). Furtado, Celso (1976). Economic Development of Latin America: Historical Background and Contemporary Problems (2nd edition) (Cambridge and New York: Cambridge University Press). Gupta, Arpita (2015). Law and development: A history in three moments. In U. Mattei and J. D. Haskel (eds.), Research Handbook on Political Economy and Law ( Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing), 327–341. Krause, Keith (2014). Violence, insecurity, and crime in development thought. In B. Currie-Alder, R. Kanbur, D. M. Malone, and R. Medhora (eds.), International Development: Ideas, Experience, and Prospects (Oxford: Oxford University Press), 379–394. Krever, Tor (2011). The legal turn in late development theory: The rule of law and the World Bank’s development model. Harvard International Law Journal, 52(1), 287–319. Krever, Tor (2018). The rule of law and the rise of capitalism. In C. May and A. Winchester (eds.), Handbook on the Rule of Law (Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing), 184–200. Krugman, Paul (1998). Saving Asia: It’s Time to Get Radical. Fortune, 7 September. Kuczynski, Pedro-Pablo and John Williamson (eds.) (2003). After the Washington Consensus: Restarting Growth and Reform in Latin America Edition (Washington, DC: Institute for International Economics). Mauro, Paolo (1995). Corruption and growth. The Quarterly Journal of Economics, 110(3), 681–712. McIlwaine, Cathy (1999). Geography and development: Violence and crime as development issues. Progress in Human Geography, 23(3), 453–463. Merton, Robert (1938). Social structure and anomie. American Sociological Review, 3(5), 672–682. Messick, Richard E. (1999). Judicial reform and economic development: A survey of the issues. The World Bank Research Observer, 14(1), 117–136. Milanovic, Branko (2005). Worlds Apart: Measuring International and Global Inequality (Princeton: Princeton University Press). North, Douglass C. (1990). Institutions, Institutional Change, and Economic Performance (Cambridge: Cambridge University Press). Odekunle, Femi (1978). Capitalist economy and the crime problem in Nigeria. Crime, Law & Social Change, 2(1), 83–96. Panakal, J. and A. Khalifa (1960). Prevention of Types of Criminality Resulting from Social Changes and Accompanying Development in Less Developed Countries (A/Conf. 17.3) (New York: United Nations). Parsons, Talcott (1966). Societies: Evolutionary and Comparative Perspectives (Englewood Cliffs, NJ: Prentice-Hall). Reitano, Tuesday (2018a). Catalysing and evaluating development responses to organized crime. In V. Comolli (ed.), Organized Crime and Illicit Trade: How to Respond to This Strategic Challenge in Old and New Domains (Cham: Palgrave Macmillan), 111–120. Reitano, Tuesday (2018b). Organized crime as a threat to sustainable development: Understanding the evidence. In V. Comolli (ed.), Organized Crime and Illicit Trade: How to Respond to This Strategic Challenge in Old and New Domains (Cham: Palgrave Macmillan), 23–35. Rostow, Walt (1960). The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge University Press).

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9. Reviewing the GVC approach and its international institutionalization: a critical perspective Víctor Ramiro Fernández and Manuel Facundo Trevignani

1. INTRODUCTION1 Over the last two decades, the global value chain (GVC) approach emerged as one of the most stimulating tools for the analysis of the geoeconomic dynamic of international development and globalization. While a group of researchers and consultants have used the concept quite vaguely when advising governments and organizations on regions and firms’ competitiveness (Porter, 1985), another group of academics, grounded in a more systemic and sophisticated theoretical tradition, have used it to explain the way in which different industrial global networks operate (Gereffi, 1996; Gereffi and Kaplinsky, 2001; Kaplinsky, 2000). Expanded through a plethora of worldwide case studies specially focused on developing countries, this approach has thus become a prescriptive policy field to advise on industrial and economic policies, encouraged from and by a complex set of international organizations (IOs). Among them, those related to United Nations with “heterodox” economic policies and development perspectives, like United Nations Conference on Trade and Development (UNCTAD); International Labour Organization (ILO); United Nations Industrial Development Organization (UNIDO); and Economic Commission for Latin America and the Caribbean (ECLAC), but also those associated to the orthodox policies of the Washington Consensus, like the Inter-American Development Bank (IADB); World Bank (WB); and the Organisation for Economic Co-operation and Development (OECD) (see Chapter 26 by Rivarola Puntigliano and Chapter 27 by Clifton and Díaz Fuentes in this volume). By analyzing different types of chains, their economic actors, and their possibilities for upgrading, the GVC approach has been able to deploy an extended empirical research program about the dynamics of global networks and the opportunities for local economic development, and territorially embedded collective and horizontal organizations (Humphrey and Schmitz, 2002). The rapid rise of this academic and political tool invites a serious evaluation of its quality, effectiveness, and limitations, so as to understand the insertion of developing regions and their actors in global networks, as well as the capacity of governments to elaborate consistent economic policies capable of promoting development by reversing the unequal dynamics that reinforce dependence and exclusion. This evaluation acquires a resignification in the scenario of pandemic crisis, which tends to exacerbate the national trends that began to be present in developed countries since the 2008 crisis with the decline in chain integration. In other words, it is necessary to evaluate the tension between the solitaire integration to global production 1 A previous version of this chapter was published in the Review of Radical Political Economics (Fernández, 2015).

131

132  Handbook on the politics of international development chains proposed by the GVC approach, with the recent reindustrialization processes in the US; the industrial and technological promotion programs for national companies in Europe; and the strategies to substitute imports of high tech in China. This chapter argues that the institutionalization of the GVC approach has legitimated a subordinated and exclusive process of integration of these actors into networks governed by the transnational fraction of capital, rather than a tool to enable economic actors from developing countries to reach strategic positions in global economic networks. In accordance with such a process, the GVC approach has also operated as a neoliberal device for fragmentary strategies implemented by global political networks conducted by those IOs. In this sense, the analysis intends to shed light on how the GVC approach has been considered only in terms of a new economic logic and not as a political tool used by the IOs to deploy a re-subordinating logic of reproduction. In order to illustrate the argument, in the next section we identify a group of limitations within the GVC theoretical and methodological corpus, which enables it to become a neoliberal device for global political networks and limits its evolution as a tool for a solid advance in developing countries, towards which those networks are, to a large extent, oriented. In section 3, we analyze the links between the GVC analysis and the supranational institutional policy networks responsible for spreading this approach as a tool of policy and research. Finally, we offer some brief conclusions stressing the need to tackle these aspects as a condition to evaluate the alternatives and the differentiated regional and national capabilities of responses to those subordinating and exploitative processes advanced by economic and institutional supranational actors.

2.

UNRAVELING THE GVC APPROACH

Based on its two conceptual pillars, governance and upgrading, the main contribution of the GVC approach to study the globalization process has been a simple but powerful tool to understand the way in which space and economic activities interact and evolve along different stages of production, conforming each global economic network, and the way in which value is produced and distributed in those activities (Gereffi et al., 2005), not only focused upon manufacturing activities, but also including marketing and distribution (Giuliani et al., 2005). In many aspects, GVC has been useful as it offers global geo-economic maps that allow us to determine who the actors, sectors, regions, and institutions linked to different activities are, how the capabilities of producing value are distributed among these activities, and how power is configured in the GVC (Gereffi et al., 1994). The relative simplicity in creating those maps and the non-conflictual way in which concepts are introduced has encouraged the international presence of the GVC approach, presented by its academic promoters as a more complete and realistic tool than the self-regulatory market strategies spread during the 1990s (Sturgeon, 2008). Capitalizing on the loss of prestige of the neoliberal tools and policies inspired by the Washington Consensus dogma, since the 2000s the GVC approach has gained increasing presence in the supranational agenda, providing new theoretical inputs for many assistance programs, financial projects, institutional advisers, and institutional workshops that a few years ago were outstandingly committed to self-regulative market theory. However, to what extent do these theoretical insights reflect a new approach that adds coherence and accuracy to those analyses of global transformation processes, as well as

Reviewing the GVC approach and its international institutionalization  133 capability of understanding the real possibilities in developing countries of being successfully incorporated to these changes through correct economic policies? In this section we argue that despite its contributions and its increasing analytical and political relevance worldwide, the GVC approach exhibits persistent limitations that threaten to turn it into an unsuccessful tool in the understanding of the subordinated positions of actors in developing regions where they seek to operate, and in the way proposed to modify them. We can organize these weaknesses into three interconnected groups of issues: (a) the conception of power and its consequences; (b) the under-consideration of the national trajectories and dynamics as result of an analytical over-centralization on firms; and (c) the lack of attention to the financialization process and financial capital in global networks, and their role in the relationship with the involvement in different production chains. 2.1

The Conceptualization of Power

The GVC framework has introduced a conceptualization of power that allows us to identify who is in charge of generating and preserving the more dynamic functions in terms of value control, that is, to determine how power is distributed and what form it assumes in terms of network and nodal governance (Gereffi et al., 2005). However, despite the fact that the two GVC key conceptual instruments allow us to identify who controls the chain (governance), and how the rest of the firms can dynamically integrate (upgrading), the approach left an empty space which leaves us with an imprecise concept of power between the actors in charge of governance and those which are subordinately challenged to unite through progressive upgrading. In this regard, the conceptualization of power that filled that empty space and acquired dominance among the GVC analyses came from the networks’ perspective, to which it has been strongly attached to highlight the macro and micro dimensional aspects of social organization that cannot be explained from hierarchical and market social relations (Messner, 2002). This incorporation of network concepts into the GVC approach has been achieved by some improvements brought to the network paradigm first developed from the embedded network perspective through the seminal contribution of Granovetter (1985), and the actor-network theory (Latour, 2005), with an important impact in geographical and relational thought (Allen, 1997). The influence of this relational notion of power in the analysis of global chains found a more explicit theoretical attention through the contributions of the Global Production Network approach. Its distinctive trait is the displacement of this notion of power as “capacity of action over others” – present in its birth under the World-System Theory (WST) – and its replacement by the idea of power as a result of “collective endeavors” developed from the basis of network relationships (Hess, 2008). This conception facilitates the analysis of the connections between actors based on win-win processes, from which empowerment is accessible for almost all actors involved in those collective endeavors. This notion of power as collective co-production has been progressively acquiring dominance within the GVC approach, taking distance from the explanation of the structural forms of dominance that is part of the WST and its analysis of commodity chains. In turn, GVC aligns with those academic concerns related to the way in which local dynamics can be more effectively connected with global networks. This connection has taken place through the improvement gained from both intra-local cooperation and interactions with global actors (Humphrey and Schmitz, 2002), allowing to learn and move up toward more value-added

134  Handbook on the politics of international development forms of production that respond to global standards (Nadvi, 2004; Lund-Thomsen and Nadvi, 2010). Besides the American strand led by Gereffi, this task has gained ground through a group of researchers gathered around the Institute of Development Studies at Sussex University, who conducted empirical studies on a multiplicity of sectors and actors on the analysis of the role of cooperation between local actors from different clusters in developing countries – horizontal – and the connections between them and the lead firms – vertical – (Nadvi and Schmitz, 1999; Schmitz and Knorringa, 2000; Giuliani et al., 2005). Along similar lines, other analysts have highlighted the relevance of the learning and innovation processes, which may be fostered by these inter-firm arrangements and linkages within the chains (Morrison et al., 2008). The results obtained, along with their specificities, intend to account that such interaction coming from the clustered firms integrated into quasi-hierarchical relations may experience rapid product and process upgrading (Humphrey and Schmitz, 2002). Based on these studies and empirical results, the “big family” of proponents and analysts of cooperative practices – horizontal and vertical – tend to consider that integrating into the global value chains is indispensable for firms from developing countries (especially SMEs). Consequently, priority is given to interrelations and cooperative actions in which “there are no zero-sum games” (Abonyi, 2005) and in which co-productive conception of power allows both to complement top-down and bottom-up ways of interactions and emphasize the range of opportunities (or challenges) posed for those not governing the chains. However, assuming power as a co-production through networks – and displacing its notion as dominance and subordination – implies the unfounded elimination of a crucial aspect for understanding the governing control over the chain that increasingly lead firms have, and the structural restrictions they fix for those interested in joining subordinately. More precisely, it is that notion that helps explain many empirical results obtained by a big number of studies within the GVC framework. These studies conducted in developing countries have shown asymmetries emerging from the increasing concentration of power in big actors which control the more dynamic functions of the global chains, and the limitations that make it harder for the local producers to achieve the functions of design, marketing, and branding (Schmitz and Knorringa, 2000; Bazan and Navas-Alemán, 2004). The GVC’s empirical studies recognize the strong limitations for developing functional upgrading, which could allow the subordinated actors to reach those “core competences” selectively controlled by the increasingly transnationalized lead firms. Turned into such a selective control of the core competences, such power involves reaffirming the asymmetrical, subordinating, and structurally restrictive role that transnational corporations (TNC) establish – based on the governance of chains – over firms from the Global South. From this position, the latter can be excluded or selected to enter the chains. However, in the last case, their performance is conditioned by the standards fixed by lead firms, and their functional upgrading is limited to a position from which they are prevented from affecting those activities controlled by those lead firms, that allow a greater value capture and command of the chain. Therefore, although the cooperative logic derived from a relational perspective of power offers possibilities to understand and promote collective building processes based on win-win games (Hess, 2008), the qualifications offered to these non-dominant actors do not always exist, and when they do, it does not only mean no threat to those concentrated actors, but also a reinforcement of their capabilities of the GVC’s command. In any case, all that these subordinated actors can expect when fighting for new upgrading through cooperation or the

Reviewing the GVC approach and its international institutionalization  135 qualification of the assemblages at a distance (Allen and Cochrane, 2007) is to be “coupled in the best way”, assimilating subordinating and standardized rules offered by those transnational buyers and producers (Gibbon and Ponte, 2008). If something can be inferred from this gap between the evidence and the theoretical proposal it is the remarkable incapability to recognize that global value chains have been constructed over an asymmetrical structure of capitalism, with consequences that demand to be tackled in order to think about the development of territories and actors from the periphery. From the point of view of actors, it is necessary to recognize the big TNC’s control over the strategic functions of the chain that implies a structural restriction for subordinated actors developing activities with less value generation. It also means a threat for many of the actors linked to this kind of activities, which cannot be disciplined or selected into the macro actor strategies and standards (Dolan and Humphrey, 2000; Gibbon, 2001). And, from a spatial point of view, it demands to notice that the concentrated control of strategic functions of the chain has been developed along with a highly rigid spatial hierarchy produced by the unequal accumulation process that divides North and South (Somel, 2003). Power as capacity is grounded in a spatial logic dominated by the reproduction of an unequal structure described by the WST. This logic has experienced a stimulating recovery and update from the contributions of Giovanni Arrighi, showing that the industrialization as a result of the relocation of productive processes in the South, is not oriented to transform but to be functional to a general logic of accumulation in which the concentrated actors controlling the most dynamic functions of the chains remain in the central areas of the world system (Arrighi et al., 2003). Undoubtedly, recovering the displaced conception of power and reconnecting it to the WST is fundamental for reinstalling a holistic view of capitalism which helps understand the strategies and restrictions not only for firms, but also for workers and institutions located in the Global South. Only complementing this conception, the co-productive conception of power dominating the GVC approach could gain sense for subordinate or excluded actors. Nevertheless, even with that qualification, the theoretical framework is not consistent enough to find responses to questions related to processes that have been taking place: Why has a part of Asia become an exceptional space in the rigid, hierarchical, and increasingly unequal global landscape? Why have their actors been able to break the subordinating and exclusive logic of global capitalism? Why have their national and regional networks been able to connect to and build up global networks in such an effective way? Why have other scenarios of the Global South like Africa and Latin America (Prochnik, 2010) not been able to follow that process? Finding answers for these questions requires tackling the second – analytically linked – limitation. 2.2

The Omitted Consideration of the Specificities of National Trajectories

Notwithstanding the argument that global chains are “situationally specific, socially constructed, and locally integrated, underscoring the social embeddings of economic organization” (Gereffi et al., 1994, p. 2), one of the most visible weaknesses of the empirical and theoretical agenda of the GVC perspective is its overwhelming focus on the firm. As a consequence of that, the activities, forms of relationships, functional changes, value distribution, and structures of governance of chains at a global scale are considered separately from the complex of elements that shape the national trajectories, especially the state.

136  Handbook on the politics of international development Largely encouraged by a critical position toward state-centrism (Glassman, 2011), the GVC approach has prioritized the analysis of upgrading and governance based on a local-global design that ignores the complex and articulated body of elements related to the role of the state, the social classes, and the institutions within the configuration of certain national trajectories. Sharing this omission, the lines of research developed by the GVC approach focused intensely on the sectorially and spatially outlined analysis of the local clusters in global networks governed from outside nations. Another important set of studies related to the theories of clusters and GVC intended to evaluate the ways and limits in which the cooperation between agglomerated firms in certain regions of the developing countries – like East Asia and Latin America – can facilitate upgrading processes and qualify the insertion into the global chains (Archibugi and Pietrobelli, 2003; Giuliani et al., 2005; Humphrey and Schmitz, 2002; Pietrobelli and Rabellotti, 2004; Kishimoto, 2004; Chaminade and Vang, 2008). Centralizing these studies on the analysis of the role of firms and their local clustering and ignoring the elements and historical ways in which certain national trajectories are configured, prevent us from properly explaining how and why specific macro-regions and countries could have been affected by a specific chain. And conversely, it prevents us from explaining how chains affect and are affected by those national processes. These problems cannot be overcome if the analysis of the local (bottom-up) is substituted by the top-down analysis (governance). The latter considers the role of lead firms and the variable relation and autonomy they give to suppliers in developing countries in the context of different macro-regional and national scenarios, as Gereffi and Memedovic did when analyzing the apparel industry in the United States, Asia, and Europe (Gereffi and Memedovic, 2003). Again, the focus on firms’ network limits the consideration of the elements configuring national trajectories and their variable – and bidirectional – connection with GVC, suppressing elements fundamental for the analysis of the different restrictions and potentialities which mediate between the local (clusters) and the GVC. For this reason, even when some studies recognize the national constitution of commodity chains (Smith et al., 2002), this does not contribute to overcome the problem without specifying which elements should be removed in order to introduce the national dimension, and without evaluating the implications of assessing this embedded context of national trajectories. This entails the necessity of considering the way in which certain historically shaped socio-economic-political structures and dynamics determine the way in which global chains penetrate or develop in a certain space, and the way in which they affect the total of those economic and institutional actors. Considering the national trajectories and specificities from those socio-economic-political structures and dynamics implies going beyond the over-centralized interest in firms, including actors – like the state and labor (Smith et al., 2002) – and determining aspects related to: (a) the existence of actors that represent different fractions of capital, labor, and the state; (b) the collective historical trajectories of those actors; and (c) the scalar articulation. In relation to the state, it entails its consideration not merely as an institution among others participating in the governance structure, but as a specific actor with different degrees of strength in its configuration (Evans, 1995), interacting with the power of social class coalitions implicated in the historical creation of state capabilities (Chibber, 2003). Recognizing the strengths and weaknesses that configure these state capabilities is essential to knowing the possibilities and constraints from which regional and national representation of capital and labor elaborate upgrading in GVCs (Dicken et al., 2001). Additionally, in relation to labor, it

Reviewing the GVC approach and its international institutionalization  137 involves not restricting its consideration to issues related to the cost impact in the chain performance or at the firm level, but externally, to its own organization and regulation at a national and regional scale (Peck and Tickell, 1992). This external dimension allows us to specify the level of organization and formal integration into the labor market (Portes and Haller, 2005), together with its participation in national income distribution (Pinto, 2008). Secondly, the examination of the origin and historical collective trajectories of those actors implies, on the one hand, understanding each actor in the framework of the collective path dependencies produced from their relations with other institutional and economic actors, which represent different capital fractions, patterns of labor organization, and the state in its different forms and scales. On the other hand, the consideration of those path dependencies in collective terms requires the evaluation of how the interrelation between economic and institutional actors is responsible not only for generating “lock-in” processes, but also for developing changes through breaking path dependent social trajectories (Crouch and Farrel, 2004). Finally, a scalar articulation of those actors and their relationships (Dicken et al., 2001) implies overcoming the tendency to associate chains with the micro dynamics of small local agglomerations (clusters) that neglect the insertion of these local processes into macro-national dynamics, historically consolidated. Certainly, conflictive strategies are developed by economic and institutional actors in order to deploy changing forms of scalar articulation that provide regional and national actors with different capabilities to respond to global strategies of transnational actors (Fernández, 2010). All these issues, with a scarce or nonexistent presence in GVC studies, are important to help us determine why and how more complex and comprehensive instances – like regions and nations – and actors (firms) are prepared differently to develop their global insertions in GVCs. 2.3

The Missing Analysis Regarding the Financialization Processes

A final limitation of the GVC approach reintroduces the role of power understood as the capability of certain actors over others. The limitation has to do with the remarkable absence of finance and financialization issues in the GVC and its conceptual apparatus. As Palpacuer pointed out: “paradoxically, while the notion of governance has been acknowledged as central to Global Commodity Chain analysis, the financialization of lead firms and its consequences for supplier relations have gone fairly unnoticed in this literature” (Palpacuer, 2008, p. 398). Ignoring financialization means not being able to recognize that the interrelationship between the productive and financial forms of capital has reached such a level of development that we could consider the TNC as an “organizational modality of finance capital” (Serfati, 2008). When this gap is filled as finance and financialization are introduced, two aspects emerge as critical for the analysis of the links between producers from peripheral countries and big transnational agents from the central ones. On the one hand, the role that financialization imprints on the lead firms governing the chains and relations within them with actors from the Global South, where production processes take place. The scarce studies addressing the process of financialization in the global production chains see their results heading toward this direction (Milberg, 2008; Milberg and Winkler, 2013; Durand and Miroudot, 2015; Balas and Palpacuer, 2016). This is the case of the ones conducted in the coffee value chain, considering the links between producers from some African countries and transnational commercialization companies (Newman, 2009).

138  Handbook on the politics of international development It explains how, in a context dominated by a process of liberalization, concentration, and transnationalization of companies controlling the chains, their strategies disassociated from the productive forms and increasingly aimed at speculative ones linked to finances. Among many other effects, this highlights the deepening inequalities affecting the progressively more vulnerable and fragmented producers located in the countries of origin, limiting their processes of accumulation (Newman, 2009). On the other hand, considering the role of finances within the GVC approach brings about a crucial aspect to identify asymmetries in the access to a vital element such as credit. The privileged access that lead – non-financial – firms have to the instruments which strengthen the financialization dynamics and their relationship with both financial investors and banks, contrasts with that of those economic actors from developing countries – mostly SMEs – localized in the subordinated functions of the chain, with traditional problems of financial assistance related to risk, scale, and asymmetric information, to name just a few. Consequently, the financialization process tends to deepen the asymmetric control of power and establishes entry barriers for mainly small actors. In order to improve their functions and positions in the chain through new financial investments, these latter actors rest on the assistance offered by either lead firms or by national and international coordinated programs from international organizations of development and financial assistance. Because structured and coordinated national financial systems in developing countries are in general fragile, the regional SMEs have become increasingly dependent either on their own revenue generation or on international financial programs, most of which are channeled through national and regional governments. This dependence of the subordinated territories leads us to analyze the often-neglected link between the GVC approach and the global political networks.

3.

THE ASSIMILATION PROCESS OF THE GVC APPROACH WITHIN THE INTERNATIONAL ORGANIZATIONS

Paradoxically, as the relevance of the GVC approach has been strengthened by its increasing assimilation in IOs worldwide, the relationship between this approach and those organizations has been academically tackled only recently by Gereffi (Gereffi, 2019; Mayer and Gereffi, 2019). Exploring such a relation could allow us to understand more accurately how and why the main limitations of the GVC approach are linked to the ideas and interests that integrate the economic and institutional global networks. In order to explore the connection among actors, institutions and networks, we concomitantly have to address two questions: Why were the heterodox instruments presented by the GVC pioneers as an alternative to the Washington Consensus’ analytical pattern finally incorporated by the IOs that were involved in the neoliberal agenda during the 1990s? Why does the GVC approach appear as a tool for those IOs and their multi-scalar networks? Obtaining responses to those questions demands paying attention to the connection between the GVC approach and the global political networks, and their role in the construction of a new neoliberal device for developing countries. The remainder of the chapter analyzes this argument.

Reviewing the GVC approach and its international institutionalization  139 3.1

The Role of Global Political Networks

Expressing a deepening penetration of capitalism into political and social institutions (Harvey, 2005), neoliberalism could be considered as a process aimed at imposing a market-oriented or market-disciplinary course to re-regulation (Brenner et al., 2010a), and a restructuring of the “embedded liberalism” (Ruggie, 1982) deployed under postwar Fordist-Keynesian capitalism. Established through an ever-increasing articulation of think tanks, and finding its political and institutional materialization through various national projects in the North (the UK and the US) and South (Chile and later on Argentina), the first big impulse of neoliberalism took place during the 1970s. However, the complete installation of the “global neoliberal machinery”, understood as a complex process of ideas, institutions, and practices, was able to consolidate itself throughout the 1980s and, fundamentally, in the 1990s under the coordination of and dissemination from IOs and their global networks (Peck, 2008). Since then and through the development of those networks, neoliberalism has manifested itself as “a rapid succession of regulatory projects and counter projects” (Brenner et al., 2010a, p. 4), with a tendency to work with “the imposition of blueprints based on idealized versions of Anglo-American institutions” (Evans, 2004, p. 30) that dominated during the Washington Consensus. Those projects and blueprints were channeled through an increasing deployment of a heterogeneous panoply of “micro practices”, rapidly adaptable to different national and regional scenarios. These practices represent an interconnected system of “fast policies” through which multiple scales are articulated in different ways, in order to extend and reproduce the commodification processes and the market-oriented social and productive strategies in local spaces. Understood in this way, neoliberalism should not be considered as a monolithic and nationally based project (exported from one nation to others), but as a multi-scalar restructuring process of socio-institutional arrangements developed under the Fordist-Keynesian accumulation regime and composed of a complex and constantly redefined and recreated set of ideas and institutional/social technologies (Peck, 2008). Likewise, these ideas and technologies are produced and merged through a complex network of IOs, which interact with local and national public and private actors, connecting an interpenetrated amalgam of practices, managers, messages, consultants, and, fundamentally, resources. Notwithstanding the technocratic image provided by those IOs, the unfolding of these networks and practices is dominated by the creation and recreation of disciplinary and consensual forms of power (Gill, 1995). While macro disciplinary forms are developed for compelling institutional structures to align their collective and individual behaviors, other more capillary and micro social practices are promoted procuring particular cooperative – and cooptative – forms of consensus. In the rough and changing regulatory landscape of neoliberal networks and policies (Brenner et al., 2010b), these combined processes of disciplinary and consensual forms of social involvement are shaped through an extended set of socio-political networks that manage variable technologies and forms of scalar articulation. These technologies implicate a transfer system of ideas and practices that reinforce the structural patterns led by market-driven mechanisms, allowing the deployment of micro devices with a rapid and micro-flexible adaptation of those patterns emergent from embedded local and regional requirements and daily life performances (Peck, 2002).

140  Handbook on the politics of international development 3.2

The Incorporation of the GVC Approach within the International Organizations

The incorporation of the GVC approach within the IOs had its beginning by the early 2000s, specifically through the implication of different United Nations agencies, which were less involved in the Washington Consensus paradigm throughout the 1990s. The first multilateral organization to incorporate the GVC framework was the ILO through the “Global production and local jobs” and “Decent work” programs launched by the end of the 1990s (Palpacuer and Parisotto, 2003). And the next one was UNIDO, which was already working with the clusters perspective and noticed the potentialities of linking the two approaches through the involvement of external consultants from the IDS (UNIDO, 2001, 2004). Moreover, the progressive settling of the GVC approach as a tool of analysis and policy within the IOs found an active presence in organizations of international financing like the IADB and the WB. The former, in a similar line as UNIDO, also had a strong focus in local economic development and clusters paradigms based on SMEs (Pietrobelli and Rabellotti, 2004). While the WB began to use the concept “seriously” after the 2008/2009 financial crisis, as a way to explain the link between trade and development in a context of increasing protectionism (Cattaneo et al., 2010). This assimilation needs to be framed within the growing problems of social legitimacy produced by the “roll back” period of the Washington Consensus and the necessity of repositioning the market before the effects generated by its ideologies of diffusion. Facing this scenario, and presented as an alternative to the prior self-regulative market conception promoted by the Washington Consensus during the 1990s, the GVC approach has gained relevance as an heterodox and more complex perspective that, from a macro point of view, offers a network world in which not only almost all regional and local actors could participate in the global chains, but also – depending on their own collective efforts – they could benefit from that participation by improving their collective organization and following the global rules. Considering these ideas, the construction of a neoliberal device of analysis and policy took place in three different phases. The first one has been gaining ground since the first appearances until the financial crisis, through the assimilation of the GVC concepts within UNIDO, ILO and the IADB. According to these organizations’ perspective, the insertion of the GVC approach has been associated with the concern about how the local processes and learning and innovation dynamics of developing countries (analyzed under concepts such as clusters or regional systems of innovation) could be introduced in the global chains. In the examination and promotion of that connection between local clusters and global value chains, the presence of the aforementioned categories of governance and upgrading has been a constant factor in fulfilling the common goal of either achieving the SME’s competitiveness or fighting poverty. The organization of the SMEs and the poor under forms of local clusters in order to enter and be qualified in the chain seems to be enrolled in that environment of micro disciplinary and consensual “fast policies”, stimulating local governments and civil organizations to assume the global network scenario as inevitable, and recognizing how their specificities can be adapted and enhanced in order to improve their insertion into global value chains. The financing that compels the SMEs – and the poor – to believe in development through local cooperation and upgrading in global chains is combined and reinforced by a consensual and non-conflictive introduction of “best practices” manuals, diffused through training programs and international and local seminars, as well as by the promotion of illustrative and successful experiences.

Reviewing the GVC approach and its international institutionalization  141 Combining discipline and consensus, the materialization of those fast policies becomes social and political technologies, supported not only in documents and policy guides but also in the proliferation of projects and programs of the organizations that have been promoting the approach, either from the UN or on behalf of financial institutions (for instance Núñez and Sievers, 2011). Oriented by a consensual (non-conflictive) logic, these projects and programs share the dominant idea of introducing “win-win” strategies. Within such perspective, local and regional actors from developing countries playing as poor or SME, by taking part, help achieve a precise knowledge of the local scenarios that are to be prepared to move into global chains. Under this assimilative logic, the “fast policies” associated with the promotion of the GVC approach in the Global South are envisioned as a refreshing opportunity for developing a novel theoretical proposal in which neither Darwinian market competition nor vertical paternalist state assistance is the central key to enhance competitiveness and the new local/global relations. In second term, as a complement for this first process operating through fast policies, a turning point emerged since the 2008/2009 capitalist crisis, and new IOs began to adopt the GVC concepts like the WB, the OECD, the WTO and the ECLAC. In this phase, the interventions were no longer at a micro level directed to operate specifically in local scenarios, but more holistic and interpretative of the new ways of addressing the insertion into the global economy and the crisis. It is along these lines that the GVC approach and its basic concepts were adopted by the WB to evaluate (based on case studies previously conducted on the shrimp industry in Nigeria and tourism in Mozambique) the ways of arriving at an environment more willing to invest and develop ways of competitiveness in firms within the global landscape, in a way to surpass the Washington Consensus’ simplistic view (World Bank, 2007). Since 2010, the WB commissioned the development of different case studies applying the GVC approach, including a good deal of its principal academic researchers. Based on those studies, and adding members from its own staff, the WB published a comprehensive document for analyzing the development crisis and strategies to be implemented (Cattaneo et al., 2010). In the same holistic spirit, after 2010 several co-organized international events took place showing a horizontal collaboration and coordination amongst the IOs in the assimilation process of the GVC approach. For instance: a conference in Paris was held in 2010 co-organized between the WB and the OECD; in 2011 United Nations established a value chain development group comprising nine member agencies (Stamm and von Drachenfels, 2011); and in 2012 several conferences were held in Mexico (organized by the WB, ECLAC, IADB and the OECD), Argentina (IADB), Costa Rica (IADB-OECD), and Beijing (UNCTAD-OECD-OMC). Finally, these collective interorganizational endeavors can be found in the joint statistical developments between the WTO and the OECD to measure trade in value-added.2 These horizontal collaborations serve as background for the last phase of the assimilation process of the GVC approach within the IOs since 2013. Many studies signal this as the year when the GVC approach consolidated as the new developmental tool within almost every IO (Gereffi, 2019; Werner et al., 2014; Dalle et al., 2013) with the construction of an international epistemic community around the GVC main theoretical foundations (Trevignani and Fernández, 2020). Accordingly, there has been a supranational urge for installing the



2

See https://​www​.oecd​.org/​sti/​ind/​measuring​-trade​-in​-value​-added​.htm.

142  Handbook on the politics of international development GVC approach as a global tool of analysis and inspiration in the creation of post-crisis paths. Such efforts share the objective of directing the policy makers in the fitting together of the upgrading of developing countries’ firms in global value chains, and of encouraging private investment and development through the market. Precisely, that last factor is fundamental to understanding how the assimilation process of the GVC approach – and its policies – jointly configure a neoliberal device. Effectively, the first assimilation process (based on micro fast policies and their localized disciplinary and consensual practices) and the second and more holistic process (aimed at installing the GVC in the interpretation of strategies post-crisis) that contributed to its ubiquity, equally help actors from the Global South (poor, small entrepreneurs, etc.) underpin their market and be inserted into the “private sector”. Through this and all the micro and macro instruments involved, an increasing and subordinate integration to the permanent and unequal marketization and commodification process is being encouraged as the only way out. Such process dominates the always recreated neoliberal project and its institutional intervention devices. In other words, the assimilation process of the GVC approach represents a creative incorporation into the machinery of discipline and consensus implemented through the international network of supranational institutions. That insertion of the GVC concepts into the global political networks has enriched the unsettled and transformed neoliberal devices, configured through regulative practices and institutions that are not targeted to challenge but to reinforce the market-driven axis that guides the neoliberal process from the beginning. However, precisely as a requirement for the conformation and functionalization of this neoliberal device, the assimilation process described appears concealed along with the asymmetric logic and the interests developed in the global economic networks. When we re-associate the economic network with the role of the global political networks, we verify that the consensual and disciplinary incorporation of the GVC perspective into the political and institutional networks, and their technologies of power travelling through space (Peet, 2001) is not neutral from the point of view of the impact on actors and their different interests. The integration of highly fragmented local and regional actors from the Global South into a complex “system of inter-jurisdictional policy transfer” promoting a fragmentary incorporation to the global production, and the assimilation of its concepts and functional logic, does not alter but recreate the subordinating, excluded, and hierarchical structure of global chains that have been previously considered. Working through these fragmentary mechanisms of financial assistance and training, the transnational political networks have become a strategic tool for the consolidation of a structure that shows increasing benefits for those TNCs, which handle the most dynamic and valuable portions of the global chains and ensure the subordinated and selective integration of the majority of small and medium economic actors of the Global South within the framework of the economic network. As a new victim of co-opted concepts, the GVC approach has finally become integrated within a standardized tale that hides the exploitative and subordinated structures of global reproduction by exalting the consensual form of incorporation into win-win games. Playing this harmonious – and non-contradictory or non-conflictive – role is in fact a disciplinary condition to obtain the “political acceptance” that allows integration into international financial assistance programs.

Reviewing the GVC approach and its international institutionalization  143

4.

FINAL REMARKS

It has been one of the main objectives to show how the GVC approach, increasingly transformed in a strategic instrument of analysis and politics of the international organizations that promote development at a global scale, has gone in the opposite direction to the achievement of the initial objectives pursued by its “academics pioneers”: providing analytical tools – and policies – for reverting processes of exclusion and subordination that affect both economics and institutional actors from developing countries. As a demonstration of this opposite direction, we highlighted how the GVC approach throughout the two decades since its emergence, has finally been linked to a set of limitations based on: the disregard of those forms of power that allow detecting the processes of domination; the adoption of a perspective which loses sight of the complex socio-economic contexts dominating the peripheral scenarios and their economic actors; and, finally, the neglect of the role played by the financialization process increasingly dominating capitalism and reproducing the structural asymmetries inside the GVC. We have also analyzed the way in which the GVC approach has been assimilated by the IOs and progressively converted into an important element of neoliberal devices. This role is played by promoting a mechanism of fragmented and centralized coupling of the actors, regions, and countries of the periphery to global chains. This process allows the continuity of the subordinated and excluded integration of those actors into the economic networks and strengthens the interests of the globalized fractions of capital that control them. In order to overcome the weaknesses and formulate alternative ways of analysis and action, we stress the need to rethink the way in which the global value chains are studied and politically used. Besides the incorporation of the three elements already mentioned, this also implies: 1. First, coming back to the theoretical sources of the approach, assuming – as the WST – the need of considering the functioning of different value chains within the global dynamic of the contemporary capitalist system, and within that framework the recognition of structural dynamics and the differential power between spaces and actors inserted in transnational economic networks. 2. With the latter in mind, we should also include a careful examination of the differential strengths and weaknesses regarding specific accumulation processes and institutional regulation resulting from different national trajectories in the Global South – and not of a certain firm or cluster of firms. From these different national trajectories and through an examination of the “path dependencies” shaped by the state, the central capitalist actors, and the labor force that conforms to the matrixes of national power, it is relevant to identify the specific national capacities of giving answers, conditioning entries, or providing alternatives to the global chains from peripheral positions. To advance in this last sense, specifying the elements through which global networks are linked to national trajectories with differentiated potentialities playing within the framework of structurally unequal and exclusive global economic networks, is probably one of the most stimulating ways forward for researchers and policy makers committed to forging an alternative agenda to neoliberal economic policies from the Global South. This agenda, however, implies the recognition that: the forms assumed by the links between global networks – economic (GVC) as well as political (expressed by the IO) – and the national processes historically

144  Handbook on the politics of international development conformed, are clearly interpenetrated. In this sense, the former cannot omit the relevance of these national trajectories and the way in which they “mediate” global and local relations. In the same way, such trajectories – as Sassen was right to warn – cannot be considered from a methodological nationalism which place the national as a “sealed container” from which answers for the global networks emerge (Sassen, 2003). On the contrary, such trajectories should be recognized, along with the actors representing them (as national) considering the constant penetration and reconfiguration realized by the networks, actors, and economic and global institutional actions, and the fact that the global is multi-scalar and constantly structured “inside what has historically been constructed as national” (Sassen, 2005, p. 529). The attempt of the GVC approach to present its analysis as an original tool for considering the specificity of globalization cannot conceal the way in which global chains are structured over historical and structural relations of constant subordination and unequalization. These elements were not only present in the designers of the “commodity chain” concept (Hopkins and Wallerstein, 1986), but also in the still important tradition of “dependentist” analysis (Frank, Amin, Furtado, Prebisch). Once this historical and structural element is introduced, the “agreed” utilization of the GVC concept by the global political network – displacing the dominant dimension of power – loses the capability of operating as a dangerous device for actors from the periphery, and, in spite of its promoters’ efforts, becomes a scarcely original tool for interpretation. For the Global South, particularly for scenarios like Latin America and Africa, being able to rely on an original tool comprehends the need to avoid focusing only on the idea of “climbing the value chains” (Gereffi, 2014, p. 10), by structurally limited upgrading and always controlled by lead firms from the “center”, but also to shift the attention – from the recognition of the different national and regional trajectories, limits of power, and capacities of their states – to the formulation of integral strategies which consider alternative networks for their development.

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Reviewing the GVC approach and its international institutionalization  147 Portes, A. and W. Haller. 2005. The informal economy. In Handbook of Economic Sociology, ed. N. Smelser and R. Swedberg, 2nd edition, 403–427. New York: Russell Sage Foundation. Prochnik, V. 2010. La inserción de América Latina en las cadenas globales de valor. Red Mercosur de Investigaciones Económicas, 25–68. Montevideo. Ruggie, J. 1982. International regimes, transactions, and change: Embedded liberalism in the postwar economic order. International Organization 36 (2): 379–415. Sassen, S. 2003. Globalization or denationalization? Review of International Political Economy 10 (1): 1–22. Sassen, S. 2005. When national territory is home to the global: Old borders to novel borderings. New Political Economy 10 (4): 523–541. Schmitz, H. and P. Knorringa. 2000. Learning from global buyers. Journal of Development Studies 37 (2): 177–205. Serfati, C. 2008. Financial dimension of transnational corporations, global value chain and technological innovation. Journal of Innovation Economics 2 (2): 35–61. Smith, A., A. Rainnie, M. Dunford, J. Hardy, R. Hudson, and D. Sadler. 2002. Networks of value, commodities and regions: Reworking divisions of labour in macro-regional economies. Progress in Human Geography 26 (1): 41–63. Somel, C. 2003. Commodity Chains, Unequal Exchange and Uneven Development. Working Papers in Economics, Department of Economics, Middle East Technical University, Turkey. Stamm, A. and C. von Drachenfels. 2011. Value Chain Development: Approaches and Activities by Seven UN Agencies and Opportunities for Interagency Cooperation. Geneva: International Labour Office. Sturgeon, T. 2008. From global commodity chains to global value chains: Interdisciplinary theory building in an age of globalization. In Frontiers of Commodity Chain Research, ed. J. Bair, 110–135. Stanford, CA: Stanford University Press. Trevignani, M. and V. R. Fernández. 2020. The institutional process of the GVC approach: From the academic field to the international organizations. In Understanding Value Chains, ed. S. Faust, 1–48. New York: Nova Science Publishers. UNIDO. 2001. Integrating SMEs in Global Value Chains: Towards Partnership for Development. Vienna: United Nations Industrial Development Organization. UNIDO. 2004. Inserting Local Industries into Global Value Chains and Global Production Networks: Opportunities and Challenges for Upgrading. Vienna: United Nations Industrial Development Organization. Werner M., J. Bair, and V. R. Fernández. 2014. Linking up to development? Global value chains and the making of a post-Washington Consensus. Development and Change 45 (6): 1219–1247. World Bank. 2007. Moving toward Competitiveness: A Value Chain Approach. Washington, DC: World Bank Group.

10. The politics of international monetary relations Oscar Ugarteche

International monetary relations is a field that studies how money is used as a political instrument (Kirshner, 2003). The top player can act in a way that can induce all nations to go in a certain direction, export its crisis, and finance its deficits while determining the exchange rates of the rest of the world. It can also use this to further its interests abroad. The power of the second level regional master currencies can be used to counterweigh the influence of the top currency, and sum power within a region. Most countries have ordinary national currencies. The unanswered question is why a few currencies function outside the geographical space of the issuing nation. Some argue the reason is political power, others that it is military and for others it is economic and technological. The fact that one player can have external deficits, fiscal deficits and the rest of the world will pay for them brings out the nature of the master currency. Over the past three hundred years only one currency at a time has been able to do this. This capacity shifts the cost of adjustment of the leading economy towards weaker countries. The question is whether this is accepted neutrally or not and what peripheral economies can do as a reaction. This is the point of regional financial cooperation.

INTERNATIONAL CURRENCY An international currency is an international means of payment, a store of value, and a unit of account. Historically there have been universal means of payment, such as the Spanish gold Doblón or the Dutch Guilder. There have also been regional master currencies such as the US Dollar, the French Franc and the German Reichsmark in the nineteenth century used in particular geographical areas or political spaces like the colonies. However, at that time, the Pound Sterling was first identified as a top currency. Susan Strange (1971a) defines the top currency as the currency of the state with world economic leadership of the world’s super economy. She argues that what matters is its predominance as a means of exchange, even when it is not necessarily a good store of value. Reaching the top is not necessarily the result of power or prestige as much as utility. She then argues that any state economically strong enough to possess the international economy’s top currency will also exert substantial power and influence. However, the political influence of that state may well be geographically less extensive than the use of its currency. She argues that because it is the leading currency, it has constraints that other currencies do not. Firstly, it is more vulnerable to economic stress and pressures of an accelerating international economy. Hence the saying, “When the US sneezes, the world catches pneumonia”. Having broader financial markets is subject to more significant financial crises and runs with a more general effect on the rest of the world than smaller countries and must then protect itself from these. This position weakened after the First World war and in the interwar years as the gold standard fell apart. The way out was the definition in 1935 of the US Dollar as being equivalent to an ounce of gold at 35.7 dollars. With that, the Pound became pegged to the Dollar and the 148

The politics of international monetary relations  149 Dollar to gold. After the Second World War, the US Dollar slowly became the top currency, and after the 1967 Pound devaluation, became the sole new top currency while the Pound became a master currency for its former colonies. Strange (1971a) defines this as the political domination of the state issuing the currency over other areas or as a subordinate relationship. Some examples are the French Franc with French-speaking African countries, the Sterling with Commonwealth countries before independence, and the Soviet Rouble in Eastern Europe during the Cold War. Here the use of the currency is induced through coercion. The largest economy has leadership and military prowess in these currency areas. A new element evolved in the second half of the twentieth century: the concept of financial interdependence. Strange (1971a) refers to Cooper’s (1968) concept of interdependence, and shows how one effect of increased interdependence is that the monetary management of one national system might inadvertently hurt others and cause conflict with other countries. The other effect is the governments need to have more sophisticated and complex monetary associative arrangements to take advantage of the expanding international economy and the interdependent system it represents. Strange (1971b) was the first to identify that international currencies have several functions aside from the three Keynesian ones named above. She understood there was a political aspect as she studied British foreign policy and Britain’s role as guardian of the Sterling. She identified the multiple roles of an international currency as it is used nationally as well as internationally with an impact on foreign aid, defence, trade, and monetary and foreign policy generally. She constructs a theory of the causes and status of international currency along two lines, first, the economic conditions under which the currency becomes used abroad; and secondly, the consequences that follow for the issuing state when this happens. ‘Political’ or ‘negotiated’ currency result not from coercion but persuasion. A political currency occurs when the possibility of coercion is lost and its use is incentivized. Strange gives an example of the exclusive agreement concluded with Hong Kong and then with the rest of the Basel Facility Agreement members of 1968, after the Sterling depreciation from 2.80 US$ to 2.40 US$. The considerations for this agreement were that Sterling continued to come under severe pressure, following its devaluation in November 1967 and the subsequent recurrent crises in the international monetary system. The British government feared another significant crisis precipitated if holders of Sterling, because of a lack of confidence, proceeded to convert their Sterling into other currencies: a second devaluation would have been unavoidable. The proposed solution was backed up by a two-pronged arrangement. First, Sterling Area members should keep a minimum proportion of their reserves in sterling. Secondly, a guarantee by the British government of a proportion of a country’s Sterling reserves in terms of US dollars, should there be any devaluation of the British Pound, would apply to that part of each country’s official Sterling reserves which exceeded 10 per cent of its total reserves. It was a political or negotiated agreement that gave preferential treatment to Sterling Area member countries in other fields. Finally, Strange identified a ‘passive’ or ‘neutral’ currency, and the example is the Swiss Franc, a refuge currency. T. Ito and his team (Ito et al., 2018) have tried to address how an international currency can be defined and exist from an economic standpoint and how it can gain and lose its status. From Triffin (and his dilemma, 1960) on to more modern views on escalating the international ladder, like De Paula et al. (2017), there lies the question of why there appears to be only one top international currency and why there appear to be no steady ladders. Since 1973 the US Dollar has been unstable, like the Sterling Pound in the interwar years, yet it remains the top

150  Handbook on the politics of international development currency despite the United States’ diminishing world GDP share, massive macro imbalances, declining productivity, and not having won a war since 1945. Exploring how a country can become a top currency issuer, Ito et al. have delved into why the Yen did not become a full-blown international currency, be it top or master, despite the fact that Japan experienced one of the highest growth rates in the world between the Second World War and 1990, and held a substantive trade surplus and a massive level of international reserves. It went from an economy destroyed by the war to the second position in the world economy in 1990. However, the Yen never grew as a valuable international currency of any type. Ito et al. explore why, for example, Japanese exporters are not able to shield themselves from exchange rate risk by adopting Yen invoicing, given their strong presence in global markets and third position in the world economy in the twenty-first century, after China and the United States. Further, why is it that Chinese exporters cannot invoice in Yuan? Both these economies have a healthy global economic weight. However, they lack both leadership and the institutions that build it. What makes for an international currency has been discussed by Ozeki (1991), Ito (1992), Ozeki and Tavlas (1992), Frankel (1993), Matsuyama et al. (1993), Obstfeld et al. (1995), and Kawai (1996), in light of the Plaza Accord effects on the Japanese economy particularly after the bubble burst in 1990. Interest in the subject was also stimulated by the 2008 US financial crisis and the expansionary monetary policy of the Federal Reserve (the Fed). Helleiner (2008), Flandreau and Jobst (2009), and Chey (2012) looked at the problems faced by the Dollar. Soon after, the Yuan was the centre of discussion by Cohen (2012), Mallaby and Wethington (2012), and Yu (2012), when the People’s Bank of China Governor Zhou Xiaochuan called for a new international reserve currency (Zhou, 2009). From an economic point of view, there is no agreement as to how to climb the ladder. From a political angle, there is a will to create less dollar-centred monetary relations, but international financial institutions – both public and private – are all geared around that currency. What Ito and his colleagues found in their work published in 2018 is that firms use the same currency both for the invoice (unit of account) and settlings (medium of exchange). The US Dollar is used increasingly in exports to the world by the larger firms, and the larger the firm size, the higher the share of intra-firm trade. Invoicing in the importer’s currency is chosen for exports to the US, and to the Euro area and the UK that have lesser international currencies. They do not invoice firms in Asian countries in Asian currencies. The same is valid for Latin America. The explanation lies in the fact that while the Dollar might be unstable, it is still perceived as stable and this is perception is only strengthened the more institutions insure the money and issue the contracts in US dollars, like the Fed, the Federal Deposit Insurance Corporation (FDIC), and the New York courts. Helleiner (2008) suggests two distinct channels through which politics can influence the international standing of currency – one indirect and one direct. Politics is essential in the indirect channel through its impact on three key economic determinants of international currencies: confidence, liquidity, and transactional networks. In the direct category, politics matters more when states support the currency’s international status for reasons unrelated to these economic determinants.

The politics of international monetary relations  151

HEGEMONY Polanyi states in The Great Transformation (1944) that nineteenth-century civilization effectively collapsed after the First World War. His work deals with the political and economic origins of this event and the great transformation it ushered in. British hegemony and nineteenth-century civilization derived, rested on four institutions: 1. The balance-of-power system which prevented any devastating war between the Great Powers. 2. The international gold standard, which symbolized a unique organization of the world economy. 3. The self-regulating market produced unheard-of material welfare. 4. The liberal state. The gold standard was introduced in Britain in 1816, as a matter of small coin convenience and rather than significant economic policy (Fetter and Gregory, 1973). This coinage was possible because of changes in minting technology. Redish (1990) argues that Britain abandoned bimetallism after the Napoleonic Wars because a gold standard with some silver coinage offered the possibility of a medium of exchange with high (gold Guinea) and low (silver) denomination coins circulating concurrently. The British gold standard became universal when Britain held the lead in the international economy and international trade, and the Pound Sterling was the international means of payment. Knafo (2006) adds that by subjecting the management of fiduciary money to state control the institutions of the gold standard created a new monetary framework that opened the way for central banking. The Bank Charter Act of 1844 gave the Bank of England a wide range of new powers and formalized the issuance of banknotes in the UK. Britain could have the top currency through a combination of strong financial institutions and a robust exchange rate, boosting its reputation as a military power upholding the Pax Britannica with the capacity to steer and lead the British liberal economic order. Gough (2014) argues that only well into the nineteenth century, did the British become conscious of the nation’s world power and world influence. At that stage, they were able to laud and magnify their rule of law. They were in a position resoundingly preaching legal trade, advancing human and civil causes, policing the end of slavery and piracy, and advancing a peace system that they hoped would endure forever. Britain’s position weakened after the First World War when it was left bankrupt and in debt to the United States, unable to win the war alone. Great Britain was no longer able to maintain the Pax Britannica and in 1931, after severe balance of payment problems during the 1920s, Britain abandoned the gold standard. It then made a last-ditch attempt to keep Sterling as an international trade currency through the Ottawa Agreement of 1932. Bilateral trade agreements settled this agreement in Sterling amongst the Commonwealth countries. After the creation of the IMF, the US Treasury Secretary pressed for the dissolution of the Ottawa Agreement with the argument that bilateral trade agreements went against the grain of the new multilateral trade and payment system created at Bretton Woods. This shift consolidated the US Dollar as the new top currency leaving the Pound as a master currency for its Commonwealth member countries. The Second World War demonstrated that the US could build a Pax Americana, the Bretton Woods Agreement replaced the gold standard entirely with the US Dollar and its nominal equivalence into gold and introduced the American liberal order constructed through the UN

152  Handbook on the politics of international development and its institutions. The IMF policies became the essence of the embedded liberalism the US wanted as a universal rule after the Second World war (Ruggie, 1982). That was the end of German corporate capitalism and of the British free trade idea built on unequal terms of exchange, the export of British industry, and the import of raw materials à la Ricardo. British liberalism was the ground on which British international firms developed and grew. The new embedded liberalism of multilateral institutions was the start of a new American corporate liberalism that included democracy and individual freedom. Ruggie argues that in the organization of the new liberal order, market rationality has pride of place. Authority is not absent from such an order. Authority relations give maximum scope to market forces rather than constrain them. The new corporate liberal regime limits the discretion of states to intervene in the functioning of self-regulating currency and commodity markets. This corporate liberalism is the basis for the expansion of US transnational corporations. Cohrs (2018) argues that the term Pax Americana describes the American superpower’s supremacy after 1945, mainly in the ‘Western world’, and the relative peace, stability, and prosperity it brought to some states and societies within the US sphere of influence during the Cold War. It can be associated with the rise of a new kind of ‘Cold War empire’ with the unprecedented expansion of a US ‘empire of production’ and an American ‘empire by invitation’, above all in Western Europe. The combination of the Pax Americana plus the new multilateral institutions based on embedded liberalism plus the size of the US economy in the world consolidated the United States’ hegemonic position. It opened the space for its holding the position of top currency.

THE POLITICS OF MONETARY RELATIONS C. Randall Henning (2005) says that monetary statecraft understood as efforts to influence the policies of other states by manipulating monetary conditions, has been a recurring feature of the global economy since the Second World War. He adds that at critical moments, the United States has exploited the vulnerability of countries in Europe and East Asia through changes in their currencies’ exchange rates vis-à-vis the Dollar to extract policy adjustments from their governments and central banks. Holding an international currency and staying at the forefront of economic relations depends on a country’s strong capacity to impose rules, have a following, build consensus, and display technological, diplomatic, economic, military, and cultural leadership. International monetary relations comprise the efforts of sovereign states to influence the conditions of cross-border flows of money and other financial assets, mainly money flows that are not the direct counterpart of real exchanges of goods and services.1 The hegemonic elements allow that particular country to set conditions on the rest of the world while remaining exempt from keeping to the rules imposed on all the rest (Arrighi, 1994). The creation of the Bank of England gave birth to money as we know it today. Far from bimetallism or the gold standard, related to the metals themselves, the politics of monetary relations also has to do with the issuance of money and its use as an international currency. In economic terms, the proportion of a country’s international trade, multiplied by the size of the country’s economy, defines an international currency. In 1 International intlpoliticalscience.

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The politics of international monetary relations  153 political terms, it must also include the above elements. As we saw earlier, the first such top currency was the Pound Sterling in the late eighteenth century. The Pound Sterling became the top currency, with proper institutions to set the rules for the international use of credit, whether commercial or sovereign; and these institutions operated under British law. Flandreau (2013) shows the importance, in the period between 1827 and 1867, of the London Stock Exchange (LSE) as a Court of Arbitration for unpaid bonds and how the LSE General Purpose Committee set up a system of Collective Action Clauses, requiring majority agreement among bondholders to permit market access. The British bondholders organized at the LSE then transformed into the first Corporation of Foreign Bondholders established in London in 1868 (Ugarteche, 2007). All the institutions behind monetary relations were British at that time. Since the inception of international sovereign lending in Pounds Sterling, the central issues were, first, how to have the correct and timely information for decision making regarding loans and, second, the mechanisms of coercion and renegotiation in case of payment problems. Such mechanisms require the cooperation of other creditor governments to some extent, given other international currencies emerged in the nineteenth century, such as the French Franc. When payments problems arose, in extreme cases, they led to gunboat diplomacy, as in Egypt (1882), Venezuela (1904), or Nicaragua (1909). Such is the close union between the state and the markets (Pauly, 1997). Already in the early nineteenth century, the problem of information was vital. How can a lender, and issuer of international currency, make an international loan without accurate information from abroad? If the source of credit is trust (credere), then there must be evidence of the sovereign government’s behaviour to give a clear idea of the possible scenarios. A government may change its modus operandi, but, in general, in the short term, it will maintain a consistent line of conduct. On the other hand, international investment bankers oceans away from debtor nations needed accurate and timely information. Moreover, when in 1825 the caveats were initiated (Suter and Stamm, 1992; Marichal, 1989) and these investment banks could not deal with their newly independent clients in Latin America, the need for a coercive mechanism became evident, as it also became clear that, in order to carry out the negotiations, most, if not all, creditors had to participate on equal terms. Otherwise, those who did not participate got a better deal. The beginning of a stable flow of homogeneous information by the Corporation of Foreign Bond Holders, established in London in 1868, happened after operations began in 1873. The private creditors who formed the Council of the Corporation of Foreign Bond Holders received a special licence from the Board of Trade to operate in 1873 and became later incorporated by an Act of Parliament in 1898. International currencies require mechanisms for future payback problems, albeit trade or sovereign debt, or more contemporarily, private international debt. The international role of the Pound as a top currency weakened with the First World War, as the City of London was no longer able to issue loans in Pounds, and international trade veered towards the US. The British difficulties with US Dollar debt and the inability to repay it as the economy floundered all through the 1920s, made evident the need for trade agreements in Sterling Pounds. Britain was losing international economic weight. When transactions in US dollars grew worldwide, the Ottawa Conference of 1932 secured trade within the Empire in Pounds. Paradoxically, the first primary sovereign debtor in dollars was the UK to finance imported weapons and food for the war. After the First World War, New York became the financial capital of the world, and mostly all loans issued in US Dollars around the world used New York courts instead of London courts. International trade slowly shifted from Pounds to Dollars throughout the 1930s. There were two major dominant currency power blocks in the

154  Handbook on the politics of international development world at the time, Pound Sterling, with the Ottawa Agreement and the Dollar block, the rest of the world. Some trade happened in French Francs, a master currency, between France, a lesser dominant power, and African and Middle Eastern countries. A fourth international reserve currency emerged as the danger of another world war loomed: the Swiss Franc. Though not used internationally, Swiss banks and francs became a refuge for money, from invasions and displacements. Strange (1971a) refers to it as a ‘neutral’ currency – not issued by a dominant economic power but achieving international standing because of its economic attractiveness. After the Second World War, the Bretton Woods Agreement designed in the US by Harry White and rubber-stamped by the rest of the world in 1944 (Steil, 2013), set the rules. The leading international world creditor was the US, and the Dollar became the primary means of payment in international trade, in loans and foreign investment. The US had the most significant weight in trade and GDP in the world, and its economy kept running after the war without the shocks experienced by Britain and the European economies. A massive injection of dollars in the form of the Marshall Plan consolidated the Dollar as an international currency, backed since 1935 by a fixed exchange rate to gold at 35 dollars an ounce. Since the 1950s, the United States has been running a massive balance of payments deficits and accumulating liabilities, i.e., injecting US dollars into the world economy. For the rest of the world, the 1950s was a period of transition, with international reserves kept in several currencies and gold. Since the 1960s and Triffin’s dilemma, there have been many discussions on how to go about recovering a macro balance for the United States and why it is vital to keep a sound economy in order to keep a sound currency. Triffin (1960) argued that if the US reduced its external deficit that would lead to a contraction of international trade and a downturn in the world economy. If it did not, the value of the US Dollar would weaken, and the US Dollar as a reserve asset would be lost.2 However, it did not happen. The Pound Sterling suffered a significant blow in 1964–1967, and that ended the era of Sterling as a top international reserve asset, leaving gold, major trading partner master currencies (Franc, Mark, Yen), and the Dollar as reserve assets. In the 1970s, international monetary reforms were due after the liberalization of the currency markets and the end of the gold reserves and the Bretton Woods system. With the end of the Bretton Woods exchange rate mechanism and fixed gold price at 35 dollars an ounce, reserves shifted almost instantly entirely into the Dollar. Evidence shows that unsound policies, with massive external deficits and large fiscal deficits, do not hurt the Dollar’s use as an international currency. Instead, it is a safe asset where investors take refuge in times of international turbulence, like the early 1970s, 1987, 1998–2000, 2008–2009, and again in 2020, despite the national macroeconomics. The argument would be that it is less unstable than other currencies and more highly accepted worldwide.

EXORBITANT PRIVILEGE The concept of exorbitant privilege was coined by Valéry Giscard d’Estaing, French Finance Minister, and later President, who said that the system designed in 1944 with the Bretton Woods Agreement gave the US the right to freely pursue its domestic policy objectives as



2

See https://​www​.imf​.org/​external/​np/​exr/​center/​mm/​eng/​mm​_sc​_03​.htm.

The politics of international monetary relations  155 well as run sustained balance-of-payments deficits (Bernanke, 2016; Eichengreen, 2011). In essence, other currencies were pegged to the Dollar and the Dollar to gold at the time. Despite the end of the Bretton Woods system and the Dollar peg to gold in 1971, all other currencies are still somehow related to the US Dollar and convert freely into it, and the US enjoys that privilege. With the 2008 crisis, the Fed reacted by injecting liquidity into the US financial system. An effect was the devaluation of the US dollar, understood as having engaged in ‘currency wars’ to gain a trade advantage. It also became evident that shifts in US monetary policy had spillover effects on the financial stability of emerging markets, especially in 2009 and 2010. Having the top currency provides the issuer with extraordinary benefits that, in political terms, implies being able to set the rules to all others. Having seigniorage, the difference between the production cost of a currency and its face value (Chey, 2012), the government of the issuing country can address the entire world with the future financial rules of operation. There is seigniorage at the international level when foreigners hold the domestic currency, or financial claims denominated in it, in exchange for goods and services (Cohen, 2013). Cohen argues that benefits are different ways to obtain benefits. In the end, three roles appear to be of paramount importance: a money’s role in financial markets and central-bank reserves enhance the issuing state’s monetary autonomy, making it easier to delay or deflect adjustment costs. He adds that a currency’s role in trade is essential, above all, because of its impact on central bank reserve preferences. The more a currency dominates in each of these three roles, the higher is the issuing state’s monetary power, and the more difficult it becomes to replace it with another currency. From Cohen’s (2013) point of view, two political aspects are central to power politics: autonomy and interactions. He defines the foundation of monetary power as the capacity to avoid the burden of adjustment required by payments imbalance – an ability to delay adjustment or deflect its costs on to others. Helleiner (2008) suggests there are direct and indirect mechanisms through which politics can influence the international standing of a currency. Politics is vital in the indirect channel through its impact on three key economic determinants of international currencies: confidence, liquidity, and transactional networks. In the direct category, politics matters more when states support the currency’s international status for reasons unrelated to these economic determinants. By definition (Cohen 2013), the capacity to avoid adjustment costs implies that others must adjust to restore payments equilibrium. Autonomy in this sense gives the powerful the possibility of shedding responsibility for its misalignments on to others, like the transfer of responsibility of the debt crisis of the 1980s to the Latin American countries when in fact it derived from a grotesque rise in US interest rates and the US government’s internal management of their imbalances and inflation during the 1970s and early 1980s. Bernanke (2016) addresses the reasons for criticism of the US and the Federal Reserve system. He suggests “that the dominant role of the US dollar in international trade and finance—about 60 percent of international reserves are in dollar-denominated assets, for example—makes Fed actions particularly consequential. That, in turn, it is sometimes argued, confers a special responsibility on US policymakers to take the international implications of their actions into account”. The elements that make the Dollar an international medium of exchange and a reserve currency are stability of value, liquidity, safety, and the Fed as a lender of last resort. The US

156  Handbook on the politics of international development Dollar has had little stability in terms of other currencies since 1990, but equally, inflation in the US is lower than in the rest of the world. The benefits for the top currency country in terms of being able to transfer its adjustment responsibilities are clear. Other benefits include the ‘good housekeeping seal of approval’ for US markets, institutions, and policies. These replaced previous British policies and institutions, and currently, China is making efforts to similarly internationalize the Renminbi through international recognition of its policies and institutions. Another benefit is that it can finance its public debt and external deficits through the sale of treasury bonds worldwide, held by central banks as international reserves. These have no significant interest rate returns but are a haven because of the elements pointed out above.

WHAT ARE THE DIFFICULTIES OF NOT HAVING A TOP CURRENCY? The main problem that arises from having a dependent currency, is that its value hangs on its relationship with the US dollar. Thus the value of the currency as a means of payment in the peripheral countries is determined by conventional domestic elements, like inflation and growth plus the external element of the value of the US Dollar in the international market. If the dollar drops because of massive liquidity injections by the Fed, as in October 2008 and March 2020, the peripheral countries’ exchange rate appreciates and vice versa. This makes for a loss of control on exchange rate policy in the periphery. With a new regionalism emerging (Riggirozzi and Tussie, 2012), new financial cooperation instruments and mechanism have appeared. The shaded areas in Figure 10.1 indicate US recessionary periods when the US Dollar rate of exchange depreciated against the rest of the world. The opposite is true for peripheral currencies. When the Dollar drops, these currencies appreciate making their exports more expensive, thus making their own crises more severe; and imports cheaper, thus transferring the US economic problem abroad via the exchange rate mechanism. Both cases, 2008 and 2020, reflect massive injections by the Fed into the financial complex for the rescue of US financial institutions. In face of this, several regions of the world organized their regional external payments mechanism so as to become more resilient to uncontrolled Dollar fluctuations. Some examples are the local payments mechanism of MERCOSUR, the Chinese Interbank Payment System in Reminbis, the construction of a South American regional financial architecture including the regional currency unit, plus a development bank and a stabilization fund, and finally, the creation of the SUCRE as a non-dollar trade credit mechanism within the ALBA group of countries. The Gulf Cooperation Council had built since 1981 a financial cooperation scheme that collapsed in 2009. Local Currency Payments Mechanism of MERCOSUR Ito and his team (2018) asked themselves why the Yen has not become a top currency or at least a master currency. Their finding is that that the buyer, not the seller, chooses the currency for invoicing. This might explain why within MERCOSUR the idea of paying in local currency was launched before the 2008 crisis because paying in local currencies saves com-

The politics of international monetary relations  157

Source: Federal Reserve Bank of St Louis, seen at https://​fred​.stlouisfed​.org/​series/​RTWEXBGS on 27 September 2021.

Figure 10.1

Real broad dollar index, 2012–2021

missions and reduces uncertainty. MERCOSUR first established a local currency mechanism between Brazil and Argentina and later opened up to all MERCOSUR country members for intra-regional trade. The Convenio del sistema de pagos en moneda local entre la República Argentina y la República Federativa del Brasil was signed on 8 September 2008, one week ahead of the Lehman Brothers crash. Among the considerations for the creation of the local currency payment mechanism are: 1. That it is necessary to promote the development of low-cost financial instruments for transactions between the Argentine Peso and the Brazilian Real. 2. That the transaction costs of operations traditionally carried out in US Dollars and the difficulties of trading in local currencies may discourage small and medium-sized enterprises from operating in foreign trade. 3. That the flow of trade between the parties and with MERCOSUR is relevant, and the creation of a bilateral payment system in local currencies would serve as a precedent with the other countries of the bloc. 4. That such a system would allow economic agents to become familiar with the local currencies of the other country, to advance the integration process and to strengthen links between the signatory institutions, increasing the liquidity and efficiency of the Peso/Real exchange market and facilitating the channelling of payments in these currencies.

158  Handbook on the politics of international development This mechanism grew and was ratified by four MERCOSUR member countries save Venezuela. Argentina signed with Uruguay in 2015, and Paraguay in 2019. Brazil signed with Uruguay in 2014 and Paraguay in 2016. The others have signed amongst themselves turning the local currency payment mechanism into a regional mechanism, the first of its kind. It is the only regional trade bloc with a local currency payments mechanism. The Introduction of the Yuan and Chinese Yuan Diplomacy The growing use of the Yuan in intra-Asian trade is an expression of the buyer’s power. This means that Chinese businesses purchase from abroad and ask to be invoiced in Yuan. The Cross-Border Interbank Payment System (CIPS) aka China Interbank Payment System, was created in October 2015, for clearing and settlement services for its participants in cross-border RMB payments and trade and takes care of the payments in Yuan abroad (Figure 10.2).

Source: http://​www​.cips​.com​.cn/​cipsen/​7050/​index​.html.

Figure 10.2

CIPS traffic by month, 2015–2020

The direct participants initially included 19 Chinese and foreign banks set up in mainland China and 176 indirect participants over 6 continents. In 2021 it has a total of 42 direct participants and 1,103 indirect participants of which 854 are in Asia, including 510 Chinese mainland indirect participants, 147 are in Europe, 26 in North America, 20 in Oceania, 17 in South America and 39 in Africa.3 The total annual amount of funds passing through CIPS in 2020



3

See http://​www​.cips​.com​.cn/​cipsen/​7050/​index​.html.

The politics of international monetary relations  159 amounted to 45.3 trillion Yuan, equivalent to 5.8 trillion Euros and 7 trillion US Dollars. Swift is the Western mechanism for Dollar related pass through and processed 42.1 million financial messages per day in 2020, making it by far the leading financial payments mechanism and consolidating the Dollar as the most used currency for global transactions. In addition, in the ten-year period between 2009 and 2019 China “signed bilateral currency swap agreements with thirty-two counterparties. The stated intention of these swaps is to support trade and investment and to promote the international use of Renminbi” (Central Bank of Egypt, 2019). The author of this report argues that China limits the amount of Renminbi available to settle trade, and the swaps have been used to obtain Renminbi after these limits have been reached. The combination of these mechanisms has given rise to the term Yuan Diplomacy, in reference to the Dollar Diplomacy of President Taft (1909–1913) which aimed at protecting and extending US commercial and financial interests; and the notion of the Chinese Debt Trap. Chinese Debt Trap The concept of the debt trap was established by Cheryl Payer with her 1974 bestseller of the same name. The point of the debt trap in her argument is that the US has governments do what it needs them to do through the IMF, as a way of seizing their assets or gaining a greater say in their internal affairs. So the debt is the handle to wiggle countries into complying with Washington’s needs and US capital requirements. The use of the Chinese Debt Trap idea was introduced by the US State Department during the Trump years and is a political use of the concept as there is no evidence of China doing any of what the US government claims (Brautigam, 2011; Nyabiage, 2021, Brautigam and Rithmire, 2021). South American Financial Architecture In Latin America the idea of a regional financial architecture with a local basket of currencies has been touted by progressive government (Ugarteche, 2007, chapter 8; Ugarteche, 2021, chapter 5).4 The idea of a regional architecture (Ugarteche, 2008a) supplemented the concept of a regional development bank that was launched alone by Venezuela with Brazil in 2005, and subscribed later with Argentina. Various governments raised the question of how to protect the Latin American economies from US Dollar fluctuations given the three-party nature of the foreign exchange market: the pass through the Dollar from currency A to currency C means that an unstable currency B unsettles the value of the means of exchange for the other two currencies and makes the final price settlement of any good or service less predictable. On top of this, commissions are paid on both ends making this trilateral forex market convenient for the US Dollar, with a large demand and supply, and inconvenient for the rest. The biggest example of inconvenience is, for example, if the US government blocks the US Dollar accounts of a declared ‘enemy country’. In the 1980s, Iran, Cuba and Nicaragua were unable to operate in the top currency and turned to the Euro with direct operations. The South American regional financial architecture was initially geared around the concept of a development bank (Rosales, 2013; Ugarteche, 2008b) without US representation or



4

See also http://​obela​.org/​estadisticas/​peso​_sudamericano.

160  Handbook on the politics of international development interference, the Banco del Sur (2009) (Ortiz and Ugarteche, 2008). This was followed by the BRICS Bank (2014) and the Asian Infrastructure Investment Bank (2016). Neither of these has US participation and thus they cannot be taken to represent or express US foreign policy interests as is the case of the IDB with the 2020 election as President of an active member of an interventionist group in a Latin American country, a Special Assistant to US President, Senior Director for Western Hemisphere Affairs on the National Security Council and finally Deputy Assistant to the President. These banks are an expression of a new regionalism under construction (Tussie, 2014). The SUCRE and ALBA With the 2008 crisis it became clear that intra-regional South American trade should be paid in local currencies or in a new basket of currencies such as the SUCRE to avoid the instability of the US Dollar. This led to the promotion of the South American regional financial architecture design by progressive governments of the time. One by-product was the SUCRE (Pàez, 2011) proposed by Ecuador which was based essentially on Venezuelan international reserves. Ecuador could not propose a local currency mechanism such as MERCOSUR’s because it uses the US Dollar as domestic currency. Hence it looked for a way out of the Dollar restrictions in international trade. The SUCRE initiative originated at the III Extraordinary Summit of ALBA Heads of State with Ecuador as observer, held on 26 November 2008 in Caracas, Venezuela, where the Heads of State and Government agreed to build a monetary zone, establish the common unit of account (Sucre), create a regional payments clearing system and a central clearing house, as well as a stabilization and reserves fund (BCN, n.d.). The Sucre can be used to channel payments corresponding to commercial transactions of any of the goods and services contained in the lists issued by the competent bodies from any of the States Parties, depending on the subject matter. The payment instruments admitted in the Bolivarian Republic of Venezuela are: (a) payment orders and (b) letters of credit. Compensation is semi-annual and each member country is assigned an amount of Sucres to be able to operate. This amount was established based on the GDP and the exportable supply of each country. The problem was that the payment settlement was done in Dollars after six months. The Sucre was a unit of credit worth 1.25 Dollars which did not reflect the weight of trade, GDP, or the rates of exchange against the Dollar of the member countries, as usually done following Ito’s or Kawai’s design. The Alternativa Bolivariana para los Pueblos de América (ALBA) was set up as an organization providing credit for intra-regional trade (Cuba, Bolivia, Nicaragua, Ecuador, Dominica, Antigua and Barbuda, and San Vicente and Grenadines are members). Political Restrictions on Becoming an International Currency A question is whether the US will forever continue with its exorbitant privilege even when it appears to be a declining power and losing some of its hegemonic aspects. Cohen (2003) states that monetary relations, too, have become conflictual and hierarchical with an issue on the breakdown of the neat territorial monopolies that national governments have historically claimed in the management of money, and the deterritorialization of money (Cohen, 2003). There is no longer a monopoly of a top currency to use Strange’s categorization, but an oligop-

The politics of international monetary relations  161 Table 10.1

Share as a global payments currency (including payments within Eurozone) March 2020

March 2018

March 2016

USD

44.1 per cent

39.45 per cent

43.09 per cent

March 2014 38.75 per cent

Euro

30.84

34.55

29.83

33.52

Pound Sterling

6.41

7.09

8.00

9.37

Yen

3.98

3.50

3.27

2.50

Yuan

1.85

1.62

1.88

1.39

Source: SWIFT Renminbi Tracker viewed on C:/Users/Oscarper cent20Ugarteche/Downloads/swift_rmb_tracker_ april2020_slidesper cent20(5).pdf.

oly of countries vying ceaselessly to shape and manage demand for their respective currencies. Cohen claims that most states are no longer able to exercise supreme control over the circulation and use of money within their frontiers. They try to do what is best to preserve or promote market share in the international currency market. The result is a monetary universe ever more stratified, which looks like a currency pyramid. The question is: How can the dominance of the Dollar be challenged? The answer comes in two parts: first, if we look at the logic of market competition; and, secondly, if we factor in government preferences. The Dollar as top currency continues to prevail. Presently, other master currencies used outside their issuing countries are the Euro, the Pound Sterling, the Japanese Yen, and the Chinese Renminbi. They make up the currency geopolitics. When the currency market is analysed, the disproportion between US Dollar payments and other currency payments is evident. Though when including payments inside the Euro area, the difference between the US Dollar and the Euro is small, one is 40 per cent of the international currency market, the other is a third, both relatively stable over six years, and the Yen and Pound seem to be on opposite paths, the Pound losing ground and the Yen gaining it. The Renminbi is gaining but from a tiny start at 1.39 per cent. It rose to 1.85 per cent six years later. The difference is so substantial as to make it impossible for them to compete as top currencies. It is worse with the Yuan included (see Table 10.1). The answer to the question of why China cannot deterritorialize its currency lies in its minimal share in international transactions, including those made inside the Eurozone. Steps were taken in the direction of deterritorializing Renminbi starting in 2005 when China revalued the Yuan by 2.1 per cent and revised the rules from fixed to managed floating exchange rates in terms of a basket of currencies within a 0.3 per cent band. The band increased to 0.5 per cent in 2007, and in 2009 it launched a mechanism for foreign trade payments to be done in Yuan. Then, Yuan appreciated 6.83 per cent per Dollar and had its flotation band increased to 1 per cent before its introduction into the foreign exchange market in 2012.5 In March 2014, China broadened the band to 2 per cent, and the Governor of the People’s Bank of China (PBoC) announced they were going in the direction of free flotation just before going into the Special Drawing Rights (SDR) currency basket approval process in November of 2015. According to Chang Shu et al. (2014) Chinese authorities facilitated the use of the Chinese currency outside mainland China from July 2009, moving quickly to remove restrictions on the use of the Renminbi in current account transactions and gradually expand the scope for the use of that currency in capital account transactions. Cross-border local currency settlement, 5 Reuters Business News, “Timeline: China’s reforms of yuan exchange rate”, 14 April 2012, https://​www​.reuters​.com/​article/​us​-china​-yuan​-timeline​-i​dUSBRE83D0​3820120414.

162  Handbook on the politics of international development a source of offshore liquidity, was introduced for trade on a trial basis in July 2009. It was broadened over the next three years to cover all current account transactions in China. Sources of offshore funds have been broadened under the capital account, for example, overseas direct investment in the Asian currency by Chinese enterprises to make offshore lending easier by mainland banks. The PBoC also set up bilateral local currency swap facilities with overseas central banks and monetary authorities, intending to support the international use of the Yuan and providing a contingent source of liquidity. These bilateral swap lines (BSA) grew to 500 billion USD between 2008 and 2018, with 35 foreign central banks as a mechanism to introduce the Yuan as an international trade currency. McDowell (2019) suggests that China’s BSAs are a form of financial statecraft: the use of national financial and monetary capabilities to achieve foreign policy ends. Beijing has sought BSAs to promote trade settlement in RMB, reducing China’s vulnerability to the Dollar. It could otherwise be an attempt to have the Yuan recognized as an international currency with trade invoices done in it. Beijing, says McDowell, also uses BSAs as a short‐term liquidity backstop outside of the Bretton Woods institutions for partner countries in need, acting as a unilateral crisis lender. The author believes it is a failed strategy, yet the evidence shows the Yuan’s presence growing globally, only very slowly. After BSA and the opening of the exchange market to a 2 per cent flotation band, the Yuan’s inclusion in the IMF’s SDR basket of currencies occurred in 2016. Until then, the US Dollar, Pound Sterling, Euro, and the Yen composed the SDR basket. With the entry of the Beijing currency into the IMF basket, all the banking institutions that already held SDR – at least sixty, including the Bank of Italy – had to convert them into Yuan, with an increase in reserves in the Beijing currency. The US Secretary of the Treasury’s reaction to this inclusion, according to Reuters, was that the Yuan was “quite a way” from actual global reserve currency status. Since then, the Yuan has been introduced and grown in foreign exchange markets. Typically exchange markets accompany trade of goods and services, and these are primarily led worldwide by China, yet the exchange markets do not yet respond to the size of the Chinese economy multiplied by its global trade weight. Chiang Mai Multilateral Initiative The Chiang Mai Initiative (CMI) emerged after a political battle between Japan and the US in the wake of the 1997 Asian Financial Crisis to create an Asian Monetary Fund. This transpired after the Thai crisis of 1997 turned into an Asian, Latin American and an Eastern European, and later a global crisis. The issue was that Thailand’s Central Bank called in the IMF, as reserves started to dwindle and dollars pour out of the Thai economy at the same time as the stock exchange collapsed and the real estate market plunged. There was a speculative run on the dollar. The very slow speed with which the emergency visit happened and the mistaken diagnosis they gave, led the Japanese government to propose an alternative institution to the US led and controlled IMF. At the time it was said that “Asian leaders charge that foreign investors and Wall Street-style trading exacerbated Southeast Asia’s financial crisis … The most extreme of the accusations came from Prime Minister Mahathir Mohamad of Malaysia … he accused the ‘great powers’ – a clear reference to the United States – of pressing Asian countries to open their markets and then manipulating their currencies to knock them off as competitors” (New York Times, 1997). Malaysia installed exchange controls and did away with the crisis as the world melted around them.

The politics of international monetary relations  163 Asian financial cooperation must be seen and understood in the aftermath of the Asian crisis (1997–1998) when Japan and the ASEAN governments focused on preventing a repetition of the Thai problem at various levels. It led first to the Japanese proposal for an Asian monetary fund, opposed by Washington, and then to the Chiang Mai meeting in May 2000, which Washington no longer resisted but finessed. In the end the CMI is 70 per cent IMF and 30 per cent local funds for any rescue. The question is why it did not resist. Shiraishi (2011) argues that regionalism was only approved by Japan after the Asian crisis and Washington lifted censorship. Japan did not want to confront Washington in the late 1990s, but in 2000, when they conceded positions, Japan joined the Chiang Mai initiative, giving it more excellent projection as a G7 country. In this sense, the 1997 Asian Financial Crisis served as a catalyst to draw the attention of the countries in the region to regional monetary and financial cooperation and as a defensive measure in economic globalisation (Asami, 2005). The ASEAN member countries decided in 2000 to agree that China, South Korea, and Japan could join the Association of Southeast Asian Nations (ASEAN) and become ASEAN+3. This changed Asia’s global weight and regional projection, since with the CMI designed for regional financial stability, a broader economic and social integration project was added to ASEAN. The raisons d’être of regional financial cooperation are: to avoid exchange rate imbalance, to have speed in resolving speculative attacks, and finally to recirculate intra-regional savings. At least two Asian currency baskets exist (Kawai and Takagi, 2005; Ito and Ogawa, 2000). Besides, a multilateral balance of payments support fund of 240 billion dollars was created (ASEAN, 2010); a bond market has been proposed (ADB, 2005) with a $700 million guarantee fund (ADB, 2010); since 2009, an intra-regional payment arrangement in domestic currency exists. The picture is complete when taking into account, China trades within the ASEAN+3 in Renminbi (Li Yingqing and Guo Anfei, 2010), and a growing volume of trade happens in that currency (Cookson, 2010; Garcia, 2010; Wei, 2011) becoming a de facto reserve currency (Bloomberg, 2010). Since December 2010, trade between Russia and China is also conducted in their national currencies (Kramer, 2010). Since 2010 the Renminbi trades on the international money markets and is considered a reserve currency. The problem is that since China, Japan, and South Korea provide 80 per cent of the CMI’s funding, they are the primary decision-makers and must approve any assistance to ASEAN countries in crisis. Besides, ASEAN+3 can only approve the first 30 per cent of the funds needed by a country in crisis. The remaining 70 per cent is subject to the IMF’s approval process, as decided by themselves on the grounds of reducing moral hazard (Kim Song Tan and Bhaskaran, 2019). China’s strength combined with the Chiang Mai agreements gives rise to a robust and dynamic regional economic and financial cooperation space taking shape. A Macroeconomic Research Office in Singapore monitors fiscal, external and exchange rate imbalances. It was set up in April 2010 based on the earlier experience of an ASEAN economic surveillance with the IMF and the European crisis. This body is linked to the multilateral balance of payments support arrangement and will provide timely information for action. It is a kind of active monetary fund. This dynamic, coupled with the fact that intra-regional trade is growing at very high rates and represents a growing share of ASEAN+3 trade, expresses a de facto regionalization.

164  Handbook on the politics of international development

CONCLUSION The politics of monetary relations has to do with hegemony and how a currency keeps at the forefront of economic relations and the hierarchy of currencies. The top currency has undergone changes, from the Doblón de oro to the Pound Sterling, to the US Dollar. Currently the Yuan arguably is rising as China shares the hegemonic role of the US and displaces Europe in that position; however China faces limitations in terms of its military role in the balance-of-power system, which hamper it in becoming a fullu-fledged top currency. The internationalization of the Yuan is also limited in terms of demand for Yuan by international traders. Given currencies are used according to the currency demanded by the sellers, as long as exporters do not request Yuan, it will not grow in sufficient volume to balance the power of the Dollar. Peripheral countries have attempted to organize regional financial architectures with regional financial cooperation and regional baskets of currencies, yet there is no evidence outside of Europe of this mechanism serving the member states. The consequence of this is that the instability of the top currency, the US Dollar, is transmitted to the rest of the world in the form of the appreciation of the rest of the world’s currencies, which in critical moments makes exports more expensive and imports cheaper for countries in the periphery, exacerbating the global economic situation. A future field of conflict is between the existing top currency and the incumbent top currency. The efforts being made are all regional and regionalism is being newly defined not by neighbouring geography but by trade frequency.

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The politics of international monetary relations  165 Central Bank of Egypt (2019). The Treatment of Currency Swaps Between Central Banks: Egypt Experience. Discussion Paper. https://​www​.imf​.org/​external/​pubs/​ft/​bop/​2017/​pdf/​17​-25a​.pdf. Chang Shu, Dong He, and Xiaoqiang Cheng (2014). One currency, two markets: The Renminbi’s growing influence in Asia-Pacific. BIS Working Papers No. 446. Basel: Monetary and Economic Department. Chey, H. (2012). Theories of international currencies and the future of the world monetary order. International Studies Review, 14(1), 51–77. CIPS (2021). http://​www​.cips​.com​.cn/​cipsen/​7052/​7057/​index​.html. Cohen, B. J. (2003). The Geopolitics of Currencies and the Future of the International System. Working Paper 28-2003. Real Instituto Elcano. Cohen, B. J. (2012). The Yuan tomorrow? Evaluating China’s currency internationalisation strategy. New Political Economy, 17(3), 361–371. Cohen, B. J. (2013). Currency and state power. In M. Finnemore and J. Goldstein (eds.), Back to Basics: State Power in a Contemporary World. Oxford: Oxford University Press, 159–176. Cohrs, P. O. (2018). “Pax Americana”: The United States and the transformation of the 20th century’s global order. Revista brasilera de política internacional, 61(2). http://​www​.scielo​.br/​scielo​.php​ ?script​=​sci​_arttext​&​pid​=​S0034​-73292018000200208​&​lng​=​en​&​nrm​=​iso. https://​doi​.org/​10​.1590/​ 0034​-7329201800202. Cookson, R. (2010). Banks back switch to renminbi for trade. Financial Times. https://​www​.ft​.com/​ content/​182a2b70​-b130​-11df​-b899​-00144feabdc0. Cooper, R. (1968). The Economics of Interdependence: Economic Policy in the Atlantic Community. New York: McGraw-Hill. De Paula, L. F, Fritz, B., and Prates, D. (2017). Keynes at the periphery: Currency hierarchy and challenges for economic policy in emerging economies. Journal of Post Keynesian Economics, 40(2), 183–202. Eichengreen, B. (2011). Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System. Oxford: Oxford University Press. Fetter, F. W. and Gregory, D. (eds.) (1973). Monetary and Financial Policy. Dublin: Irish University Press. Flandreau, M. (2013). Sovereign states, bondholders’ committees, and the London Stock Exchange in the nineteenth century (1827–68): New facts and old fictions. Oxford Review of Economic Policy, 29(4), 668–696. Flandreau, M. and Jobst, C. (2009). The empirics of international currencies: Network externalities, history, and persistence. The Economic Journal, 119, 643–664. Frankel, J. A. (1993). Is Japan creating a Yen bloc in East Asia and the Pacific? In J. A. Frankel and M. Kahler (eds.), Regionalism and Rivalry: Japan and the United States in Pacific Asia. Chicago: University of Chicago Press, 53–88. Garcia, C. (2010). Beijing looks to broaden renminbi use. Financial Times. https://​www​.ft​.com/​content/​ 81500cea​-a9fc​-11df​-8eb1​-00144feabdc0. Gough, B. (2014). Defining Pax Britannica. In B. Gough, Pax Britannica: Ruling the Waves and Keeping the Peace before Armageddon. Basingstoke: Palgrave Macmillan, 1–18. Helleiner, E. (2008). Political determinants of international currencies: What future for the US dollar? Review of International Political Economy, 15(3), 354–378. Henning, C. R. (2005). The Exchange Rate Weapon, Macroeconomic Conflict, and Shifting Structure of the Global Economy. EUI RSCAS, 2005/11. Cadmus, European University Institute Research Repository. http://​hdl​.handle​.net/​1814/​3360. Ito, T. (1992). The Yen and the International Monetary System. Discussion Paper Series a265, Institute of Economic Research, Hitotsubashi University, Tokyo. Ito, T., Koibuchi, S., Sato, K., and Shimizu, J. (2018). Managing Currency Risk: How Japanese Firms Choose Invoicing Currency. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing. Ito, T. and Ogawa, E. (2000). On the Desirability of a Regional Basket Currency Arrangement. National Bureau of Economic Research. Kawai, M. (1996). The Japanese Yen as an international currency: Performance and prospects. In R. Sato, R. Ramachandran, and H. Hori (eds.), Organization, Performance, and Equity. Research Monographs in Japan-U.S. Business & Economics, vol 1. Boston: Kluwer, 305–355.

166  Handbook on the politics of international development Kawai, M. and Takagi, S. (2005). Towards regional monetary cooperation in East Asia: Lessons from other parts of the world. International Journal of Finance & Economics, 10(2), 97–116. Kim Song Tan and Bhaskaran, M. (2019). Rebuilding ASEAN’s financial safety net. East Asia Forum. https://​www​.eastasiaforum​.org/​2019/​02/​08/​rebuilding​-aseans​-financial​-safety​-net/​. Kirshner, J. (2003). Money is politics. Review of International Political Economy, 10(4), 645–660. Knafo, S. (2006). The Gold Standard and the origins of the modern international monetary system. Review of International Political Economy, 13(1), 78–102. Kramer, A. (2010). Sidestepping the U.S. dollar, a Russian exchange will swap rubles and renminbi. New York Times, 14 December, B2. Li Yingqing and Guo Anfei (2010). Pilot RMB settlement kicks off. China Daily, 28 July. Mallaby, S. and Wethington, O. (2012). The future of the yuan: China’s struggle to internationalize its currency. Foreign Affairs, 91(1), 135–146. Marichal, C. (1989). La historia de la deuda externa de América Latina. México: Alianza Editorial. Matsuyama, K., Kiyotaki, N., and Matsui, A. (1993). Toward a theory of international currency. The Review of Economic Studies, 60(2), 283–307. McDowell, D. (2019). The (ineffective) financial statecraft of China’s bilateral swap agreements. Development and Change, 50(1), 122–143. New York Times (1997). Asia’s economic tigers growl at world monetary conference. New York Times, 22 September, Section A, p. 2. Nyabiage, J. (2021). ‘Debt-trap diplomacy’ a myth: No evidence China pushes poor nations to seize their assets, says academic. https://​www​.msn​.com/​en​-xl/​news/​other/​debt​-trap​-diplomacy​-a​-myth​-no​ -evidence​-china​-pushes​-poor​-nations​-to​-seize​-their​-assets​-says​-academic/​ar​-BB1dROAC. Obstfeld, M., Dornbusch, R., and McKinnon, R. (1995). International Currency Experience: New Lessons and Lessons Relearned. Brookings Papers on Economic Activity. Washington, DC: Brookings Institution. Ortiz, I. and Ugarteche, O. (2008). El Banco del Sur: avances y desafíos. http://​www​.choike​.org/​ documentos/​banco​_del​_sur​_ortiz​_ugarteche​.pdf. Ozeki, Y. (1991). The Japanese Yen as an International Currency. IMF WP/91/2. Washington DC: IMF. Ozeki, Y. and Tavlas, G. S. (1992). The Internationalization of Currencies: An Appraisal of the Japanese Yen. Occasional Paper. Washington DC: IMF. Pàez, P. (2011). Otro modelo financiero ya está en marcha en América Latina. Entrevista por Sofia T. Jarrin y Nick Buxton. Amsterdam: Transnational Institute. Pauly, L. W. (1997). Who Elected the Bankers? Surveillance and Control in the World Economy. Ithaca, NY: Cornell University Press. Payer, C. (1974). The Debt Trap: The IMF and the Third World. Harmondsworth: Penguin Books. Polanyi, K. (1944). The Great Transformation. New York: Farrar & Rinehart. Redish, A. (1990). The evolution of the gold standard in England. The Journal of Economic History, 50(4), 789–805. Riggirozzi, P. and Tussie, D. (eds.) (2012). The Rise of Post-Hegemonic Regionalism. Dordrecht: Springer. Rosales, A. (2013). The Banco del Sur and the return to development. Latin American Perspectives, 40(5), 27–43. Ruggie, J. (1982). International regimes, transactions, and change: Embedded liberalism in the post-war economic order. International Organization, 36(2), 379–415. Shiraishi, T. (2011). Ajiia Taiheiyo renkei eno fukki [Returning to the Asia Pacific Partnership]. Yomiuri shimbun, 6 February. Steil, B. (2013). The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order. Princeton: Princeton University Press. Strange, S. (1971a). The politics of international currencies. World Politics, 23(2), 215–231. Strange, S. (1971b). Sterling and British policy: A political view. International Affairs, 47(2), 302–315. Suter, C. and Stamm, H. (1992). Coping with global debt crises: Debt settlements, 1820 to 1986. Comparative Studies in Society and History, 34(4), 641–678. Triffin, R. (1960). Gold and the Dollar Crisis. New Haven: Yale University Press. Tussie, D. (2014). Reshaping regionalism and regional cooperation in South America. Pensamiento Propio, 39, 109–138.

The politics of international monetary relations  167 Ugarteche, O. (2007). Genealogía de la arquitectura financiera internacional: 1850–2000. Doctoral thesis. https://​bora​.uib​.no/​bora​-xmlui/​bitstream/​handle/​1956/​2319/​PhD​_Thesis​_Oscar​_Ugarteche​ .pdf​?sequence​=​1​&​isAllowed​=​y. Ugarteche, O. (2008a). Entre la realidad y el sueño: La construcción de una arquitectura financiera sudamericana. Revista Nueva Sociedad, 217, 14–23. Ugarteche, O. (2008b). El Banco del Sur: la lucha de los grandes contra los chicos. América Latina en Movimiento. http://​alainet​.org/​active/​21572​&​lang​=​es. Ugarteche, O. (2021). Elementos para la Cooperación Financiera Regional. Mexico City: IIEC UNAM. Wei, L. (2011). New move to make yuan a global currency. The Wall Street Journal, 12 January. https://​ www​.wsj​.com/​articles/​SB1​0001424052​7487037919​0457607608​2178393532. Yu, Y. (2012). Revisiting the Internationalization of the Yuan. Working Paper No. 366. Tokyo: Asian Development Bank Institute (ADBI). Zhou Xiaochuan (2009). China calls for a new reserve currency. Financial Times, 23 March.

11. The politics of south–south cooperation Bernabé Malacalza

1.

THE HISTORICAL BACKGROUND OF A POLITICAL BATTLE

Our understandings of international development cooperation are organized by theory and reflected in the broad range of diverse and contending theoretical approaches. Development as a field of study became an issue of urgent priority following the end of the Second World War. Conventional wisdom generally accepts the argument that development is a universal pattern and sequential process associated with preconditions, achievements and overcoming obstacles. Development studies have been centrally concerned with understanding patterns of North–South cooperation, great powers and specific political and economic circumstances of the North, while the study of international development cooperation has always been based on the belief that the donor–recipient relation is necessary in order to promote development in the poorest countries. Generally speaking, some works have allowed us to examine South–South cooperation (SSC) and certain of its conceptual propositions, as well as to identify themes that require further investigation (Blaney and Inayatullah, 2008; Jules and Sá e Silva, 2008; De la Fontaine and Seifert, 2010; Robledo, 2015; Deciancio and Tussie, 2019; Deciancio and Quiliconi, 2020). However, little has been assessed and summarized on the question of how the politics of SSC has been understood throughout the debates on international development and International Relations (IR). International development cooperation emerged as a significant field of study as a result of at least two hinge events: the European Recovery Programme, known as the Marshall Plan, and decolonization processes in Africa and Asia. The Marshall Plan enabled a discussion on operational concepts to measure, evaluate and homogenize the development cooperation programs and policies of traditional donors, which would later become routine practices in North–South cooperation (Esteves and Assunçao, 2014). The Organisation for Economic Co-operation and Development (OECD) was established officially in 1961, and it took over directly from the Organisation for European Economic Co-operation created in 1948 to help administer the Marshall Plan. The definition of Official Development Assistance (ODA) underscored the ultimate social purpose of international development cooperation: “the promotion of the economic development and welfare of developing countries.” ODA became a key concept that established its borders and stabilized its meanings, especially in the economic studies of aid. The dismantling of European colonial empires and the emergence of decolonization movements opened up new areas for the Global South in order to articulate their own strategies and reach a less dependent status both within the field and in the international system as a whole. One of these strategies was the promotion of SSC as a way of playing within the rules on the field, as well as to change them. The countries of the so-called “Third World” started to be treated, and also to see themselves, as part of a political force or project, whose common goals would be the solidarity, the promotion of their development and the defense of their sovereignty. Six milestones in this regard were: (1) the Afro-Asian Conference of Bandung 168

The politics of south–south cooperation  169 in 1955, the first held without the presence of representatives of the United States, Soviet Union and Europe; (2) the constitution of the Non-Aligned Movement (NAM) at the Belgrade Conference (1961); (3) the creation of coalitions among developing countries – the Group of 77 or G77 (1964); (4) the United Nations Conference on Trade and Development (UNCTAD) in Santiago de Chile and its call for a New International Economic Order (NIEO) (1972); (5) the United Nations Conference on Technical Cooperation among Developing Countries (UNTCDC) in Buenos Aires (1978); and (6) the South Commission (now South Centre) created in 1987, which marked the convergence between the countries of the South. According to Acharya (2016), all these events but particularly the Bandung Conference, which was a key milestone in the emergence of the South in world politics, offered a more fertile ground for rethinking the established boundaries of IR. As of the 1980s, SSC as a political force progressively lost strength as a result of a more restrictive context. The debt crisis during the 1980s forced Southern countries to agree with the World Bank and the International Monetary Fund (IMF). The ideological turn towards neoconservatism or neoliberalism in the United States and United Kingdom created an international environment less favorable to the setting up of a NIEO. The Asian miracle, with the growth of East Asia, also challenged the common identity of a homogeneous “Third World” and hindered the establishment of a Southern agenda. With the end of the Cold War and the acceleration of a process of capitalist hyperglobalization in the 1990s, the possibility of South–South agreement disappeared almost completely. In the 1990s, the establishment of the Washington Consensus boosted the ideas of free market, deregulation and economic opening in the countries of the South. But simultaneously the centrality of neoliberal economic arguments began to be challenged and the criticism opened a fertile ground in IR for discussion and interpellation of conventional categories of development such as the type “one size fits all” (Bergamaschi et al., 2017). The emphasis on Bandung’s discourse of non-interference, economic self-reliance and the postcolonial claim for political autonomy opened up a confrontation within the UN General Assembly, with Southern countries questioning the legitimacy of the donor–recipient dyad and raising the issue of the North–South divide, and Northern donors trying to propose a renewal of practices through the Paris Declaration (2005) and the new aid effectiveness agenda. The Fourth High-Level Forum on Aid Effectiveness in 2011 created the Global Partnership for Effective Development Cooperation (GPEDC). The Development Assistance Committee (DAC) and the UN Development Cooperation Forum (DCF) became two sites on the battlefield on which the borders of the international development field are being redrawn. Many identify the DCF (established after the UN World Summit in 2005 as a G77 initiative) as the most inclusive development forum for reviewing trends and progress in international development cooperation – clear evidence of the G77’s opposing DAC’s dominant role in the evolving development landscape. The background of this confrontation are antithetical conceptions of development: on the one hand, the theory of modernization with its staggered conception; on the other, structuralist theory with its understanding of development as structural change. An important contemporary as well as historical puzzle in some academic works has been how to think about SSC with theoretical lenses. What is SSC? What is the link between SSC and international development? How do Southern countries pose challenges to the world system? What are the causes of the origins and existence of a periphery in the world system? Is the idea of an “objective” development of the Global South possible? How can SSC become

Bandung

Conference and

decolonization

processes

Washington

Consensus and

hyper globalization

Theories of

Modernization/

Structuralism

1960s–1990s

Post-Development

Theories

1990s–2000s

Source: Own elaboration.

background

conceptions

Global politics

Epistemological

World politics

Ontological

Topics

Key concepts

development? In what way can to reflect and question the global order?

South–South Development Cooperation

Post-Development Theories Critical Studies Middle-Range Studies

South?

emancipatory project of the Global

SSC become a transformative and

Is there an “objective” idea of theory? Is it to explain or

Post-Development

Poststructuralism and

globalized and naturalized? What is the function of the

Global politics

Studies

global politics?

How do you get to know the How were Western concepts

Neoliberal globalization

South–South Relations Global South

foreign policy Global South Studies Postcolonial and Decolonial

order?

Structural change

Latin American analysis on

Relations overcome dependency?

system? How can South–South

the position of periphery in the world

social forces in the world

political, economic and

of? What are the main

Third World

World system

Semi-periphery

development

Cooperation and international

Questions about South–South

What does the world consist What are the main implications of

Big questions

IPE

World System Analysis

and Dependency Theory

Latin American Structuralism Periphery and

Theoretical approaches

Theorization on South–South cooperation and international development

Emerging development Historical

Table 11.1

170  Handbook on the politics of international development

The politics of south–south cooperation  171 a transformative and emancipatory approach vis-à-vis Western categories such as economic modernization and North–South aid?

2.

SOUTH–SOUTH COOPERATION AND INTERNATIONAL DEVELOPMENT

The discussion of development aid from the perspective of development theory became an issue of urgent priority following the end of the Second World War. The central question was whether aid to developing countries could be justified theoretically and it has been debated in detail since of the 1950s. According to modernization theories, aid could help developing countries to gain so much speed that their growth process could take off. The principal assumptions of modernization theory were (1) that modernization is a total social process associated with (or subsuming) economic development in terms of the preconditions, concomitants, and consequences of the latter; (2) that this process constitutes a “universal pattern” (Bernstein, 1971). Theorization on SSC were directly influenced by development studies and became counter-responses to conventional theories of development, such as functionalism and modernization theories at an early stage, and were in tune with postmodernism and all other poststructuralist theories that have emerged thereafter (Jules and Sá e Silva, 2008). Modernization theories of the 1950s were centrally concerned with understanding patterns of “North–South cooperation,” while postcolonization debates of the 1960s and 1970s enabled, at first, a discussion on the constitutive factors of the world system, and, second, an interpellation on the ways of producing knowledge and understanding of global politics (Sanahuja, 2018). Table 11.1 compares the ways in which SSC theorization has evolved in terms of historical background, topics, theoretical approaches, key concepts, and big and specific questions that played a key role understanding the underpinnings of SSC.

3.

INTERNATIONAL DEVELOPMENT AND SOUTH–SOUTH RELATIONS

SSC theorization begins with the emergence of structuralism, which was influenced by intellectual and political developments of the 1950s, 1960s, and 1970s. Structuralism in IR is the legacy of decolonization processes and tensions created by the political and economic subordination of the South to the North. Raúl Prebisch’s groundbreaking ideas on import substitution and creation of tariff barriers for products of advanced countries have served as guides, even though his position is considerably less radical than that of later structuralists. Subsequently, theories of dependency and World-Systems Analyses (WSA) had a common point of departure: the idea that North and South are in a structural relationship one to another; that is, both areas are part of a structure which determines the pattern of relationships that emerges (Malacalza, 2019a). From this conception, SSC is seen as a broad political and economic sphere of cooperation among peripheral countries in order to overcome dependency from the core.

172  Handbook on the politics of international development 3.1

Core–Periphery Relations and International Development

The structuralist school of the 1960s offered an analysis of the working of international system and the origins and experiences of the periphery. The concepts they are based on reflected or matched the reality in many Southern countries. Furthermore, they introduced questions that are central to Southern perspectives and were absent or under-theorized in mainstream schools. The structuralist school is born in response to the American modernization theory (Rostow, 1952; Lipset, 1959). Tickner (2011) points out that during the 1950s and 1960s the American modernization theory and the Economic Commission for Latin America and the Caribbean (ECLAC) School led by Raúl Prebisch coexisted in time. Although modernization theories demonstrated the importance of development in IR, structuralism introduced a consideration of how the “North–South divide” shapes those interactions. Structuralists were often more committed to categorize SSC as a structural transformation in IR. According to Prebisch, the notion of periphery acknowledges “the imperative necessity of changing the whole process of appropriation of the surplus, of capital accumulation and of redistribution of the fruits of technical progress” (Chaturvedi and Chakravarti, 2019, p. 129). These topics linked into the concerns and approaches of the literature on underdevelopment and dependency (Gunder Frank, 1967; Cardoso and Faletto, 1971; Dos Santos, 1972). The notion of a core and a periphery was incorporated in Latin America by the Dependency School, for which underdevelopment would not be a stage of development, but a product of the expansion of the capitalist system around the world. Dependency is defined as a conditioning situation in which the periphery economies are conditioned by the development and expansion of the core. Room for maneuver that remains on the periphery is what is called autonomy or the ability to adopt independent policies from the core. The principal focus of dependency as a research program has been on South–South relations, mainly economic relations and structures of production. 3.2

Semi-Periphery as Analytical Unit

The American sociologist Immanuel Wallerstein’s ideas, known as WSA, introduce the concept of South–South relations within the framework of new international division of labor (Wallerstein, 1974). The approach adds an intermediate dimension to the relations between core and periphery, regarding the existence of a global semi-periphery; which implies a hierarchization of the periphery by their vulnerability to exploitation at the hands of the core or the semi-periphery. They investigate the causes of the formation of semi-periphery in world economy and examines the nature of trade and capital flows. In contrast with dependency theories, WSA argues that South–South relations take place between parties on different levels of development, and for that reason it is very likely that developmental effects arising from such a relation will be no different from the ones of the traditional North–South relations (Dargin, 2013). Theorists like Samir Amin (2009) subscribe to the WSA’s conception that development should be studied as a historical movement, that is to say, that the progress of developed countries would not be an ontologically primitive phenomenon, but would itself have generated a setback for developing countries. One of his main contributions is the concept of monopolies of power and dependency in the international economic structure. According to the author, dependency is perpetuated by five monopolies: (i) the control of financial flows, (ii) the

The politics of south–south cooperation  173 control of access to natural resources, (iii) the control of new technologies, (iv) the control of the media, and (v) the monopoly on weapons of mass destruction. More recently, Amin (2015, p. 453) has highlighted that the Global South is a victim of the pattern of imperialist unipolar globalization of our time and, therefore, “the challenge is to construct a South solidarity against globalization, creating the conditions for a polycentric world order.” 3.3

SSC as a Tool for a Southern Counter-Hegemonic Bloc

In the 1970s, studies on South–South relations also emerged in the sphere of IPE. Authors like Karl Polanyi (1944) and Susan Strange (1970) emphasized the structural character of power and the asymmetrical economic relations between countries. The body of IPE research is the result of a thematic convergence between several disciplines, such as economics, economic history, IR, political science and sociology. IPE focuses on different levels of inquiry: the structure of the international system, the nature of government and competition within institutions, the role of interest groups and social forces. Susan Strange (1970) had insisted on the puerility of the “mutual neglect of politics and economics.” According to Diana Tussie (2020, p. 94), “she saw herself as representing a marginalized position and pulling ideas from many quarters (Latin American dependencia or French economists) into the mainstream.” Knowledge production on IPE and SSC was developed in a group of Latin American institutions, among the most important ones highlighted in the literature being the Latin American School of Social Sciences (FLACSO) and the Latin American Council for Social Sciences (CLACSO). Another of the lines that opened a course for South–South studies was that of Critical IPE. In this literature are the contributions of Robert Cox (1981), Stephen Gill (1993) and Kees Van der Pijl (1998), responsible, among others, for the inauguration of a neo-Gramscian or Critical School in international studies. Their main contribution is to categorize SSC as a counter-hegemonic bloc containing complete ideological homogeneity to achieve meaningful social transformation, going beyond Western capitalism, hegemonic globalization, imperialism, new colonialism, and any kind of Western interventions that are pivotal elements in international politics (Vivares and Marcholini, 2016). The different policies of SSC, then, can be understood as expressions of a heterogeneity that is characteristic of the regions, in light of the complex relationships of causality that inform the development patterns. SSC is one of the multiple analytical dimensions of the changing dialectics between the different models and forms of State and development that confront each other, depending on the transformations of the structures of the world order (Deciancio and Míguez, 2020). 3.4

Autonomy and South–South Relations

Between the 1970s and 1980s, the starting point for studying South–South relations from Latin America was theories of autonomy. Helio Jaguaribe (1979) and Juan Carlos Puig’s (1980) works were focused on foreign policies but were strongly influenced by dependency theorists and realist understandings of foreign policy. The autonomy theory proposed to the Latin American countries alternatives to get out of the peripheral insertion – unlike the options shown by the theories coined in the center – in a context of détente and the Cold War. The idea was to take advantage of the room for maneuver that the international system offered to the

174  Handbook on the politics of international development states of the region, to autonomously get out of the Cold War straitjacket (Lechini and Rojo, 2019). The creation of a regional network of scholars nucleated around the Joint Studies Program in International Relations in Latin America (RIAL) was definitive in carving out regional contribution to SSC theorization. The central concept of autonomy was understood as the maximum capacity for self-decision that a state can achieve, taking into account the objective constraints of the real world and that every autonomist project requires mobilizing power resources and the strengthening of Southern coalitions. As Míguez (2017) points out, the new concept appeared as a response to the explanation that existed at that time about the situation of vulnerability in dependent countries, analyzed by dependency theories. According to Gladys Lechini (2009), one of the exponents of the Rosario School founded by Puig, South–South relations were conceived by the theory of autonomy as a strategic option for coalition-building and gaining autonomy in international negotiations.

4.

GLOBAL SOUTH, POST-DEVELOPMENT AND SOUTH– SOUTH COOPERATION

Starting in the 1990s, although there were already embryonic moves in this direction in the 1980s, the study of international development turned a critical eye from the ontological issue about the conditions of the world system towards the epistemological issue of questioning whether those categories imposed by Western modernization such as “development” are viable for understanding the realities of the Global South. Scholars drew attention to the production of knowledge, discourses, and forms of power from North to South. IR were witnessing the decolonial wave and incorporated indigenous world-views away from the white, European, dominant one inherited by colonialism. 4.1

From the Third World to the Global South

Global Studies became a new chapter in the debate of IR with the hyperglobalization process of the 1990s and the acknowledgment of international actors besides the state, going beyond traditional debates around international peace and security. The post-Cold War world was not mainly divided into different political systems, but by degrees of benefits in a globalized neoliberal capitalist economy. In this context, SSC re-emerged in the IR agenda through new lenses, which recognizes the international power of the Global South and the increasing role of social movements, NGOs, think tanks or universities as legitimate promoters of SSC. It is a reaction not against globalization itself but against the asymmetries and the common situation that winners are generally in the North, whereas the losers are usually in the South. The term Global South replaced previous ones such as “developing countries” and “Third World.” The prefix “Global” signaled the integration of the entire planet into a single economic system: the hyperglobalization or “neoliberal economic globalization.” The release of the United Nations Development Programme initiative of 2003, Forging a Global South, played an important role in drawing attention to the concept of Global South. Also the term gained favor in the academic community. The first recorded use was in 1996, but by 2013 the number of quotes had grown to 248 (Eriksen, 2015).

The politics of south–south cooperation  175 The epistemological turn that reflected the emergence of Global South Studies gave rise to a debate on the geopolitics of knowledge. Postcolonial and decolonial studies questioned the assumption that only Western cultures are capable of producing knowledge, while non-Western cultures are reduced to being only their objects of knowledge. The idea of the South as a political subjectivity and a distinctive intellectual production is articulated by Boaventura de Sousa Santos (2006). An “epistemology of the South” is forged when the “Souths” recognize one another and view their conditions as shared. It refers to “the resistant imaginary of a transnational political subject that results from a shared experience of subjugation under contemporary global capitalism” (Mahler, 2017, p. 1). Postcolonial and decolonial theories allow a dialogue with sociology and anthropology. They offer a space more open to different conceptions on the global without having to justify its belonging to a previously structured and hierarchical field (Mignolo, 1993). The notion of the “coloniality of power” emphasizes the legacy of colonialism in contemporary culture and politics (Quijano, 2000). From this concept, the DAC’s donors (many members of whom were colonial powers) are criticized for their apparently colonial approach to North–South cooperation, and “emerging donors” (many members of whom were once colonized) for their neocolonial approach to development cooperation. Beyond the practices of some donors, SSC is also analyzed as a subaltern category that captures both a political collectivity and ideological formulation that arises from lateral solidarity among the world’s multiple Souths (Kim and Garland, 2019). 4.2

From Development to Post-Development

Post-Development theory arose in the 1990s as a particular vision of society removed from the discourse of development, modernity, politics, and cultural and economic influences from the Western countries. Its main hypothesis is that the concept of “development” is Eurocentric and legitimizes relations of domination between “developers” and those “to be developed.” In contrast, post-development can be a transformative option more prone to a “bottom-up” approach, which recognizes that development is diverse, homegrown and idiosyncratic. This normative proposal lies in the interest not in development alternatives, but in “alternatives to development.” According to Post-Development theorists, the Global South has important roles for grassroots movements, local knowledge, and popular power in transforming traditional and rigid conceptions of development (Ziai, 2012). While Structuralism theories like dependency and WSA focus on systemic inadequacies that prevented the achievement of development of the South or the periphery, Poststructuralism rejected the totality of entire paradigm and denounced “development” as a myth (Rist, 1997). From this view, North–South approaches to development have been seen as an ideology or a discourse according to the models set by the Western societies (Escobar, 1995). The paradigms of SSC criticize development’s reductive nature and “the idealized notion of development derived from the Western experience and the associated implicit longing to replicate it voluntarily” (Gülalp, 1998, p. 957). However, theorists like Gudynas (2016) subscribe to the concept of “Buen Vivir” and question the epistemic violence of development as articulated through the high modernization narratives associated with China, India and others.

176  Handbook on the politics of international development 4.3

SSC from a Multidisciplinary Perspective

Critical Studies have made important contributions to the understanding of SSC based in radical political economy, political geography, development anthropology, critical security studies, critical geopolitics, cultural perspectives, indigenous theory, critical race theory, and feminist theory (Mawdsley, 2019). SCC is treated throughout Critical Studies as “the outcome of a social construct—shaped by the dialectical relationship between knowledge and power— and as a project aimed at governing poverty, the global South, and/or international politics” (Bergamaschi et al., 2017, p. 10). Drawing on the work of Bourdieu (1977), Gramsci (1977), Foucault (1975), Derrida (1992) and Mauss (1990), among others, critical theorists have examined SSC from different disciplines and approaches, such as ethnographic studies (Cesarino and Da Nóbrega, 2012), geographical and historical studies (Mawdsley, 2019; Gonzalez-Vicente, 2012), social anthropology (Brun, 2018), philosophy and deconstructionism (Six, 2009), cultural studies on anthropophagy (Abdenur, 2019), socio-spatial approaches (Muhr, 2017), notions of hegemony and post-hegemonic governance (Domínguez and Rodriguez, 2017; Domínguez et al., 2019; Gürcan, 2019; Lemus Delgado, 2018; Vadell, 2019), perspectives on peripheral research (Perrotta and Alonso, 2020) and sociological perspectives (Esteves and Assunçao, 2014; Bringel and Viera, 2015). Critical Studies build on existing geographical, sociological and anthropological works, address traditional foreign aid and explore SSC as a transformative modality based on “knowledge and beliefs, evidence, representations and interactions, daily practices and habits” (Bergamaschi et al., 2017, p. 10). For Emma Mawdsley (2019, p. 228), the South constitutes an “ontological challenge to the donor–recipient binary, and the spatialities, imaginaries and identities of developed/developing that this has historically (re)produced.” She also identifies some characteristic features of the symbolic regime of SSC: a shared “developing country” identity; expertise in appropriate development; rejection of hierarchical “donor–recipient” relations; and an insistence on mutual opportunity. In this view, SSC attempts to deconstruct the hegemonic features of the international system, through its counter-hegemonic discourse (Mawdsley, 2012). 4.4

The Politics of South–South Development Cooperation

Building on the legacy of the Latin American Autonomist School, Middle-Range Studies in the South, or what was called later “Foreign Policy Analysis” (FPA), provide an eclectic and systematic overview of SSC policies through cross-national comparisons. Unlike international system-based approaches, which tend to reduce SSC policies to a monolithic state with a single interest, FPA introduce keys to unlocking the black box. This approach is very much focused on domestic influences and interaction of bureaucracies and politicians, citizens, businesses, or interest groups (Malacalza, 2019a). FPA looks at the politics of South–South development cooperation (SSDC) – that is, its political foundations, actors, and interactions in domestic politics in Southern provider countries of development cooperation – and assesses its sociopolitical effects in recipient countries through dense and context-specific research (Bergamaschi et al., 2017). Carlos Milani and Leticia Pinheiro (2012), two of the main exponents of FPA, argued that, by assuming SSDC as a public policy, they are bringing SSDC to the terrain of politics, that is, recognizing that its

The politics of south–south cooperation  177 formulation and implementation are inserted in the dynamics of government choices that result from coalitions, bargains, disputes, agreements between representatives of different interests, which ultimately express the very dynamics of politics. FPA also pays special attention to ideas and ideologies, norms and institutions, bureaucratic categories and practices, cultural bonds, and popular imaginaries that underlie and sustain SSDC practices (Milani and Pinheiro, 2012; Bergamaschi et al., 2017). How have SSDC strategies been historically integrated in national foreign policy agendas? What are the geopolitical, economic and developmental motivations of SSDC strategies? What are their implications? Southern cooperation providers are themselves a diverse group of nations on different trajectories. Although the FPA literature is dominated by the cases of BRICS and China’s foreign policies in Africa, a vast amount of academic studies have appeared based on different Latin American and African cases since the first decade of the twenty-first century (Lima, 2005; Hirst, 2009; Ayllón and Surasky, 2011; Souza, 2012; Milani and Pinheiro, 2012; Ayala and Rivera, 2014; Lechini and Morasso, 2015; Lallande et al., 2016; Suyama et al., 2016; Santander, 2016; Kern and Pauselli, 2017; Farias, 2018; Malacalza, 2019b; Mthembu, 2018; Ojeda and Echart, 2019). Several authors from the Research and Information System for Developing Countries (RIS) in India and the Network of Southern Think Tanks (NeST) have also produced an eclectic and vast literature on regional and national studies (Chaturvedi, 2012; Chakrabarti, 2016; Chatuverdi et al., 2012).

5. CONCLUSION The study of SSC begins with the emergence of Structuralism and the study of core–periphery relations after the Bandung Conference, which was a turning point in international development studies. Although some authors have examined the literature on SSC and certain of its conceptual propositions, the discussion on the place that SSC theorization has in mainstream debates has been little addressed by scholars. As stated here, Structuralism enabled an ontological discussion on the constitutive factors of the world system, the origins, voices, experiences, knowledge and perspectives from the periphery or the “Third World.” Structuralists and dependency theorists contributed to the understanding the reality of those countries located in the periphery. Then, Global South Studies introduced the epistemological issue as a novel element with the post-positivist turn; the interpellation on the ways of producing knowledge and understanding development and global politics. They also invited to challenge dominant modern/developed/Western/North–South conceptions on development and international cooperation. In recent years, we have witnessed a new wave of academic works that seek to incorporate a new agenda for research and to bring other perspectives to the center of the stage, trying to address the plurality and diversity of actors, and interactions in context-specific researches. Table 11.2 compares the ways in which SSC theorization evolved in terms of theoretical approaches, key concepts and conceptual definitions. The main issue is that SSC theorization grounded in the South has provided a greater analytical and normative richness to the study of international development. Given the contributions of Structuralism, Dependency Theory, WSA, IPE, theories of autonomy, Global South, Postcolonial and Decolonial studies, Poststructuralism and Post-Development theories, Critical and Middle-Range studies, most peripheral and Southern approaches on SSC have been acknowledged in international development debates. However, big questions like the ones

Postcolonial and Decolonial Studies

Structuralism versus

interactions, daily practices and habits

Sociological, Geographical and Cultural

Politics of SSDC

politics of SSDC

Source: Own elaboration.

SSDC as a public policy

Middle-Range Studies: FPA on the

Perspectives and Non Western IR

recognized that development is homegrown and idiosyncratic

Knowledge and beliefs, representations and

Critical Studies and the revival of

are inserted in the dynamics of government choices

SSDC as a public policy, recognizing that its formulation and implementation

dialectical relationship between knowledge and power

SSC as a native category and as an outcome of a social construct – shaped by the

SSC is a transformative option more prone to a “bottom-up” approach, which

Alternatives to development

Theories

1990–

solidarity and identity among the Global South

a political collectivity and ideological Formulation that arises from lateral

SSC as a political subjectivity or a subaltern category that captures both

Poststructuralism and Post-Development Post-development

Coloniality of power

Social Global Movements

Global South

international negotiations

SSC as a strategic option for coalition-building and gaining autonomy in

Theories

Post-Development

Global South Studies

Neoliberalism/

Intermediate states

Autonomy Non-alignment

Autonomy

Middle-Range Studies: Theories of

Post-hegemonic governance

SSC as a counter-hegemonic bloc and post-hegemonic governance

it reflects political resistance to the hegemonies of the world system

Counter-hegemonic bloc

World system

International Political Economy

SSC involves something more than a bloc that promotes economic cooperation:

Semi-periphery

1960–1990

peripheral countries in order to overcome dependency from the core

SSC is seen as a broad political and economic sphere of cooperation of

Theories of Autonomy World-System Analysis

Core–periphery relations

Third World

SSC definitions

Dependency

Dependency Theory

Key concepts

versus Structuralism/

Latin America Structuralism and

Modernization

international development

Theoretical approaches on SSC and

Debates on SSC and international development

Theories of

Debate

Table 11.2

178  Handbook on the politics of international development

The politics of south–south cooperation  179 proposed here are intended to encourage greater theorization and reflexivity among scholars in an attempt to incorporate a new agenda for research. How can SSC studies address the shift from hyperglobalization to a growing tendency toward deglobalization like the current one? How does China’s rise impact on South–South relations? Does China’s rise suppose a change in core–periphery relations? Is China a new North or a Northern South? Are the countries of the Global South facing a more complex neo-dependency? How can SSC become a transformative political project in the current global crisis? Is it possible to think “Post-South” as a new category? The Bandung Conference marked a turning point in international development: it challenged existing mainstream and enabled to move from a debate on international politics to another on world politics. There was not, then, a third conference that marked another hinge in history; however, the COVID-19 pandemic is a major breaking point that has changed the political landscape and should revitalize the debate on global politics.

REFERENCES Abdenur, A. E. (2019), Devouring international relations: Anthropophagy and the study of South–South cooperation. In E. Mawdsley, E. Fourie, and W. Nauta (eds.), Researching South–South Development Cooperation. London. Routledge, 32–48. Acharya, A. (2016), Studying the Bandung conference from a Global IR perspective. Australian Journal of International Affairs, 70(4), 342–357. Amin, S. (2009), Aid for “development”? Or instrument conceived to dominate vulnerable economies? Forum Tiers Monde, Paris. http://​forumtiersmonde​.net/​fren/​index​.php​?option​=​com​_content​&​view​=​ article​&​id​=​247:​aid​-for​-development​-or​-instrument​-conceived​-to​-dominate​-vulnera​-ble​-economies​&​ catid​=​1:​latest​-news​&​Itemid​=​108. Amin, S. (2015), From Bandung (1955) to 2015: Old and new challenges for the states, the nations and the peoples of Asia, Africa and Latin America. International Critical Thought, 5(4), 453–460. Ayala, C. and Rivera, J. (2014), De la diversidad a la consonancia: la cooperación sur-sur latinoamericana. México: Instituto Mora. Ayllón, B. and Surasky, J. (2011), La Cooperación Sur-Sur, Utopía y realidad. Madrid: Catarata. Bergamaschi, I., Moore, P., and Tickner, A. B. (eds.) (2017), South–South Cooperation Beyond the Myths: Rising Donors, New Aid Practices? New York: Springer. Bernstein, H. (1971), Modernization theory and the sociological study of development. The Journal of Development Studies, 7(2), 141–160. Blaney, D. L. and Inayatullah, N. (2008), International relations from below. In C. Reus-Smit and D. Snidal (eds.), The Oxford Handbook of International Relations. New York: Oxford University Press, 663–674. Bourdieu, P. (1977), Outline of a Theory of Practice. Cambridge: Cambridge University Press. Bringel, B. and Vieira, F. B. (2015), Movimientos internacionalistas y prácticas de cooperación Sur-Sur: brigadas y experiencias formativas del Movimiento de los Sin Tierra de Brasil y La Vía Campesina. Revista española de desarrollo y cooperación, 36, 65–79. Brun, É. (2018), La cooperación Sur-Sur de Brasil, Chile y Venezuela: interés y pérdida de esencia. Revista CIDOB d’Afers Internacionals, 120, 171–194. Cardoso, F. H. and Faletto, E. (1971), Dependencia y desarrollo en América Latina: ensayo de interpretación sociológica. Buenos Aires: Siglo Veintiuno Editores. Cesarino, L. and Da Nóbrega, M. (2012), Anthropology of development and the challenge of South– South cooperation. Vibrant, Virtual Brazilian Anthropology, 9(1), 507–537. Chakrabarti, M. (2016), Development Compact – the cornerstone of India’s development cooperation: An ‘externalities’ perspective. International Studies, 53(1), 2–14. Chaturvedi, S. (2012), India’s development partnership: Key policy shifts and institutional evolution. Cambridge Review of International Affairs, 25(4), 557–577. Chaturvedi, S. and Chakrabarti, M. (2019), Raul Prebisch and Development Strategy. Delhi: RIS.

180  Handbook on the politics of international development Chaturvedi, S., Fues, T., and Sidiropoulos, E. (eds.) (2012), Development Cooperation and Emerging Powers: New Partners or Old Patterns? London: Zed Books. Cox, R. W. (1981), Social forces, states and world orders: Beyond international relations theory. Millennium, 10(2), 126–155. Dargin, J. (2013), The Rise of the Global South: Philosophical, Geopolitical and Economic Trends of the 21st Century. Singapore: World Scientific. De la Fontaine, D. and Seifert, J. (2010), The Role of South–South Cooperation in Present Brazilian Foreign Policy: Actors, Interests and Functions. Stockholm: Institute of Latin American Studies. Deciancio, M. and Míguez, M. C. (2020), Contribuciones de los estudios globales al análisis de la política exterior: una aproximación metodológica. Colombia Internacional, 102, 87–112. Deciancio, M. and Quiliconi, C. (2020), IPE beyond Western paradigms: China, Africa, and Latin America in comparative perspective. In E. Vivares (ed.), The Routledge Handbook to Global Political Economy. London: Routledge, 457–471. Deciancio, M. and Tussie, D. (2019), Globalizing global governance: Peripheral thoughts from Latin America. Fudan Journal of the Humanities and Social Sciences, 13(1), 29–44. Derrida, J. (1992), Fuerza de ley: el fundamento místico de la autoridad. Doxa, 11. Domínguez, R., Brutto, G. L., and Surasky, J. (eds.) (2019), La constelación del Sur: lecturas histórico-críticas de la Cooperactión Sur-Sur. Puebla: Benemérita Universidad Autónoma de Puebla. Domínguez, R. and Rodríguez Albor, G. (2017), Historia de la Cooperación Internacional desde una perspectiva Crítica. Barranquilla: Uniautónoma. Dos Santos, T. (1972), Socialismo o fascismo. El nuevo carácter de la dependencia y el dilema latinoamericano. México: UNAM. Eriksen, T. (2015), What’s wrong with the Global North and the Global South? http://​voices​.uni​-koeln​ .de/​2015​-1/​whatsw​rongwithth​eglobalnor​thandsouth. Escobar, A. (1995), El desarrollo sostenible: diálogo de discursos. Ecología Política, 9, 7–25. Esteves, P. and Assunção, M. (2014), South–South cooperation and the international development battlefield: Between the OECD and the UN. Third World Quarterly, 35(10), 1775–1790. Farias, D. B. L. (2018), Aid and Technical Cooperation as a Foreign Policy Tool for Emerging Donors: The Case of Brazil. London: Routledge. Foucault, M. (1975), Vigilar y castigar. México: Siglo XXI. Gill, S. (ed.) (1993), Gramsci, Historical Materialism and International Relations. Cambridge: Cambridge University Press. Gonzalez-Vicente, R. (2012), The political economy of Sino-Peruvian relations: A new dependency? Journal of Current Chinese Affairs, 41(1), 97–131. Gramsci, A. (1977), Cultura y literatura. Madrid: Península. Gudynas, E. (2016), Beyond varieties of development: Disputes and alternatives. Third World Quarterly, 37(4), 721– 732. Gülalp, H. (1998), The Eurocentrism of dependency theory and the question of ‘authenticity’: A view from Turkey. Third World Quarterly, 19(5), 951–961. Gunder Frank, A. (1967), El desarrollo del subdesarrollo. Pensamiento crítico, 1, 159–173. Gürcan, E. C. (2019), Multipolarization, South–South Cooperation and the Rise of Post-Hegemonic Governance. London: Routledge. Hirst, M. (2009), Países de renda média e a cooperação Sul-Sul: entre o conceitual e o político. Brasil, Índia e África do Sul: desafios e oportunidades para novas parcerias. São Paulo: Paz e Terra. Jaguaribe, H. (1979), Autonomía periférica y hegemonía céntrica. Estudios internacionales, 12(46), 91–130. Jules, T. D. and Sá e Silva, M. (2008), How different disciplines have approached South–South cooperation and transfer. Society for International Education Journal, 5(1), 45–64. Kern, A. and Pauselli, G. (2017), South–South cooperation and the governance of development aid in South America. In P. Riggirozzi and C. Wylde (eds.), Handbook of South American Governance. London: Routledge, 191–203. Kim, J. and Garland, J. (2019), Development cooperation and post-colonial critique: An investigation into the South Korean model. Third World Quarterly, 40(7), 1246–1264.

The politics of south–south cooperation  181 Lallande, J. P. P., Surasky, J., Medina, T. O., Dolcetti-Marcolini, M., Ayllón, B. A., and Giacalone, R. (2016), Cooperación Sur-Sur, política exterior y modelos de desarrollo en América Latina. Buenos Aires: CLACSO. Lechini, G. (2009), La cooperación Sur-Sur y la búsqueda de autonomía en América Latina: ¿Mito o realidad? Relaciones Internacionales, 12, 55–81. Lechini, G. T. and Morasso, C. (2015), La cooperación sur-sur en el siglo XXI: reflexiones desde América Latina. Pensamiento propio 3.2015. Buenos Aires: CRIES. Lechini, G. and Rojo, P. (2019), Las contribuciones de la “Escuela Rosarina” al estudio de Relaciones Internacionales en Argentina. Revista de Relaciones Internacionales de la UNAM, 133. Lemus Delgado, D. (2018), La Ayuda Oficial al Desarrollo (AOD) como una práctica hegemónica (1945–2000). Revista CIDOB d’Afers Internacionals, 120, 29–50. Lima, M. R. S. D. (2005), A política externa brasileira e os desafios da cooperação Sul-Sul. Revista brasileira de política internacional, 48(1), 24–59. Lipset, S. M. (1959), Some social requisites of democracy: Economic development and political legitimacy. The American Political Science Review, 53(1), 69–105. Mahler, A. G. (2017), Global South. Oxford Bibliographies in Literary and Critical Theory. https://​www​ .academia​.edu/​34955961/​_Global​_South​_Oxford​_Bibliographies​_in​_Literary​_and​_Critical​_Theory​ _ed​_Eugene​_OBrien​_New​_York​_Oxford​_University​_Press​_2017. Malacalza, B. (2019a), Aid in the framework of international relations theories. In I. Olivié and A. Perez (eds.), Aid Power and Politics. London: Routledge, 11–33. Malacalza, B. (2019b), La política de la cooperación Sur-Sur: China, India y Brasil en América Latina y el Caribe. Colombia Internacional, 98, 67–103. Mauss, M. (1990 [1950]), The Gift: The Form and Reason for Exchange in Archaic Societies. New York and London: W. W. Norton. Mawdsley, E. (2012), The changing geographies of foreign aid and development cooperation: Contributions from gift theory. Transactions of the Institute of British Geographers, 37(2), 256–272. Mawdsley, E. (2019), Queering development? The unsettling geographies of South–South cooperation. Antipode, 52(1), 227–245. Mignolo, W. D. (1993), Colonial and postcolonial discourse: Cultural critique or academic colonialism? Latin American Research Review, 28(3), 120–134. Míguez, M. C. (2017), La autonomía heterodoxa y la clasificación de las políticas exteriores en la Argentina. Revista Relaciones Internacionales, Estrategia y Seguridad, 12(2), 207–229. Milani, C. and Pinheiro, L. (eds.) (2012), Política externa brasileira: As prácticas da política e a política das prácticas. Rio de Janeiro: Editora FGV. Mthembu, P. (2018), China and India’s Development Cooperation in Africa. Cham: Palgrave Macmillan. Muhr, T. (2017), South–South cooperation and the geographies of Latin America–Caribbean integration and development: A socio-spatial approach. Antipode, 49(4), 843–866. Ojeda, T. and Echart, E. (2019), La cooperación Sur-Sur en América Latina y el Caribe. Balance de una década. Buenos Aires: CLACSO. Perrotta, D. and Alonso, M. (2020), Cross-national research partnerships in international relations: A study of research groups’ practices of MERCOSUR—Re-envisioning scholarly activities beyond the Global North–Global South divide. Journal of Studies in International Education, 24(1), 79–96. Polanyi, K. (1944), The Great Transformation: The Political and Economic Origins of Our Time. New York: Farrar and Rinehart. Puig, J. C. (1980), Doctrinas internacionales y autonomía latinoamericana. Caracas: Universidad Simón Bolívar, Instituto de Altos Estudios de América Latina. Quijano, A. (2000), Coloniality of power and Eurocentrism in Latin America. International Sociology, 15(2), 215–232. Rist, G. (1997), The History of Development. London: Zed Books. Robledo, C. (2015), New donors, same old practices? South–South cooperation of Latin American emerging donors. Bandung, 2(1), 1–16. Rostow, W. (1952), The Process of Development. New York: W. W. Norton Sanahuja, J. A. (2018), Reflexividad, emancipación y universalismo: Cartografías de la teoría de las relaciones internacionales. Revista Española de Derecho Internacional, 70(2), 101–126.

182  Handbook on the politics of international development Santander, G. (2016), Identidades e intereses de la cooperación Sur-Sur: Los casos de Chile, Venezuela y Brasil. Madrid: Catarata. Six, C. (2009) The rise of postcolonial states as donors: A challenge to the development paradigm? Third World Quarterly, 30(6), 1103–1121. Sousa Santos, B. de (2006), Conocer desde el Sur: Para una cultura política emancipatoria. Coimbra: UNMSM. Souza, A. D. M. (2012), A cooperação para o desenvolvimento Sul-Sul: Os casos do Brasil, da Índia e da China. Rio de Janeiro: IPEA. Strange, S. (1970), International economics and international relations: A case of mutual neglect. International Affairs, 46(2), 304–315. Suyama, B., Waisbich, L. T., and Leite, I. C. (2016), Brazil as a development partner under Lula and Rousseff: Shifts and continuities. In J. Gu, A. Shankland, and A. Chenoy (eds.), The BRICS in International Development. London: Palgrave Macmillan, 25–62. Tickner, J. A. (2011), Dealing with difference: Problems and possibilities for dialogue in international relations. Millennium, 39(3), 607–618. Tussie, D. (2020), The tailoring of IPE in Latin America. In E. Vivares (ed.), The Routledge Handbook to Global Political Economy: Conversations and Inquiries. London: Routledge, 92–110. Vadell, J. A. (2019), China in Latin America: South–South cooperation with Chinese characteristics. Latin American Perspectives, 46(2), 107–125. Van der Pijl, K. (1998), Transnational Classes and International Relations. New York: Psychology Press. Vivares, E. and Dolcetti-Marcolini, M. (2016), Two regionalisms, two Latin Americas or beyond Latin America? Contributions from a critical and decolonial IPE. Third World Quarterly, 37(5), 866–882. Wallerstein, I. M. (1974), The Modern World-System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century. New York: Academic Press. Ziai, A. (2012), Post-development. https://​www​.uni​-bielefeld​.de/​cias/​wiki/​p​_Post​_Development​.html.

12. Civil society and the politics of development Daniela Irrera

1. INTRODUCTION Research on international development policy has produced, in the last decades, a rich and wide variety of results. Global aid consists of various actors, institutions and agencies, procedures, norms, and practices (Sumner and Tiwari, 2009; Attinà, 2012; Snilstveit et al., 2012; den Heyer and Johnson, 2020). Civil society organizations (CSOs) are slowly becoming relevant non-state players in emergency policy-making and implementation. Whereas the United Nations defines civil society as the ‘third sector’ along with business and government, the World Bank more specifically includes the wide array of non-governmental organizations (NGOs) and not-for-profit organizations that have a presence in public life, expressing the interests and values of their members or others, based on ethical, cultural, political, scientific, religious or philanthropic considerations. The CSO category is then extremely broad and includes all associations different by states and able to represent interests. Among them, NGOs are the most organized and purpose-based non-state actors. In the international development field, they can deploy a wide range of materials and logistics, and make use of apposite capabilities while implementing projects in the field, using their own particular approach to service provision. In principle, this approach is complementary to that of the state as well as international governmental organizations (IGOs). In practice, however, it can differ significantly. NGOs in particular, have developed actions that often clash with governmental programmes. Most of the time, however, they interact with states and IGOs and contribute, directly or indirectly, in shaping the whole international development system. The relationships between international aid institutions and NGOs have been strongly developed over the years through aid programmes and within specialized agency activities. At the same time, NGOs have developed and strengthened direct relationships with member states, receiving executive tasks from them as well as playing the role of implementing actors. The result is a multi-layered policy process in which national interests, common values, universal principles and global duties merge and interact. In keeping with the general aims of this book, this chapter aims at analysing trends and changes in NGOs’ performance and their contributions to the implementation of international development policy, focusing in particular on their relationship with core global institutions. It is here assumed that CSOs, and more specifically NGOs, have gradually built their roles within international development strategy, by interacting with key actors, participating to the policy-making, and also contesting ideological pillars. In so doing, they have continued to play the traditional role of intermediary between states and IGOs on the one hand, and local communities on the other. They have also strengthened their role as implementing actors, and, by implementing projects in the field, NGOs have maintained a link with states but have also operated within international organizations' bodies and agencies. 183

184  Handbook on the politics of international development This double channel has allowed NGOs to maintain their executive role, but also to develop their lobbying capacities and their ability to exert influence on policy-making. Relationships with local communities and stakeholders constitute a third component and contribute to explaining why civil society has been so relevant in shaping development agenda over time while adapting to historical and political change. This chapter is divided into three sections. The first one introduces the political and ideological context in which principles, practices and norms have been conceived and shaped. NGOs are analysed in their capacity to interact with the global system and strengthen their negotiation and networking ability in terms of a development strategy. Secondly, the major and most traditional NGO roles are presented as the result of intense struggles with government actors, because of donorship, political preferences and divergencies in the development agenda. Finally, the most innovative tasks, that is to say intermediation and implementation, are depicted as the new frontier of non-governmental action. The double channel, concerned with relations between states and intergovernmental agencies, allows more space for negotiation and influence. Relations with local stakeholders, on the other hand, mitigate the excesses of politicization and increase NGO accountability and legitimacy. Finally, consideration is given to civil society actors in difficult policy fields and their future impact.

2.

CIVIL SOCIETY AND INTERNATIONAL DEVELOPMENT POLICY: THE IDEOLOGICAL AND POLITICAL CONTEXT

Within the global system, CSOs have been consistently investigated in respect to several policy fields, including humanitarian issues, aid policy, and international development. Driven by universal humanitarian principles and shaped by their identity, the majority of CSOs have focused on human promotion initiatives and have developed specific expertise, professionalized their tasks, and, gradually, expanded their impact (Roth, 2019; Krawczyk, 2019). Within the broad CSO community, NGOs have acquired greater visibility due to the strength of their mandates, resources and ability to contribute to the management of various problems and crises, at all levels. Studies on NGOs in international development and aid policies have demonstrated that they can more easily obtain the confidence of local populations and facilitate state and IGO interventions. This is usually accompanied by the promotion of principles and practices and the strengthening of the civilian dimension of intergovernmental interventions. However, as has been observed, depending on the policy field, the area of action, and difference in approach, there are various ways in which CSOs interact with other relevant political actors, carrying out projects and programmes, trying to gain wider public support, promoting fund-raising, and in many cases, also facing several ethical and legal predicaments (Willetts, 2001; Rubenstein, 2015). Whereas all NGOs know the international rules and principles and react accordingly, they relate differently to governmental actors (Stoddard, 2003; Donini, 2012). Their performance should thus be analysed within the broader framework of international and regional organizations and states. The United Nations (UN) system, in particular, is the universally recognized realm in which collective security and international development have been conceived and structured. The UN system has allowed NGOs to strengthen and test their expertise and identify how to respond to states and institutional bodies. By using the formal accreditation mechanism to

Civil society and the politics of development  185 the Economic and Social Council (ECOSOC), they have begun to shape practices and norms (Heiss and Kelley, 2017; Mowell, 2018a; Willetts, 2018). In parallel to UN bodies, NGOs have started to perform specific functions, such as providing assistance, promoting aid practices and measures, and supporting development initiatives. The United Nations Development Programme (UNDP), for example, has been particularly useful to NGOs, especially given the intense interactions with agencies such as the World Food Programme (WFP), World Health Organization (WHO), UNICEF, and UN Environment Programme, that have a more established pattern of cooperation with non-state actors (Seybolt, 2009). This has resulted in a mixture of top-down general reforms, promoted by the UN, along with bottom-up attempts, on the part of NGOs, to exert a stronger influence (Donini, 2012; Irrera, 2013). The overall mechanisms, however, are not easy to coordinate. Although driven by the same aims and principles, NGOs and government actors are often divided on how aid and assistance should be delivered. The existence of different mandates and sectoral interests has meant that policy instruments have not always been efficient and effective. In some initiatives the proliferation of parallel structures has confused roles and competences, rather than fostering coordination. The Clusters Mechanism, for example, was put in place by the UN to manage all different phases of crisis and disaster management, particularly for increasing preparedness and solving the problem of emergency shortages. Each cluster was expected to involve several competent institutional and non-institutional actors, under the supervision of a UN agency. However, the mechanism failed to enhance real coordination among various actors. As in this case, the multiplication of procedures and bureaucracy has also produced uncertainty with regard to funds allocation (Stobbaerts et al., 2007; Clarke and Campbell, 2018; Irrera, 2018). The relationship between the UN and NGOs has been labelled a marriage of convenience (Natsios, 1995), settled by global events and the balance of power. Intergovernmental agencies, governments, and NGOs work at different speeds and are affected by diverse interests, although room for joint action, initiatives, and practices has been found. International development is a paradigmatic example of how NGOs have tried to adapt to an extremely changeable environment, shaping trends and outcomes from the bottom and from within. As Clarke has pointed out, development is a policy field traditionally associated with civil society, where liberal views have emphasized the capacities of CSOs to cope with people’s needs and to limit excessive state power. When it comes to practical aid policies, particularly within the UN system, NGOs become the preferred interlocutors, as the ones which can better support a government donorship ideology and strategy (Clarke, 2006). The relationship between NGOs and intergovernmental actors (both states and IGOs) in development policy is complex, shaped by historical events, political factors, economic trends and several sources of contestation. Whereas, the UN system has represented the ideal context, NGOs have found more difficult, although more challenging to interact with the International Financial Institutions (IFIs), given their peculiar service-oriented nature, focused on the provision of funds to countries, as clients (Tussie and Casaburi, 2000). NGOs had been particularly interested in being involved into the General Agreement on Tariffs and Trade (GATT), since its establishment. However, their commitment increased after its transformation into the World Trade Organization (WTO). The deep transformation of the agenda of trade negotiations was perceived by NGOs as a positive chance to be at the centre of globalization dynamics and become more influential, in a more extended area, beyond Europe and North America. Unfortunately, at least at the very begin-

186  Handbook on the politics of international development ning, NGOs were restricted to consultation procedures rather, than a real participation, as they expected. The main issue, which was visible, even in the World Bank, the regional development banks and the International Monetary Fund (IMF), was that the participatory dimension was not well developed and more intergovernmental dynamics and priorities were preferred. Although specific programmes required a direct or indirect involvement of society at large, it was difficult to go beyond consultation (Malena, 1995; Fox and Brown, 1998; Woods, 2000). In the 1970s, the decolonization process and increasing role of the Global South in the UN General Assembly, resulted in a need for more structured aid policies. Despite this, NGOs were poorly recognized in the implementation of development projects and only a small number – mainly those from the Global North deployed in southern countries – were able to get support. Civil society, as a whole, was not perceived as a potential player in service provision and emergency work. Neoliberal models, which emerged in the late 1970s, resulted in radical reform in development strategy (see Chapter 1 by Ocampo, Chapter 8 by Chodor and Blaustein, and Chapter 26 by Rivarola Puntigliano in this volume). The market replaced the state, even as optimistic expectations on economic growth substituted poverty as the most public concern (Murray and Overton, 2011). As scholars have observed, reductions in public expenditure, and the withdrawal of state-provided services, were key elements of structural adjustment policies. One of the most important consequences was a shift in the perception of NGOs, towards being considered as newly desirable interlocutors. The frustrations in working with states pushed donors (including intergovernmental agencies) to view NGOs as more legitimate and accountable beneficiaries. At the same time, their potential in developing new methodologies and practices, in respect of poor communities, began to be valued (Lewis, 2005; Murray and Overton, 2011). Such perceptions were then strengthened during the successive decade, often labelled, ‘the NGO decade’. Neoliberal agendas dominated Western economic and social strategies and the evident failures of state-led development approaches throughout the 1980s brought to the increasing involvement of NGOs as a promising development alternative. The Reagan administration in the US promoted radical new economic policies at home and abroad, including structural adjustment programmes in developing countries that linked development aid to reduced government spending, privatization and market liberalization. This also produced a proliferation of faith-based NGOs, particularly active in developing countries, trying to implement the neoliberal agenda, as a response to poverty, inequality and social exclusion (Clarke, 2006). As a result of their spiritual and moral values, faith-based NGOs often demonstrated a greater ability to mobilize adherents and to build networks both nationally and internationally. In spite of their peculiar identity, these NGOs succeeded in being recognized as important actors in the development process and warrant commensurate attention in development policy. Although their expertise and people-centred approaches have been necessary to service delivery and advocacy, divergencies in NGO attitudes and levels of formality started to become more evident and problematic (Lewis and Kanji, 2009). Investigations have demonstrated that despite classificatory difficulties NGOs have emerged as a ‘development alternative’. One of the most important factors has not only been their ability to address poverty and unequal relationships, but also their capacity to fill the vacuum left by state inefficiency in the provision of services (Bebbington et al., 2008; Lewis and Kanji, 2009). During the NGO decade, it was also clear that, next to traditional services, NGOs had developed more innovative and experimental approaches, addressing community participation. The adoption of an ‘empowerment’ strategy

Civil society and the politics of development  187 became essential in that period and, since then, has remained associated with development NGOs. Programmes specifically designed to empower disadvantaged groups, expand their participatory potential, and facilitate them in gaining a voice in the governance spaces from which they have usually been excluded, have begun to be supported, particularly at the UN level (Cornwall and Brock, 2005). The end of the Cold War and the impact it had on the global system, shaped development systems and policies. A series of important conferences and summits, convened in the 1990s and the beginning of 2000s, updated the UN social agenda on several important issues, including development and human rights. To ground this renewed political effort from the bottom-up, NGOs were strongly encouraged to participate. Thousands of organizations invested their efforts in the diplomatic negotiating processes, advocating for a variety of proposals (Bissio, 2003). In the late 1990s, and more prominently in the 2000s, the emergence of the good governance agenda resulted in a new international aid regime, based on the promise of greater consultation, non-growth factors and bigger state responsibility (Murray and Overton, 2011). IFIs were the most responsive organizations in catching the potential of NGOs. The World Bank, in particular, developed a renovated approach, based on the empowerment of civil society as an essential tool for enhancing in the quality and efficiency of global financial governance. Cooperation with NGOs became more organized and structured into meetings, conferences and working groups, as public space for policy consultation. In the regional development banks and followed suit, NGOs started to serve as intermediaries and consultants and to act as implementing actors of several national programmes. Even the IMF has changed its approach towards civil society organizations, opening to meetings with labour groups and trade union representatives. In 1995 these meetings were organized also at national level, in all countries in which IMF’s staff and resident missions were deployed. Although, these meeting were just producing more consultation, they were perceived as a meaningful innovation (Woods, 2000). Although IFIs always represented a challenging environment for civil society, NGOs tried to adapt and profit from limited but still useful opportunities. In this period, NGOs found themselves in the middle of a controversial shifting process. On the one hand, the so called ‘re-governmentalization’ of aid increased state funding along with attempts to influence recipient governments’ agenda (Lewis and Kanji, 2009). On the other, the good governance agenda favoured the spreading of democracy, human rights, and public participation discourses in the international development landscape. NGOs were ideally placed to convey these topics, thanks to their people-centred approaches (Murray and Overton, 2011). The dominance of NGOs thus continued, although the new focus on strengthening civil society emphasized the recognition that NGOs constitute only one part of civil society. The range of NGO approaches and identities became stronger in the successive decade and found its most evident and important manifestation in the negotiations that led to the Millenium Development Goals (MDGs) (Fukuda-Parr, 2017; Mowell, 2018b; see Chapter 20 by Currie-Alder in this volume). Throughout the 1990s, NGOs had always participated in UN conferences, advocating for different proposals, supporting the implementation of resolutions, and periodically reviewing official documents and policies within the commissions of ECOSOC. This process, although sometimes challenging, produced interactions with governments at national levels which consequently led to more accountable drafts, which later turned into conference resolutions.

188  Handbook on the politics of international development The manner in which the Millennium Summit was organized did not favour civil society participation. It convened as a single, large meeting, months before the effective session involving Heads of State. NGOs could only indirectly follow the negotiations and were not totally aware of the effective contents of the MDGs documents. The way they were formulated allowed the UN Secretary-General to produce the reports without any civil society input. Those reports could be considered by the General Assembly without NGOs even being allowed to observe the proceedings. The only contribution NGOs could provide was limited to the implementation of poverty eradication programmes at national level, which was exactly what they had already been doing prior to that point. In the end, the limited NGO impact in negotiations and the excessive role of state actors in the creation of the MDGs, meant they have been perceived as a missed opportunity for providing effective change. This is the general context, within which development NGOs have strengthened their approaches, increased their influence and built a set of interactions with different actors. This complex and multi-layered journey has thus been essential in building development agendas which, in parallel to official government agenda, has brought to the fore global issues and local needs. Such agendas have been built and implemented through a combination of traditional tasks and innovative and more politicized functions.

3.

CIVIL SOCIETY AND INTERNATIONAL DEVELOPMENT POLICY: AGENDAS AND CONTESTATION

NGOs have been involved in development cooperation for as long as that cooperation has existed. They have, in the end, been viewed as actors in the domestic landscape of many countries in need, where they contribute to social, economic, cultural, and democratic development, and whose contribution cannot be underestimated (Wood and Fällman, 2019). However, this perception has been built gradually and challenged by several difficulties. In addition to the flexibility of NGO size, mandate, and governance structure, the multitude of functions they fulfil, from service delivery to advocacy on issues of public policy, from research to the promotion of human rights, has made them invaluable in international development cooperation. In principle, NGOs are seen as both recipients and channels of aid, and as development actors as well as programme implementers on behalf of donors. In practice, this reflects a controversial interplay between the service-oriented function (which is traditionally associated with any civil society actor) and the need to be more politically influential. Such an interplay can be observed in any policy field related to human promotion, and it is even more visible in aid policy, where NGOs try to shape global agenda and reorient policies towards different aims. The different roles NGOs play can be grouped into three main categories and represent an escalation of their involvement: 1. service provider; 2. independent development promoter; 3. empowerment and democracy promoter. The first role, of NGOs as a service provider, is most commonly associated with civil society organizations. In providing various services to local communities, NGOs have intersected with several actors across different fields, ranging from health and education services to more niche areas, such as emergency response, conflict and natural disasters, human rights and minority protection, and environmental management (Lewis and Kanji, 2009). The recognition, therefore, that the specific skills and expertise of NGOs allow them to provide

Civil society and the politics of development  189 humanitarian assistance quickly, when compared to other governmental actors, has always been part of the system. As has been observed, even this very traditional role has begun to be understood and applied in a more innovative way (Bebbington et al., 2008; Hulme, 2008). In respect to the final outcomes of service delivery, scholars have emphasized the existence of at least two approaches: on the one hand, development may be viewed as a project-based activity, in which the most important thing is the provision of what people need locally on a daily basis. On the other hand, development may be viewed as an ongoing process, through which it is possible and necessary to change societies from the bottom-up, through identifying alternative and more accountable ways of organizing the economic and political system (Bebbington et al., 2008). The latter approach, also used to support accountability and empowerment processes and to promote democracy in partner countries, is strongly related to the second role, that is to say, NGOs as independent development actors. This role has been interpreted in a very peculiar way. According to established and common practices, all CSOs are freely permitted to operate as independent development actors, and to make use of their skills, resources and networks as they prefer, without necessarily following official programmes (DCD-DAC, 2011). Benefiting from this, since the beginning, NGOs have established their own priorities, plans, and approaches to achieving their goals. At the same time, and this is the most important and innovative aspect, NGOs have used their independence to engage actively in development within the official aid system rather than outside of it. As independent actors, NGOs are able to raise financial resources through private contributions to development cooperation and as such, are themselves aid donors. Funds are then used in the implementation of their own-defined programmes or activities. In parallel, they also receive funds from donors, including states, to support and realize programmes, meeting specific objectives on behalf of the donors. This double channel, which will be analysed in detail in the next paragraph, has been used, increasingly, in strengthening relations with governmental actors, expanding their influence and attempting to push for more state support towards development policies and measures. As already seen, in the 1990s, states and IGOs began recognizing NGOs as promoters of political reform and democratization (Harsh et al., 2010). Studies on this third important role have demonstrated that it developed very slowly, compared to the others, due to difficulties in participating in the political process needed to achieve more ambitious goals (Edwards and Hulme, 1996). A more proactive political role could challenge the state and lead to hostile relationships, thus threatening prospects for sustainability (Clarke, 1998). At the same time, pushing for more democratic policies is a natural component of NGO work, as stressed by Bebbington, who defines NGOs as “democratisers of development” (Bebbington, 2005). As a result of their typical people-centred approach, NGOs have stressed the need for international development policies to be grounded in a stronger participatory approach. To this end, aid and service delivery are not only expected to meet immediate and medium-term needs, due to conflicts, poverty and deprivation, but also to promote changes which, in the long-term, reflect in local and national institutions and processes (Mohan, 2002). The development policies they offer, therefore, often focus on encouraging a strong democratic culture rather than immediate relief. This third role can be considered as the last step of an escalating process that brings NGOs greater influence but also more contestation since it inevitably requires the consideration of donors and their impact on global international policies. Some scholars have observed that the

190  Handbook on the politics of international development global aid system is built on unequal relationships between donors and NGOs, which allow NGOs to grow and expand, as long as their donors’ preferences are satisfied, regardless of the quality of the services they provide (Mohan, 2002; Power et al., 2002). Others have argued that NGOs’ main concern remains the establishment of strategies for more effective service provision. As a consequence, representing grassroots communities while being accountable primarily to external organizations, puts NGOs in an irreconcilable position (Mohan, 2002). In the end, scholars agree that the extremely high cost of accountability to donors is the factor that most severely limits more innovative NGO roles (Ebrahim, 2003; Rose, 2011). In many cases, NGOs have been slow to implement innovations to improve their accountability and strengthen their legitimacy, and also slow in taking steps to change their relationships with donors and/or reduce their aid dependence (Edwards, 2008; Hulme, 2008). This has presented a dilemma: in order to increase accountability, NGOs have had to prioritize their organizational imperatives over their development vision (Bebbington et al., 2008). According to Ebrahim (2003), if both donors and NGOs focus on short-term functional accountability, longer-term strategic processes, necessary for lasting social and political change, are then often overlooked (Rose, 2011). Problems of accountability, autonomy, and distancing from the grassroots are, therefore, closely interlinked. Whether NGOs can still design and pursue a development alternative remains in question. Success in this sphere will require a shift away from their role as service providers to a more sophisticated one, allowing their skills and networking abilities to be more functionally employed. The ‘crisis’ that many development NGOs have experienced in recent times, as described in this section, has been useful in reshaping roles and agenda.

4.

SHIFTING TO A NEW DEVELOPMENT AGENDA: FROM INTERMEDIARIES TO IMPLEMENTING ACTORS

The analysis of the impact of NGOs in international development policy is part of a wider reflection on the influence CSOs try to exert on global politics. It also reflects the need for greater democratization and transparency in the policy-making process at various levels. In many policy fields, NGOs are often criticized and accused of ambiguity, lack of transparency, and inappropriate performance. Despite this, they have gradually, but efficaciously, developed relationships with governmental actors, maintaining their cooperation with states, in parallel with international institutions. This double channel represents a consolidated and powerful tool, which has allowed NGOs, in more recent times, to diversify their roles and ameliorate those which were considered less efficient. Investigations into service provision and development promotion, as traditionally exerted by civil society, should be combined with more recent analyses which have focused on the role that intermediaries play in mediating state–citizen relations and helping people to solve their problems in fragile, conflict and violence-affected settings. These investigations have emphasized the nature of intermediaries and how and with which tools and strategies they deal with different governance issues (Aldashev and Navarra, 2018). While there are several important functions that state authorities and agencies are expected to fulfil, in a range of different contexts, this does not always happen, particularly in those areas affected by state failure, civil conflict, and serious underdevelopment. Here, alternative actors are essential in playing the role of intermediaries where they primarily complement

Civil society and the politics of development  191 and/or replace state institutions. They do this through a wide variety of activities, mostly addressing the inclusion and exclusion of poor and vulnerable communities in state structures (IDS, 2020). In addition to NGOs, social movements, religious authorities, traditional leaders and CSOs are all able to act as intermediaries, with various outcomes and consequences. In managing conflict-related issues, for example, they cover state deficiencies, in parallel to law enforcement agencies, mitigating, in many cases, the effects of the confrontational nature of state-citizen relations (Irrera, 2018). Likewise, in the implementation of development programmes, NGOs act as intermediaries in providing emergency food packages and other emergency equipment, on behalf of state authorities, or by replacing them. In addition to this, intermediary NGOs also diversify beneficiaries and compile and constantly update beneficiary lists, selecting those who will receive or not receive support, depending on their needs and priorities. This not only impacts relations with local communities, but also with donors. On the one hand, being responsible for the list of people, within communities, who are eligible to receive relief assistance, maximizes NGO networks, by cultivating new ones or rekindling older ones. On the other hand, it also acts as an accountability tool to show benefactors where their aid is being spent. Some unintended consequences may however, arise. Firstly, the coexistence of several NGOs, working as intermediaries in a specific setting, and interacting with local stakeholders, may not necessarily result in fair cooperation. The exponential increase of demand for assistance and support can create conflict between intermediaries in accessing finite resources, or in some cases, bringing informal and unusual cross-party alliances between diverse actors so that more resources are delivered to their locations. Secondly, this intermediary activity also greatly influences how different government relief programmes are conducted and implemented. Intermediaries become the real key players in the inclusion and exclusion of vulnerable people in international and state development programmes. According to some research, the fact that NGOs are often best placed to identify who should be entitled to access these programmes, through their interactions with local stakeholders, enables them to raise awareness campaigns and align local political movements with the aim of putting pressure on governments to reconsider how resources generated by development programmes are distributed among citizens (IDS, 2020). Ultimately, in international and development aid policies, NGOs are relevant to both international donors and states. In both contexts and towards both interlocutors, NGOs have offered themselves as implementing actors, and this task, more than intermediation, and beyond other duties, is becoming increasingly more significant. The notion of an implementing actor can be understood in different terms, in regard to the relationship between the actors requested to implement a programme (NGOs) and those who commission (regional/international agencies/states). At least three main qualities can be identified, influencing development policies at all levels. Implementation can be directly linked to relationships with donors, where NGOs are expected to promote donor preferences or/and discharge their moral responsibilities (Rubenstein, 2015). Alternatively, NGOs may provide the emergency aid as a good, like multinational actors to their donors, thus acting as entrepreneurs towards their recipients (Bob, 2005). Finally, NGOs can access considerable levels of private funding, as well as various sources of public funding, especially in those contexts, such as the UN or EU, which strongly support CSOs (Petiteville, 2001).

192  Handbook on the politics of international development This double channel, allowing relations with both supranational institutions and states, has already significantly shaped conflict management duties, and is also producing effects even in development policies, where it combines with a ‘third’ component, that is to say, the local communities. When it comes to this last one, and in particular, to the different impact of projects on a local community, the notion of the implementing actor should be viewed in a broader sense. Although NGOs are trusted for the actual execution of programmes, they preserve autonomy and, far from being simple executors, are aware of development principles and policies, as well as governmental objectives and preferences. They are, therefore, able to select intervention zones and become responsible for planning and implementation. The transition from service-delivery providers, to the most politicized task of implementing actors, requires not only diversification and professionalization of expertise and skills, but also an increase in negotiation and networking capacity. For these reasons, NGOs are sometimes accused of excessive action. The search for the best quality assistance and aid may become obsessive, especially in cases in which, fearful of unnecessary politicization, they underestimate the potential misuse of their aid and are unaware of the unintended political consequences therein. This means that NGOs may not always be able to properly manage the excesses of their actions, however well intentioned, as happened during the MDG negotiations (Hillhorst, 2002; Gourevitch and Lake, 2012; Lischer, 2015). In addition, aid programmes and projects sometimes fail to achieve expected results for a variety of reasons, including the lack of (or poor) coordination among interested stakeholders. As Seybolt has identified, in reference to the humanitarian system, the workload of a crisis environment, the lack of trust among organizations, and the political interests of donors can be crucial constraints (Seybolt, 2009). The same can be observed in the development and aid system, which is constrained by dependency on funding. In many cases, NGOs have to fulfil the unpredictable decisions of IGOs and states for funding, while trying to preserve accountability towards local stakeholders. Implementation, is therefore, the ultimate and most important achievement in development policy, and is what allows NGOs to achieve their goals. The escalation in roles and duties, as described in these last paragraphs, is simply the natural consequence of the fact that NGOs are part of the system and participate by offering their expertise and capacities. Although they try to preserve their independent and neutral identity, their involvement in the mechanisms and tools as they have been developed, cannot help but be influenced by the different kinds of interactions they have with governmental actors. Promoting development and tackling poverty and deprivation in current times, requires a complex response from various actors.

5.

CONCLUSIONS: HOPE FOR A MORE HUMAN WORLD

This chapter has discussed the roles of CSOs and, in particular NGOs, in the building and implementation of international development policy. In particular, it is here assumed that, within the wider CSO community, NGOs have reinforced their own agenda and roles and, through implementing projects in the field, they have maintained a link with states while also operating within international organizations’ bodies and agencies. The growing participation of NGOs in international development policy, while an ongoing struggle to be effective, is potentially politically innovative, especially if they are able to preserve their independence and neutrality. NGO approaches merge easily with government

Civil society and the politics of development  193 and international organization practice, even though they may, sometimes, differ. These approaches are closely linked to NGOs’ individual identities and their specific approach to conflict management and humanitarian intervention. In keeping with the rationale of this book, NGOs have been analysed within the political and ideological context in which principles, practices and norms have been conceived and shaped. If development is considered an object of strategy, NGOs, more than other and less structured CSOs, have raised their capacity to interact with the global system and strengthen their negotiation and networking capacity. International development agendas emerged at the end of Second World War, as the result of profound political, economic and social change which shaped the global political system. The decolonization process and the emergence of postcolonial political regimes spread poverty, inequality and instability to several world regions. The traditional roles that NGOs have been able to develop can, therefore, be considered the result of intense struggles between governmental actors. Contestation has emerged due to the divergencies in approaches to donor and political preferences, and also to the ways in which the development agenda should be implemented. Initially ignored by states and confined to the ‘usual’ service-provider role, NGOs have emerged as significant development actors in more recent years, thanks to IGOs and more collective phenomena, such as the building up of MDGs. The ability of NGOs to reach people in vulnerable situations, and those with a high risk of discrimination or marginalization, and the capacity to develop proximity to beneficiaries in partner countries, have been identified as valuable and necessary. The most innovative roles of intermediation and implementation are the new frontier of non-governmental action in this field and the final step in an escalating process towards more power and influence. Fulfilling roles usually given over to states and filling political voids have meant that NGOs are perceived as key players in the implementation of development programmes. What has been described as the double channel, that is to say, the maintenance of relationships between both states and intergovernmental agencies, has allowed NGOs to have more space for negotiation and influence. This should necessarily be considered alongside relationships with local stakeholders, the essential recipients of any programme, which mitigate the excesses of politicization and increase NGO accountability and legitimacy. The ability of NGOs to provide public awareness and engage citizens in member countries, constitute significant comparative advantages over governmental donors and therefore justifies a more proactive implementing role. At the same time, having the power to select the effective beneficiaries of programmes can put NGOs in difficult situations, exposing them to the risk of duplication, lack of co-ordination with other NGOs and local stakeholders, and challenges in demonstrating and aggregating development results. The balance between the need to fulfil governmental expectations, the urgency to provide adequate assistance and relief to vulnerable people, and the desire to shape international development agenda is, in the end, the interplay that constrains NGO action and shapes their performance. Although they have failed to respond to many of these criticisms, NGOs remain an important part of an emerging civil society that creates a more balanced relationship between governmental actors, markets and people. Finally, as is also evident in other sensitive policy fields, the non-governmental dimension remains controversial and contested. However it cannot but be taken into consideration.

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REFERENCES Aldashev, G. and Navarra, C. (2018). Development NGOs: basic facts. Annals of Public and Cooperative Economics, 89(1), 125–155. Attinà, F. (ed.) (2012). The Politics and Policies of Relief, Aid and Reconstruction. Basingstoke: Palgrave Macmillan. Bebbington, A. J. (2005). Donor-NGO relations and representations of livelihood in nongovernmental aid chains. World Development, 33(6), 937–950. Bebbington, A. J., Hickey, S., and Mitlin, D. (2008). Introduction: Can NGOs make a difference? The challenge of development alternatives. In A. J. Bebbington, S. Hickey, and D. C. Mitlin (eds.), Can NGOs Make a Difference? The Challenge of Development Alternatives. London: Zed Books, 3–37. Bissio, R. (2003). Civil society and the MDGs. Development Policy Journal, 3(1), 151–160. Bob, C. (2005), The Marketing of Rebellion: Insurgents, Media, and International Activism. Cambridge: Cambridge University Press. Clarke, G. (1998). Nongovernmental organizations and politics in the developing world. Political Studies, 46, 36–52. Clarke, G. (2006). Faith matters: Faith‐based organisations, civil society and international development. Journal of International Development, 18(6), 835–848. Clarke, P. K. and Campbell, L. (2018). Coordination in theory, coordination in practice: The case of the Clusters. Disasters, 42(4), 655–673. Cornwall, A. and Brock, K. (2005). What do buzzwords do for development policy? A critical look at ‘participation’, ‘empowerment’ and ‘poverty reduction’. Third World Quarterly, 26(7), 1043–1060. DCD-DAC (2011). How DAC Members Work with Civil Society Organisations: An Overview. DCD/ DAC(2010)42/FINAL. Paris: OECD. den Heyer, M. and Johnson, D. (2020). Exploring the complexity of partnerships in development policy and practice: Upstairs and downstairs. Development Policy Review, 38, O133–O147. Donini, A. (ed.) (2012). The Golden Fleece: Manipulation and Independence in Humanitarian Action. Hartford, CT: Kumarian Press. Ebrahim, A. (2003). Accountability in practice: Mechanisms for NGOs. World Development, 31(5), 813–829. Edwards, M. and Hulme, D. (1996). Too close for comfort? The impact of official aid on nongovernmental organizations. World Development, 24(6), 961–973. Fox, J. A. and Brown, L. D. (eds) (1998). The Struggle for Accountability: The World Bank, NGOs, and Grassroots Movements. MIT Press. Fukuda-Parr, S. (2017). Millennium Development Goals: Ideas, Interests and Influence. London; Routledge. Gourevitch, P. A. and Lake, D. A. (2012). Beyond virtue: Evaluating and enhancing the credibility of non-governmental organizations. In P. A. Gourevitch, D. A. Lake, and J. Gross Stein (eds.), The Credibility of Transnational NGOs: When Virtue is not Enough. Cambridge: Cambridge University Press, 3–34. Harsh, M., Mbatia, P., and Shrum, W. (2010). Accountability and inaction: NGOs and resource lodging in development. Development and Change, 41(2), 253–278. Heiss, A. and Kelley, J. (2017). Between a rock and a hard place: International NGOs and the dual pressures of donors and host governments. The Journal of Politics, 79(2), 732–741. Hilhorst, D. (2002). Being good at doing good? Quality and accountability of humanitarian NGOs. Disasters, 26(3), 193–212. Hulme, D. (2008). Reflections on NGOs and development: The elephant, the dinosaur, several tigers, but no owl. In A. Bebbington, S. Hickey, and D. Mitlin (eds.), Can NGOs Make a Difference? The Challenge of Development Alternatives. London and New York: Zed Books, 337–345. International Development Studies (2020). Mediating between the State and its Poor and Marginalised during Covid-19. https://​www​.ids​.ac​.uk/​opinions/​mediating​-between​-the​-state​-and​-its​-poor​-and​ -marginalised​-during​-covid​-19/​. Irrera, D. (2013). NGOs, Crisis Management and Conflict Resolution. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing.

Civil society and the politics of development  195 Irrera, D. (2018). EU Emergency Response Policies and NGO. Trends and Innovations. Cham: Palgrave Macmillan. Krawczyk, K. A. (2019). International NGOs, transnational civil society, and global public policy. In D. Stone and K. Moloney (eds.), The Oxford Handbook of Global Policy and Transnational Administration. Oxford: Oxford University Press, 148–164. Lewis, D. (2005). Individuals, organizations and public action: Trajectories of the ‘non-governmental’ in development studies. In U. Kothari (ed.), A Radical History of Development Studies: Individuals, Institutions and Ideologies. London: Zed Books, 200–221. Lewis, D. and Kanji, N. (2009). Non-Governmental Organizations and Development. London: Routledge. Lischer, S. K. (2015). Dangerous Sanctuaries: Refugee Camps, Civil War, and the Dilemmas of Humanitarian Aid. Ithaca, NY: Cornell University Press. Malena, C. (1995). Working with NGOs: A Practical Guide to Operational Collaboration between the World Bank and Nongovernmental Organizations, No. 15013, p. 1. The World Bank. Mohan, G. (2002). The disappointments of civil society: The politics of NGO intervention in northern Ghana. Political Geography, 21, 125–154. Mowell, B. (2018a). United Nations–NGO accreditation regimes: A comparative profile. Journal of International Organizations Studies, 9(2), 143–149. Mowell, B. (2018b). Patterns of development issues and proportional representation in UN-affiliated NGOs related to the Millennium Development Goals and the Monterrey Consensus. Journal of Global South Studies, 35(2), 359–389. Murray, W. E. and Overton, J. D. (2011). Neoliberalism is dead, long live neoliberalism? Neostructuralism and the international aid regime of the 2000s. Progress in Development Studies, 11(4), 307–319. Natsios, A. S. (1995). NGOs and the UN system in complex humanitarian emergencies: Conflict or cooperation? Third World Quarterly, 16(3), 405–420. Petiteville, F. (2001). La coopération économique de l’Union européenne entre globalisation et politisation. Revue française de science politique, 51(3), 431–458. Power, G., Maury, M., and Maury, S. (2002). Operationalising bottom-up learning in international NGOs: Barriers and alternatives. Development in Practice, 12(3–4), 272–284. Rose, P. (2011). Strategies for engagement: Government and national non-government education providers in South Asia. Public Administration and Development, 31, 294–305. Roth, S. (2019). Humanitarian NGOs. In T. Davies (ed.), Routledge Handbook of NGOs and International Relations. London: Routledge, 267–282. Rubenstein, J. (2015). Between Samaritans and States: The Political Ethics of Humanitarian INGOs. Oxford: Oxford University Press. Seybolt, T. B. (2009). Harmonizing the humanitarian aid network: Adaptive change in a complex system. International Studies Quarterly, 53(4), 1027–1050. Snilstveit, B., Oliver, S., and Vojtkova, M. (2012). Narrative approaches to systematic review and synthesis of evidence for international development policy and practice. Journal of Development Effectiveness, 4(3), 409–429. Stobbaerts, E., Martin, S., and Derderian, K. (2007). Integration and UN humanitarian reforms. Forced Migration Review, 29, 18–20. Stoddard, A. (2003), Humanitarian NGOs: Challenges and Trends. London: Overseas Development Institute. Sumner, A. and Tiwari, M. (2009). After 2015: International Development Policy at a Crossroads. Basingstoke: Palgrave Macmillan. Tussie, D. and Casaburi, G. (2000). From global to local governance: civil society and the multilateral development banks. Global Governance, 6(4), 399–403. Willetts, P. (2001). Transnational actors and international organizations in global politics. In, J. B. Baylis and S. Smith (eds.), The Globalization of World Politics. Oxford: Oxford University Press, 356–383. Willetts, P. (2018). NGOs as insider participants: Evolution of the role of NGOs at the United Nations. In A. Kellow and H. Murphy-Gregory (eds.), Handbook of Research on NGOs. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, 56–94. Wood, J. and Fällman, K. (2019). Enabling Civil Society for Sustainable Development: Select Survey Findings. OECD Working Paper 57. Paris: OECD.

196  Handbook on the politics of international development Woods, N. (2000). The challenge of good governance for the IMF and the World Bank themselves. World Development, 28(5), 823–841.

13. The development compact Milindo Chakrabarti

INTRODUCTION The idea of development cooperation has diverse facets, which largely aim to support national and international priorities, formulate development oriented agendas, favour developing countries and institute cooperative relationships. If difference between the ideas of ‘growth’ and ‘development’ emerged as the point of departure for development economics to create its bold entry into the body of economic literature, the decline of ‘high development theories’ (Krugman, 1993) observed since the early 1960s marked the death of the perceived difference between the two. Development became almost synonymous with growth as multilateral organizations as well as traditional bilateral donors with responsibilities to contribute to the global development process identified per capita GDP as the ‘gold standard’ for measuring level of living across countries, and development cooperation became synonymous with helping the countries with flows of financial resources that would augment their capacity to grow following the tenets of extant ‘growth’ theories. The present chapter argues that contrary to investing complete faith in financial resources as the sole contributor to development, South–South cooperation (SSC) looked forward to a path of development that considers support and assistance through other tangible and intangible resources that are necessary to break the structural barriers to development experienced by the Southern partners. This chapter traces the evolution of the conceptual framework of SSC and places the idea of the ‘Development Compact’ as the operational strategy to facilitate cooperation among developing countries in their quest for development. The next section elaborates the evolution of income as the sole criterion of development among the traditional donors in deciding their strategies for development cooperation. The following section traces the evolution of the ideas behind SSC and the creation of its conceptual and operational frameworks. The fourth section throws some light on the use of the idea of the Development Compact by India in pursuing development cooperation through SSC. The final section concludes.

INCOME AS THE SOLE MEASURE OF DEVELOPMENT In tune with the perceived difference between growth and development, prevailing in the 1950s, the Report on International Definition and Measurement of Standards and Levels of Living (E/CN. 3/179 E/CN. 5/299) submitted in March 1954 by an expert committee convened by the Secretary-General of the United Nations jointly with the International Labour Office and the United Nations Educational, Scientific and Cultural Organization, argued that there is no single index of the level of living as a whole that can be applied internationally. In this connection, the Committee advised against the use of per capita national income as an international index of the level of living. It concluded, in fact, that, for several reasons, including difficulties of determining purchasing power parities and of converting currencies, no type of 197

198  Handbook on the politics of international development monetary index as a general international measure of levels of living could be recommended (Balassa, 1964). It was agreed that the problems of measuring levels of living must be approached in a pluralistic manner by analysis of various ‘components’ representing internationally accepted values (health, nutrition, education, etc.) and by the use of various statistical ‘indicators’ for these components (e.g., life expectancy rates, infant mortality rates, etc., as indicators of health) (United Nations, 1954, p. vi). It took a long time to articulate these ideas into a meaningful measure of level of living when UNDP developed its Human Development Index (HDI) in 1990 (see Chapter 26 by Rivarola Puntigliano in this volume). Of course, there were efforts made to take the ideas mooted by the committee forward. The Inter-Agency Working Party on Statistics for Social Programmes which met in Geneva in September 1959 adopted as a basis for its discussion the system of components and indicators recommended by the Committee of Experts. The components recommended by the Expert Committee included the following: (1) Health, including demographic conditions; (2) Food and nutrition; (3) Education, including literacy and skills; (4) Conditions of work; (5) Employment situation; (6) Aggregate consumption and savings; (7) Transportation; (8) Housing, including household facilities; (9) Clothing; (10) Recreation and entertainment; (11) Social security; and (12) Human freedoms (United Nations, 1961, p. 3). Interestingly when there arose a need to operationalize the conceptual framework, the efforts tilted entirely in favour of using per capita GDP/GNI as the applicable indicator of level of living. The International Development Association (IDA) of the World Bank accepted the per capita income criterion in 1964 as a test for eligibility to access IDA resources. And by 1978, the World Bank constructed an analytical country classification system with a view to pressurizing countries asking for support into accepting its Structural Adjustment Programmes. The 1978 World Development Indicators (WDI) divided countries into three categories: (1) developing countries, (2) industrialized countries, and (3) capital-surplus oil-exporting countries, besides 11 countries identified as centrally planned economies. Incidentally, there were some exceptions. Two relatively poor countries (South Africa with a per capita GNI of US$1,340 and Ireland with that of US$2,560) were put in the group of industrialized countries, whereas five countries (Israel, Singapore, and Venezuela, and OECD members Greece and Spain) with income levels exceeding that of Ireland were classified as developing. Major reforms to the country classification system were introduced in 1989. First, a high-income country category was established by combining the old industrial and capital-surplus oil-exporter categories. Thirty countries (including all OECD member countries with the exception of Turkey) were in the new high-income group. The middle-income developing countries group was further subdivided into lower and upper middle-income countries using as a threshold the income cut-off between softer and harder borrowing terms used by the World Bank (World Bank, 1990). The IMF began its analytical and operational classification of countries in 1973. Its operational policies did not discriminate among members based on their level of development for the first three decades of the Fund’s existence. It provided resources for specific balance of payments needs mainly of interest to developing member countries, but eligibility to access these facilities was open to the full membership (Garritsen de Vries, 1985; Chapter 24 by Forster et al. in this volume). The establishment of a Subsidy Account to help stabilize the oil shock in 1975 through which voluntary contributions from industrial and oil-exporting countries would subsidize the financing charges opened the door for the Fund to rely on a list of 41 countries drawn up by the UN as having been most seriously affected by the current situation (i.e., the oil and food price hikes in 1972–73). This was used to identify beneficiaries of the

The development compact  199 Subsidy Account and for the first time, it distinguished among its members in terms of income. The establishment of a Trust Fund proposed by the US at the IMF in 1974 to provide concessional balance of payments support to developing members following the expiry of the oil facilities also consolidated the process of classification. The Fund’s Executive Board in 1977 in a close vote decided to designate 103 members as developing countries. In 1978, the second amendment to the Articles of Agreement recognized that “balance of payments assistance may be made available on special terms to developing members in difficult circumstances, and that for this purpose the Fund shall take into account the level of per capita income”. The Structural Adjustment Facility established in 1986 also clarified that “all low-income countries eligible for IDA resources that are in need of such resources and face protracted balance of payments problems would be eligible initially to use the Fund’s new facility” (Boughton, 2001, p. 649). The subsequent concessional assistance that comes from the Poverty Reduction and Growth Trust (PRGT) developed a new framework for determining the eligibility criteria to go beyond the criterion relating to per capita income and included market access, and vulnerability as agreed in early 2010. The eligible countries were recognized as low-income developing countries. The Development Assistance Committee (DAC) of the OECD that oversees the allocation of Official Development Assistance (ODA) by donors at bilateral or multilateral levels, also follows the income criterion developed by the World Bank in classifying the recipients. However, it also accords a special treatment to the Least Developed Countries (LDCs) classified by the UN system. The UN system, however, tried to categorize development in terms of factors other than per capita income. During the first session of the United Nations Conference on Trade and Development (UNCTAD) in 1964, member states called for special attention to be “paid to the less developed among the developing countries, as an effective means of ensuring sustained growth with equitable opportunity for each developing country”. By March 1971, the 7th Session of the Committee for Developing Planning determined the initial criteria for identification of LDCs to be low per capita GDP and the presence of structural impediment to growth, a decision which had been preceded by continuous prodding from the UN General Assembly since 1969. Twenty-five countries were identified under this category. The Substantial New Programme of Action for the 1980s for the Least Developed Countries (SNPA) was adopted in 1981 by the first United Nations Conference on the Least Developed Countries. Its aim was to transform the LDC economies and enable them to provide minimum standards of nutrition, health, housing and education as well as job opportunities to their citizens, particularly to the rural and urban poor. This was followed by the Paris Programme of Action of the Least Developed Countries for the 1990s, Brussels Programme of Action for the Least Developed Countries for the Decade 2001–2010, and the Programme of Action for the Least Developed Countries for the Decade 2011–2020 adopted by the Fourth United Nations Conference on the Least Developed Countries, held in Istanbul, Turkey, in May 2011. The priority areas identified for action include productive capacity; agriculture, food security and rural development; trade; commodities; human and social development; multiple crises and other emerging challenges; mobilizing financial resources for development and capacity-building; and good governance at all levels. The World trade Organization (WTO) also considered the LDC criterion in developing its classificatory structure for the developing countries (see Chapter 22 by Peixoto Batista in this volume).

200  Handbook on the politics of international development Over the years, 28 additional countries were added as countries gained independence and faced severe developmental challenges often accompanied by sustained deterioration of their economic conditions. Five countries had graduated by 2018. Vanuatu graduated in 2020 and Angola has been given an extension of 3 years in 2021 to graduate (DESA, 2021). Other than per capita GDP, two other indexes, namely, the Human Assets Index (a measure of level of human capital) and the Economic Vulnerability Index (a measure of structural vulnerability to economic and environmental shocks) were developed by the United Nations.1 To summarize, it is observed that per capita GDP/GNI remained the main, if not sole, indicator of development since the process of operational classification of countries began in the early 1960s and such a mode of classification formed the basis for developmental support provided by the multilateral organizations to the developing world. The UNDP, since 1990, came up with a new classification system to categorize countries in terms of their levels of human development. However, HDIs have never been considered as a basis for development cooperation by the traditional donors in providing financial support for developing countries. The operational models centred around income as the sole criterion of development have their theoretical underpinnings in the ‘two-gap theory’, later expanded to a ‘three-gap’ model. The cooperation was designed to take care of two distinct gaps the developing countries were suffering from: gap in resources to meet the capital deficit and gap in foreign exchanges (because of unfavourable balance of trade) (Chennery and Strout, 1966), with the fiscal gap being added later (Bacha, 1990), to procure required capital from the developed world. The third gap opened the scope for general budget support (GBS) introduced in the late 1990s as a tool for providing development cooperation support by the traditional donor countries. OECD (2006) provides an evaluation of the first round of GBS. These theories were very much consistent with the exogenous growth models that identified factors external to the economies – determined technically – as the drivers of growth. Starting from Harrod (1939) and Domar (1946) through Solow (1956), Robinson (2013 [1956]), Kaldor (1957), Meade (1961), and Pasinetti (1962), the models linked the dynamics of economic growth of a nation to the strict interrelationship between savings rate, capital output ratio and the growth of population. While Harrod and Domar considered all these three factors to be given and hence posited a ‘razor’s edge’ of growth, the later attempts tried to bring about variability in either of these three, keeping the other two unaffected. The emergence of the endogenous growth model, thanks to Frankel (1962), Romer (1986), Lucas (1988, 1993), Gelb (1989), Barro (1990), Grossman and Helpman (1991), Barro and Sala‑i‑Martin (1992), Aghion and Howitt (1992), Barro and Lee (1994), Stokey (1995), Bruno and Easterly (1998), and Rodrik (2008), shifted the centre of attention to the importance of factors internal to the economy such as investment in innovative and intellectual capital and knowledge and skills along with real interest rates, fiscal policy, inflation and real exchange rates. This helped create the distinction between growth and development – a phenomenon that Krugman (1993) christened as the ‘counter-counterrevolution’ that vies for attention in the theoretical literature on development. Banerjee and Duflo (2005) extended the argument further to highlight the need to build macroeconomic models of growth that use the results from microeconomic studies as parameters in calibration exercises to arrive at an aggregated production function that forms the basis of these macro models. Development 1 For details of the components used to develop these indices, see LDC Identification Criteria & Indicators available at https://​www​.un​.org/​development/​desa/​dpad/​least​-developed​-country​-category/​ ldc​-criteria​.html.

The development compact  201 calls for linking micro issues into the macro process of growth. The assumption of the ‘trickle down’ theory initiated to ensure the existence of this linkage, did not really work out in practice and necessitated a relook at development as different from a typical process of growth.

DEVELOPMENT COMPACT: THE OPERATIONAL MODEL FOR SSC Just at the juncture of history of development cooperation when the arguments of conditionalities in development assistance gained prominence, a second strand of arguments in favour of South–South cooperation (SSC) also made its entry into the arena. Southern nations began to consider opportunities for enlarged cooperation in economic terms among themselves. This approach was an extension of the spirit of the Bandung Conference (1955) and the resultant formation of the Non-Aligned Movement (NAM) in 1961 and the G77 in 1964 which emphasized mostly the need for political solidarity and social networking among the newly independent colonies. The UN also played a role in helping form a platform for SSC with a clear focus on economic cooperation among the Southern nations, when it set up UNCTAD (1964) for cooperation in trade, United Nations Fund for Science and Technology for Development (UNFSTD) for cooperation in science and technology and Technical Cooperation among Developing Countries (TCDC) (1974) for promoting technical and economic cooperation among the Southern nations. However, the fact remains that SSC is yet to acquire a particular structural shape and it is still mostly influenced by policies and modalities identified by individual Southern countries participating in bilateral cooperation between themselves. Some consensus in terms of guiding principles vis-à-vis SSC has, obviously emerged. They are: respect for national sovereignty; national ownership; independence; equality; non-conditionality; non-interference; and mutual benefit. It is interesting to note that India, being a British colony itself, got engaged in development assistance pretty early, even before attaining independence. Way back in 1946, Nehru argued in favour of India contributing to the development processes of neighbouring and other newly independent countries across the world through trade financing, technical assistance and training programmes. India sent a Scientific and Cultural Mission for building technical capabilities to Nepal in 1949. The India Aid Mission to Nepal started in 1954. It was later renamed in 1966 as the Indian Cooperation Mission highlighting that the Indian approach to development cooperation engages with partners in a spirit of friendship and solidarity to realize mutual benefits. Incidentally, India never became a member of the Nepal Aid Group constituted by the World Bank way back in 1976, even though India continuously provided developmental support to Nepal in several forms and ways. China also initiated efforts at development assistance quite early. There are reports about China contributing to Egypt for the construction of the Suez Canal way back in 1955. However, development assistance efforts from erstwhile colonies like India were fairly insignificant in quantitative terms, even though their impacts were not so insignificant. It should, however, be clarified that such assistance was not huge in financial terms but was provided more as a gesture of solidarity, than as an effort to bridge resource gaps then thought required to usher in ‘development’. The modalities followed by India in pursuing its mission of SSC are referred to in the relevant literature as the ‘Development Compact’ (Chakrabarti, 2016). The idea was derived

202  Handbook on the politics of international development from the original proposal of Thorvald Stoltenberg made in 1989 and later articulated by Arjun Sengupta in 1993. Stoltenberg noted the hardship faced by the developing countries in fulfilling their contractual agreements linked to the Structural Adjustment Programme which emerged as the cornerstone of the ‘Washington Consensus’. He proposed “that compacts (or agreements) be established between industrialised and developing countries to ensure that the latter received sufficient resources for development as they tried to reform their economies though programmes such as SAP, and in that way minimise the social costs of reform”. According to Chaturvedi (2016), who is credited with coining the term development compact in the context of SSC, Sengupta’s concept of Development Compact is based on the principles of ‘mutuality of obligation’ and ‘reciprocity of conditionality’. Under the compact developed countries and international organizations will provide assistance necessary for the successful implementation of development plans in poor countries, while in return developing countries will cooperate in the process through bold reform programmes. In the absence of appropriate capacity within a developing country, the developed countries will be obligated to provide whatever assistance is necessary for developing countries to achieve their targets. The Development Compact envisages a reciprocal obligation between developing countries and bilateral donors, international organizations and the UN system; hence it will be a country-specific arrangement, instead of a traditional ‘one-size-fits all’ solution applied across the board to all problems of developing countries. The UNDP Human Development Report of 2003 further explained the proposition, defining the Development Compact as an arrangement based on a system of shared responsibility, where all countries could orientate their efforts towards helping poor countries achieve their development goals. The compact allows poor countries to pitch for higher assistance and improved market access, while provider countries can demand better governance and accountability in return. It should, however, be noted that while Sengupta’s call for a Development Compact emerged out of an understanding of North–South cooperation (NSC), the term, in the present context, is linked to modalities followed by India in implementing its perceptions of SSC. Such an imposition of the concept to operationalize SSC, apparently coined in the context of NSC is justified in terms of the principle of ‘mutuality of obligation’ consciously followed in the case of the former. The Development Compact is visualized as providing an analytical structure to India’s philosophy of development cooperation that is composed of five distinct but very much interlinked components (Chaturvedi, 2016, p. 63). They are: Capacity Building, Development Finance (Lines of Credit), Trade and Investment, Technology Transfer and Grants. The approach thus shifts from a ‘growth only’ perspective of development with an intention to link the micro issues with the overall macro issues in a mission mode (explained later). We argue that the inherent theoretical framework in favour of strengthening SSC as an alternative approach to development, even though not as a substitute to NSC altogether, focuses on taking advantages of the positive externalities or spillover effects in breaking the low level equilibrium trap in a developing country. Such a framework of cooperation among the developing countries creates an effective roadmap to development that is not only intended to avoid inflicting any pain of conditionalities linked to internal structural reforms, but also aims to garner ‘mutual benefits’ for the partners engaged in such cooperation. A perusal of the modalities of development cooperation pursued by India reveals how these five components are being effectively utilized to not only meaningfully contribute to

The development compact  203 the development of partner countries without infringing on their sovereignty, but also derive mutual benefits for both the countries engaged in such a partnership. How do these efforts generate positive externalities for both the partners? Let’s take a brief look at the capabilities of components of the Development Compact in tapping the positive externalities and spillover effects. The several sub-components identified in this context have been enumerated in detail elsewhere (Chaturvedi and Mohanty, 2016). A schematic presentation of the Development Compact is given in Figure 13.1.

Figure 13.1

Development Compact

India has formally engaged with development cooperation since the 1960s, and its policies towards specific sectors have evolved significantly over the last five and a half decades.

204  Handbook on the politics of international development India has a clear vision of the potential for mutual gain in sharing prosperity with fellow developing countries. Towards this end, it seems appropriate to link India’s development cooperation approach with existing paradigms of economic thought, to improve its robustness, continuity, and consistency, on the one hand and make it more appealing, acceptable, and relevant for its partners, on the other. Such an approach would also provide a basis for empirical validation of its philosophy of development cooperation. India shares the structuralist view that macroeconomic management should address supply constraints. In developing countries, such constraints persist in agriculture, manufacturing, services, infrastructure, and several social sectors. Individual countries have sector-specific requirements, and therefore it is sector-specific, demand-driven needs that India must address according to its capacity to support. Much of the current literature has consequently focused on assistance volumes of India’s development cooperation across different sectors (see e.g. Chaturvedi, 2012; Fuchs and Vadlamannati, 2013). The structuralist approach emphasizes income redistribution in the recipient economy as an important condition for growth. India’s cooperation has been aimed to create income in specific locales, through small projects that may generate local employment. Employing ‘appropriate technology’ in these projects leads to gainful jobs for local populations. Many of these projects occur in the social sector and other productive sectors, such as agriculture, industry, and services. From the structuralist perspective, imposing conditionality does little to influence the growth prospects of a programme country. Therefore, India’s current practice – development cooperation programmes without conditionality – is very much consistent with the structuralist approach. Furthermore, India’s external economic engagements and integration strategies provide an important backdrop for analysing its development cooperation. India has adopted a multi-pronged strategy, connecting with these recipient countries through trade and investment as well as cooperation policies. In order to enhance mutual gains, India seeks to bolster trade activities with improved bilateral cooperation, and further engagement with partner countries through free-trade agreements. Other trade engagement enhancements include improved trade financing, lines of credit, and easier terms for bilateral cooperation (Chaturvedi, 2012, 2015). The engagement in trade cooperation differs from one emerging country to another, and further demonstrates assumptions closer to the structuralist position than the monetarist one. For example, China finances infrastructure projects in recipient countries, but uses barter-trade in settling loans with these countries. Instead of recovering loan elements in monetary terms, China prefers to accept equivalent amounts in goods such as minerals. India’s Objective and SSC India’s development assistance programme has the twin objectives of (a) mitigating poverty and (b) revitalizing economic growth in recipient countries. This is unlike the Heavily Indebted Poor Countries (HIPC) initiatives of the Bretton Woods Institutions (BWIs) and industrialized countries, which focused on debt relief to poor countries. This type of programme aims to terminate their debt burden and alleviate poverty, but may not prove effective enough to boost economic development (Chaturvedi, 2015). Like other emerging countries, India emphasizes poverty alleviation as a means to achieve long-term growth. India’s development cooperation, we would argue, therefore, prioritizes the resumption and sustainability of Southern growth. Apart from India being the staunch proponent of SSC, other developing

The development compact  205 economies like China and Brazil have also grown at a rapid pace in the past few years, with a consequent multiplication of SSC volumes. The Task Team on South–South Cooperation, supported by the OECD-DAC, has signalled the end of the era of one-way cooperation, as countries of the South engage in collaborative learning models and share innovative, adaptable, and cost-efficient solutions for development. The Task Team also mentioned that new arrangements among Southern countries have revolutionized the delivery and administration of assistance in socially relevant sectors, including health (TT-SSC, 2011) (see Chapter 18 by Struckmann in this volume). Mission Approach and the Development Compact As mentioned before, India’s approach to development cooperation has distinct characteristics. Its theoretical underpinnings strongly reflect its experience as an aid recipient, stressing ‘win-win’ partnerships that embody shared challenges but distinct national priorities. As mentioned earlier, India’s mission centres on empowering developing countries and supporting them in efforts to come out of deprivation and engage in long-term, sustained development. This long-term development cooperation strategy has often been referred to as the ‘mission approach’ (Mohanty, 2015). Conceptually, the mission approach aims to identify a set of growth drivers that support partner development efforts, setting them on a high-growth path. Technically, an understanding of economic conditions (based on macroeconomic paradigms) in partner countries would help identify these economic drivers and key growth sectors. This might also help in devising a ‘road map’ for providing consistent and predictable resources to selected areas, without conditionality and in the spirit of the ‘partnership’ principle. Some of the salient features of the ‘mission approach’ draw from various past Indian initiatives to support developing countries in securing independence, in their post-independence reconstruction efforts, and their specific attempts to resume steady progress during Plan periods (Chaturvedi, 2015; Mohanty, 2015). For example, India has been engaged with Bhutan since 1955 and began extending yearly financial support to that country in 1960. In 1972, India also supported the establishment of two industrial estates, namely Nepalganj and Dharan, in Nepal and provided financial support to promote Nepalese cottage industries between 1968 and 1973. As a follow up action, India also agreed to fully support these countries’ national five-year plans (Chaturvedi, 2015). The ‘mission’ thus looks beyond debt servicing and undoubtedly faces challenges in constantly raising resource flows – a pressing issue for Indian development cooperation in its present form. In this context, we should address the prevalent understanding of other dominant approaches to development cooperation. Japanese economist T. Yanagihara has evolved a comparative analysis to distinguish different cooperation modes. He identifies two broad types of engagement, the ‘framework’ approach and the ‘ingredient’ approach. According to his definition, the framework approach represents the ‘rules of the game’: economic agents make decisions and take action in a given economy, itself conceived in terms of the functions of institutions and mechanisms, thereby underscoring the need to enforce conditionalities. By contrast, the ingredient approach refers to tangible organizational units such as enterprises, official bureaus, and industrial projects, along with their aggregations in industries, sectors, and regions. Wonhyuk Lim ascribed the framework approach to North–South engagements and the ingredient approach to South–South ones (Lim, 2012).

206  Handbook on the politics of international development India’s ‘mission approach’ differs distinctly from the ‘framework approach’, but it has some elements similar to those of the ‘ingredient approach’. It favours defining development cooperation as demand-driven, impelled by aid-recipient requests and needs. In this view, development cooperation should adopt sectoral-support programmes, based on specific projects, rather than providing broader budgetary support. These projects may not be highly capital-intensive in nature, but should cover several desired sectors, depending upon the request of the partner country. These projects should also aim at improving supply conditions in these countries. The ‘mission approach’ thus emphasizes sectors such as agriculture and manufacturing, which create large forward and backward linkages in the partner country (Mohanty, 2015). With the detailing of delivery modalities at the practical level, the broad goals of the ‘mission approach’ dovetail with what Chaturvedi terms the ‘Development Compact’. As mentioned earlier, this compact rests on five action pillars: capacity-building and skills transfer, concessional finance (further divided into grants and lines of credit), preferential trade, investment, and technical cooperation. It implicitly depends on the principle of equitable access to trade, investment, and technology in SSC initiatives. India’s deployment of a broad portfolio of modalities allows for flexibility that makes it much more attractive and appropriate for partner countries in the South. As Chaturvedi (2015) argues, India and other emerging (BRIC) donors have a broader concept of aid that goes beyond giving hand-outs, and generates economic activities in the recipient country. Significantly, this compact rests solidly on the concept of mutual gain. The Development Compact is, therefore, something less than the articulated policies of the DAC members, but more than a string of unrelated aid programmes, and intimately related to broader economic strategies of the recipient country. In short, we can see the ‘mission approach’ as articulating the broad theoretical basis of Indian development cooperation, while the Development Compact represents the broad strategies flowing from that approach.

INDIA’S DEVELOPMENT COOPERATION THROUGH THE LENS OF THE DEVELOPMENT COMPACT This section provides an empirical elaboration of some of the pillars of the Development Compact. Cooperation in Capacity Building Contribution to capacity building of citizens of partner countries has been the mainstay of India’s approach to development cooperation. A process that was initiated even before India attained independence, when the first Asian Relations Conference was held in Delhi in March– April 1947, led to “many initiatives at the bilateral level for development cooperation between India and various Southern economies, particularly other Asian countries, in areas including trade financing, technical assistance, and training programmes. For example, in 1949 the Indian government provided 70 scholarships to students from other countries” (Chaturvedi et al., 2013, p. 6) that increased to 100 by 1953 and between 1949 and 1954, nearly 340 such scholarships were awarded. Interestingly, India facilitated training of participants from China and Indonesia in 1946, even before attaining independence (Chaturvedi, 2016). The emphasis on capacity building as a modality for India’s vision of SSC was institutionalized in 1964 with

The development compact  207 the establishment of the Indian Technical and Economic Cooperation (ITEC) programme. Over the 55 years since its inception, participation in ITEC programme has increased by leaps and bounds, not only in terms of the number of participants, but also in terms of the number of countries they come from. The number of courses offered and that of the prestigious institutions engaged in facilitating the programme increased exponentially over the years. Prior to the formalization of the ITEC programme, India’s capacity building support to Southern partners were channelled through the Colombo Plan for Economic Development and Economic Cooperation in South and South-East Asia launched in 1950 and the Special Commonwealth African Assistance Programme (SCAAP) that began in 1960. Even though the ITEC programme was designed as a bilateral mode of support, regional and multilateral approaches initiated beforehand were subsequently subsumed under it. Other than offering training opportunities to participants from different countries who are provided with travel and subsistence grants, besides being given a book allowance, to attend the regular programmes held in India, experts are also sent to different partner countries according to their stated needs to provide onsite ITEC programmes. Specially designed ITEC Executive programmes are also offered to policy makers, senior level functionaries and professionals. Of late, e-ITEC was also introduced to provide online real time training to participants located in other countries, a feature that turned into the sole mode of offering ITEC training since the outbreak of COVID-19. The conclusion of the India-Africa Forum Summit (IAFS) III in 2015 also led to creation of new training slots for participants from African countries. Table 13.1 gives a detailed overview of the performance of the ITEC programme from 1998–99 to the present. It captures the growth profile of the number of slots offered and number of courses run to give an idea of the options given and the number of institutions engaged. The numbers clearly indicate that the ITEC programme is one of the most important pillars in India’s approach to development cooperation. Another important mechanism of providing capacity building support to citizens of the developing countries runs in terms of the Indian Council of Cultural Relations (ICCR) providing scholarship support. Established in 1950, the ICCR has been providing continuous support to younger generations from the Southern world in opening up opportunities for students from partner countries to pursue undergraduate postgraduate or PhD level studies in Indian universities. During the financial year 2019–20, the ICCR offered 3,940 scholarships to foreign nationals. As one goes through to the flow of scholarships from ICCR over the years it will be observed that the number has been growing steadily. Besides providing scholarship, the ICCR has also created India Chairs in many universities in countries across the world. The Chair provides insights into Indian culture and its achievements over the years. This exercise also contributes meaningfully to the capacity building of citizens from partner countries. Table 13.2 gives us a detailed understanding of the dynamics of the growth in ICCR fellowship over the years since the beginning of the twenty-first century. The table captures the gradual increase in the slots offered and utilized. It is also heartening to note that the utilization ratio (measured as the number of slots utilized as a percentage of number of slots offered) of the scholarships has been increasing steadily over the years. In 2019–20, the ratio has been estimated at 72.68 per cent. Lines of Credit Another important component of India’s SSC support to partner countries is providing lines of credit (LOCs). LOCs are extended to sovereign governments or their nominated agencies,

208  Handbook on the politics of international development Table 13.1

ITEC training opportunities for civilian participants

Year

Slots offered

Courses offered

Institutions engaged

IAFS slots offered

1998–99

1485

 

39

 

1999–00

1967

 

51

 

2000–01

2178

 

50

 

2001–02

2153

 

 

 

2002–03

3080

 

 

 

2003–04

3128

 

44

 

2004–05

3579

 

43

 

2005–06

3879

240

45

 

2006–07

4000

220

39

 

2007–08

4700

220

43

 

2008–09

4800

200

43

 

2009–10

4900

200

42

 

2010–11

5500

232

46

 

2011–12

6700

280

47

 

2012–13

8500

280

47

 

2013–14

8280

280

47

 

2014–15

8957

280

47

 

2015–16

8923

284

47

41

2016–17

10515

280

50

297

2017–18

11157

309

68

1385

2018–19

11261

370

85

1355

2019–20

11645

334

89

468

Source: Annual Reports, Ministry of External Affairs (various years).

to enable buyers in those countries to import goods and services from India on deferred credit terms. Countries offered LOCs by India are classified into three broad categories. They are: (i) Low and Lower Middle Income Countries (L & LMI) for which IMF has prescribed a minimum binding concessional requirement; (ii) Low and Lower Middle Income Countries (L & LMI) for which there is no minimum binding concessional requirement; and (iii) Other Developing Countries. While 27 countries are identified under the first category, 59 have been put under the second. Table 13.3 provides an picture of the terms and conditions that guide Indian LoCs. As per the data available to 20 April 2020, EXIM Bank issued a cumulative credit to the tune of 24.701 bn US$ to support 348 projects involving 259 credit instruments. Some of the credit instruments covered multiple projects. The projects have been of varying sizes, with the average project size being 71.60 million US$. The one involving minimum credit inputs was worth 0.17 mn US$ that was offered to Burundi for ‘Preparation of Detailed project report for an Integrated Food Processing Complex’ between 2014 and 2016. The highest ticket size so far has been in respect of a LOC offered to Bangladesh that amounted to US$ 2.07 bn, offered during 2016 for financing various social and infrastructure development projects in Bangladesh such as power, railways, road transportation, information and communication technology, shipping, health and technical education sectors. The regional breakdown of LOCs sanctioned is given in Table 13.4. It is noted that the lion’s share of the projects comprises in the countries from the African continent, while the share of credit is more concentrated in the countries in Asia.

The development compact  209 Table 13.2

ICCR scholarships: slots offered, utilized and utilization ratio

Year

Slots offered

Slots utilized

Utilization ratio

1998–99

615

 

 

1999–00

967

 

 

2000–01

1015

 

 

2001–02

909

 

 

2002–03

 

 

 

2003–04

1093

671

61.39

2004–05

1200

720

60.00

2005–06

1264

732

57.91

2006–07

1300

1100

84.62

2007–08

1153

1205

104.51

2008–09

1868

1238

66.27

2009–10

2226

1517

68.15

2010–11

2350

1483

63.11

2011–12

2404

1530

63.64

2012–13

3334

1863

55.88

2013–14

3465

2104

60.72

2014–15

3359

2174

64.72

2015–16

3339

2284

68.40

2016–17

3452

2325

67.35

2017–18

3452

1960

56.78

2018–19

3940

2289

58.10

2019–20

3861

2806

72.68

Source: Annual Reports, Ministry of External Affairs (various years).

Right now, 31 projects are being negotiated that involve partnership with 25 countries, involving a sum of 4,343.24 mn UD$. Sixteen of the countries are located in the African continent and most of them fall under the category of low income countries. More than a third (11) of them are linked to power related projects to contribute to the energy security of the partner countries. Grants and Loans Besides providing LOCs to the partner countries, India also arranges for grants and loans to facilitate developmental activities in partner countries. Between 2008–09 and up to June of the fiscal year 2020–21, the extent of disbursal to other developing countries almost tripled since the end of the financial year 2019–20 from a disbursement of about 330 million US$ to 920 million US$.2 It may be noted that other developing countries supported by India through grants and loans are located in African continent, the Eurasian region and Latin America as well. India’s commitment to support partner countries through humanitarian assistance is also significant. As these supports are often difficult to monetize, Table 13.5 gives an account of the types of support provided. It accounts for nature of humanitarian assistance including support in disaster management provided between 1999 and 2020. The list of recipient coun-



2

See https://​meadashboard​.gov​.in/​as of 20 July 2020.

210  Handbook on the politics of international development Table 13.3

Terms of credit under LOCs Credit terms Interest (Fixed)

Category

Grant element as Credit period (inclusive of

Moratorium

calculated by IMF

moratorium) Low and Lower Middle

formula*

1.50%

25 years

5 years

37.48%

1.75%

20 years

5 years

31.37%

Libor + 1.50%

15 years

5 years

24.31%

Income Countries (L & LMI) for which IMF has prescribed a minimum binding concessional requirement (Category-I) Low and Lower Middle Income Countries (L & LMI) for which there is no minimum binding concessional requirement (Category-II) Other Developing Countries (Category-III)

Note: *The grant element measures the concessionality of a loan. It is defined as the difference between its nominal value (face value) and the sum of the discounted future debt-service payments (net present value) to be made by the borrower, expressed as a percentage of the face value of the loan. Whenever the interest rate charged for a loan is lower than the discount rate, the resulting present value of the debt is smaller than its face value, with the difference reflecting the grant element of the loan. Source: Guidelines on Lines of Credit Extended by the Government of India to Various Countries under the Indian Development and Economic assistance Scheme (IDEAS): Ministry of Finance, 7 December 2015 available at https://​www​.eximbankindia​.in/​assets/​pdf/​loc/​GOI​-Guidelines​-on​-LOC​.pdf.

Table 13.4

Regional distribution of credit under LOC (between 2002–03 and 2018–19)

Region

Number of projects

Project value (USD mn)

Africa

219

9790.66

Asia

97

14377.5

CIS

1

200

LAC

28

603.58

Oceania Grand Total

3 348

155.78 25127.52

Source: EXIM Bank.

tries would indicate that India extended its support to developing countries throughout the world during the period under review. Trade India’s support to its Southern partners in trade related activities is mainly captured in terms of the announcement made in 2008 that exports from LDCs would attract preferential duties. It was the first developing country to announce such support to the countries that lie at the bottom of the income ladder. The scheme is known as Duty Free Tariff Preference (DFTP) Scheme. As of 27 July 2017, 34 LDCs have been notified to be brought under the benefits of this scheme (Afghanistan, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, the Comoros, Eritrea, Ethiopia, the Gambia, Guinea, Guinea Bissau,

Mozambique

Three Indian naval ships to Beira under Operation ‘Sahayata’

2012–2013

2013–14

2014–15

2015–16

2016–17

2017–18

2018–19

Papua New Guinea

Cash assistance

Yemen Nepal

Medical assistance

Assistance in kind

Libya, Bangladesh, Fiji, Syria, Republic of Congo and Myanmar

Relief assistance in cash or kind

Yemen, Marshal Islands, Philippines, Madagascar and Namibia Yemen

Food supplies

Palestine

Relief assistance in cash or kind

Syria

Nicaragua, Algeria

and Burundi

Cash assistance

of chemical weapons in Syria (US$3 million) at Geneva-II

Contributed financially towards humanitarian assistance and destruction

Medicines

Assistance in cash or kind

Afghanistan, Nepal, Maldives, Myanmar and Sri Lanka

Technical assistance

Serbia, Bosnia Herzegovina, Philippines, Croatia, Sri Lanka, Syria, Nepal, Solomon Islands

Syria, Philippines, Jordan, Lebanon, Commonwealth of Dominica

Lesotho, Namibia and Zimbabwe

Ecuador, Malawi, Commonwealth of Dominica, Yemen, Kenya, Mozambique, Ukraine,

Cash assistance

Assistance in cash or kind

Syria

UN-backed humanitarian assistance

Lesotho, Namibia, Zimbabwe, Bangladesh, Myanmar Jordan

Food items

Cash assistance

Mozambique, Myanmar

Medical assistance

Indonesia Iraq

Cash assistance/investment

Bangladesh, Syria, Afghanistan

Mozambique, Syria, Yemen, Somalia, Uganda, Tanzania, Madagascar, Swaziland, Kenya,

Myanmar

Operation ‘Samudra Maitri’ for earthquake and tsunami assistance

Food and medicines

Humanitarian aid in kind

Over 140 High Impact Community Development Programmes (HICDPs) Afghanistan

Namibia, El-Salvador, South Sudan and Zimbabwe

Medical assistance

Recipient countries Democratic People’s Republic of Korea

Form of humanitarian assistance

Food and anti-TB medicine kits

Year

Nature of humanitarian assistance provided between 1999–2000 and 2019–20

2019–20

Table 13.5

The development compact  211

Year

Recipient countries

Moldova, Myanmar, Niger, Pakistan, Sri Lanka, Tajikistan, Kyrgyzstan and Venezuela

1999–2000

Indonesia, Tajikistan Bhutan

Assistance in kind

Financial assistance

Belize, Senegal, Mongolia, Bhutan Madagascar, Turkey, Mozambique, Afghanistan, Ghana and Honduras

Financial assistance

Medical assistance

Ethiopia, Indonesia, Eritrea, Palestine

Assistance in kind

DPRK, Lebanon, Panama, St. Lucia Lebanon, Madagascar

Medical assistance

Assistance in kind

2000–01

Moldova, Russia, Honduras, Guatemala

Medical assistance

2001–02

Iraq Cambodia, Laos, Mongolia, Vietnam, Bosnia Herzegovina

Financial assistance

Medical assistance

Suriname, DPRK, Jamaica, Sudan

Assistance in kind

Grenadines, Bosnia & Herzegovina, Guatemala, Haiti, Tajikistan, Pakistan El Salvador, Nicaragua, Guatemala, Belize, Grenada, Haiti, Bahamas, Dominican Republic

Medical assistance

Disaster relief (uncategorized)

DPRK, Algeria DPRK, Tuvalu, Jamaica, Dominican Republic, Philippines, Kyrgyzstan, St. Vincent and

Assistance in kind/food items

DPRK, Mongolia Indonesia, the Philippines, Palestine, Lebanon

Financial assistance

Assistance in kind/food items

Sri Lanka, Mongolia, Afghanistan, Lao PDR, Pakistan

Assistance in kind/food items

Peru, Bolivia, Solomon Islands, Belize, Mexico, Haiti, Dominican Republic

Sri Lanka

Medical assistance

Financial/medical assistance

China, Lao PDR, Cuba, Haiti

Ukraine

Salvador, Sri Lanka, St. Lucia and Guatemala

Philippines, Lebanon, Bangladesh, Tajikistan, Burkina Faso, Myanmar, Ecuador, El

Financial assistance

Medical assistance

Assistance in cash and kind

Disaster relief in cash and kind

Afghanistan Jamaica, St. Lucia, Costa Rica, Chile, Haiti, Columbia, Benin, the Gambia, Liberia,

Afghanistan, Somalia, Kenya and Djibouti

Food assistance

St. Vincent & Grenadines, and Turkey

Bangladesh, Bolivia, DPRK, El Salvador, Libya, Myanmar, Namibia, Nicaragua, Senegal,

Medical assistance

Cash assistance

Form of humanitarian assistance

2003–04

2004–05

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

2011–2012

212  Handbook on the politics of international development

The development compact  213 Haiti, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mozambique, Myanmar, Niger, Rwanda, Senegal, Somalia, the Sudan, Timor Leste, Togo, Uganda, the United Republic of Tanzania, Yemen and Zambia). On the other hand, there are 14 LDCs that are yet to become beneficiaries under the scheme (Angola, Bhutan, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Kiribati, Mauritania, Nepal, Sao Tome and Principe, Sierra Leone, Solomon Islands, South Sudan, Tuvalu and Vanuatu). In the meantime, LDCs which have graduated out of the UN list of LDCs have been deleted from this list. The annual Report of the Ministry of Commerce and Industries for the year 2018–19 notes that the ratio of India’s import under DFTP from the LDCs as a share of its global imports increased from 12.7 per cent in 2016–17 to 24.3 per cent in 2017–18. If we consider the share of total import of the excluded products from the DFTP countries, it increased from 44.8 per cent to 71.6 per cent during the same period. Technology Sharing Technology sharing has been an important component of India’s development cooperation paradigm. Some interesting and effective efforts at technology sharing with partner countries initiated by India are briefly described in the following paragraphs. Based on a literature survey of SSC in the domain of technology sharing, we have identified some interesting cases. It may be noted that almost all of them were facilitated by concessional lines of credit provided. 1. Sugar Industry in Ethiopia 2. Mahatma Gandhi Information Technology & Biotech Park Inaugurated in Côte d’Ivoire 3. Several technology intensive cooperation initiatives have been undertaken between India and Myanmar that include: Industrial Training Centres, India-Myanmar Centre for Enhancement of Information Technology Skills, Myanmar-India Entrepreneurship Development Centre, Myanmar Institute of Information Technology (MIIT), Advance Centre for Agricultural Research and Education, Rice Bio Park. 4. Centre for Innovation and Technological Development (CITD) in Mozambique 5. Pan African e-Network Project (PAENP) 6. India-Mongolia Joint Information Technology Education & Outsourcing Centre (IMJIT) 7. Solar Power Project in Sudan 8. National Rural Broadband Network (NRBN) in Nigeria 9. Fruit Processing Plant in Tajikistan 10. Tajikistan Centre for Information Technology The chronicle of India’s development cooperation through these five pillars of the Development Compact underscores the belief that development is something that goes beyond flow of financial resources alone. Instead of just following efforts that emphasize creating standardized institutions through conditionalities, which Chang (2011) terms Global Standardized Institutions (GSI) that ensure that the flows of finance are effectively utilized for development, the ‘mission approach’ can ensure effective linkages between the macro parameters with their micro implications and contribute meaningfully to take a partner country on to a desired developmental track that avoids the imposition of hard social and economic costs in the bargain.

214  Handbook on the politics of international development

CONCLUSION The apparent agreement among the traditional donors about the operational fusion of the idea of development with that of growth to carry on development cooperation is observed to have not yielded the desired results (Easterly, 2006; Hoff, 2000; Chang, 2011). Krugman (1993) diagnosed the death of development economics since the early 1960s to have resulted from the failure of development economists to analytically integrate the ideas of increasing returns to scale and external economies arising from the enlargement of market size that were central to the prevailing ideas of development. Unfortunately, the prevailing growth-led understanding of the process could not appreciate these issues as they were obsessed with mathematical models based on strict assumptions of perfectly competitive markets and their consequent incompatibilities with the idea of increasing returns. Consequently, development economics was crowded out of mainstream economics. The arrival of the ideas of endogenous growth, economics of organization and spatial perspectives in international economics opened the space for some valid and useful ideas of development economics to be resurrected. The present chapter establishes that the spirit of SSC in general and that of the Development Compact in particular, capture these fundamental niceties of development economics from an operational perspective and have been in use since well before the analytical frameworks were developed to provide a theoretical and conceptual support to practice.

REFERENCES Aghion, P. and Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2), 323–351. Bacha, E. L. (1990). A three-gap model of foreign transfer and the GDP growth rate in developing countries. Journal of Development Economics, 32, 279–296. Balassa, B. (1964). The purchasing‑power parity doctrine: a reappraisal. Journal of Political Econ­omy, 72(6), 584–596. Banerjee, A. V. and Duflo, E. (2005). Growth theory through the lens of development economics. In P. Aghion and S. Durlauf (eds.), Handbook of Economic Growth, Vol. 1, Part A. Amsterdam: Elsevier, 473–552. Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, 95(5), 103–125. Barro, R. J. and Lee, J. W. (1994). Sources of economic growth. Carnegie‑Rochester Conference Series on Public Policy, 40, 1–46. Barro, R. J. and Sala‑i‑Martin, X. (2004). Economic Growth. New York: McGraw‑Hill. Boughton, J. M. (2001). Silent Revolution: The International Monetary Fund 1979–1989. Washington DC: International Monetary Fund. Bruno, M. and Easterly, W. (1998). Inflation crises and long‑run growth. Journal of Monetary Economics, 41, 3–26. Chakrabarti, M. (2016). Development Compact – the cornerstone of India’s development cooperation: An ‘externalities’ perspective. International Studies, 53(1), 2–14. Chang, H. J. (2011). Institutions and economic development: Theory, policy and history. Journal of Institutional Economics, 7(4), 473–498. Chaturvedi, S. (2012). India and development cooperation: Expressing Southern solidarity. In S. Chaturvedi, T. Fues, and E. Sidiropoulos (eds.), Development Cooperation and Emerging Powers: New Partners or Old Patterns? London: Zed Books, 169–189. Chaturvedi, S. (2015). The emerging institutional architecture of India’s development cooperation. In E. Sidiropoulos, J. A. Perez Pineda, S. Chaturvedi, and T. Fues (eds.), Institutional Architecture

The development compact  215 and Development: Responses from Emerging Powers. Johannesburg: South Africa Institute of International Affairs. Chaturvedi, S. (2016). The Logic of Sharing: Indian Approach to South-South Cooperation. Delhi: Cambridge University Press. Chaturvedi, S., Kumar, S., and Mendiratta, S. (2013). Balancing State and Community Participation in Development Partnership Projects: Emerging Evidence from Indian SDPs in Nepal. Research and Information System for Developing Countries Discussion Paper 183. New Delhi: RIS. Chaturvedi, S. and Mohanty, S. K. (2016). Indian Development Cooperation: A Theoretical and Institutional Framework. FIDC Policy Brief No. 7. Chenery, H. B. and Strout A. (1966). Foreign assistance and economic development. American Economic Review, 55, 679–733. DESA (2021). Angola receives three-year extension before its graduation from the list of LDCs. https://​www​.un​.org/​development/​desa/​dpad/​2021/​angola​-receives​-three​-year​-extension​-before​-its​ -graduation​-from​-the​-list​-of​-ldcs/​#:​~:​text​=​On​%2011​%20February​%202021​%2C​%20the​,developed​ %20country​%20(LDC)​%20category. Domar, E. D. (1946). Capital expansion, rate of growth and employment. Econometrica, 14(2), 137–147. Easterly, W. (2006). The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. New York: Penguin. Frankel, M. (1962). The production function in allocation and growth: a synthesis. American Economic Review, 52(5), 996–1022. Fuchs, A. and Vadlamannati, K. C. (2013). The needy donor: An empirical analysis of India’s aid motives. World Development, 44(4), 110–128. Garritsen de Vries, M. (1985). The International Monetary Fund 1972–1978: Cooperation on Trial. Vols. I and II, Narrative and Analysis, Vol. III, Documents. Washington, DC: International Monetary Fund. Gelb, A. (1989). Financial Policies, Efficiency, and Growth. Policy, Planning and Research Work­ing Paper No. 202. Washington, DC: World Bank. Grossman, G. M. and Helpman, E. (1991). Quality ladders in the theory of growth. The Review of Economic Studies, 58(1), 43–61. Harrod, R. F. (1939). An essay in dynamic theory. Economic Journal, 49(193), 14– 33. Reprinted in R. F. Harrod, Economic Essays, 2nd edition. London: Macmillan, 1972. Hoff, K. (2000). Beyond Rosenstein-Rodan: The modern theory of coordination problems in development. Proceedings of the World Bank Annual Conference on Development Economics. Washington, DC: World Bank, 145–176. Kaldor, N. (1957). A model of economic growth. The Economic Journal, 67(268), 591–624. Krugman, P. (1993). Towards a counter counterrevolution in development theory. Proceedings of the World Bank Annual Conference on Development Economics. Washington, DC: World Bank. Lim, W. (2012). Industrial policy without apology: Korea’s experience with strategic risk taking. Presentation at the International Economic Association/World Bank Roundtable on New Thinking on Industrial Policy, Washington, DC, 22–23 May. Lucas, R. E. Jr. (1988). On the mechanics of economic development. Journal of Monetary Econom­ics, 22, 3–42. Lucas, R. E. Jr. (1993). Making a miracle. Econometrica, 61(2), 251–272. Meade, J. (1961). A Neo-Classical Theory of Economic Growth. London: Allen & Unwin. Mohanty, S. K. (2015). Why development cooperation approaches differ: A perspective on India’s ‘mission approach’. In E. Sidiropoulos, J. A. Perez Pineda, S. Chaturvedi, and T. Fues (eds.), Institutional Architecture and Development: Responses from Emerging Powers. Johannesburg: South Africa Institute of International Affairs. OECD (2006). Evaluation of General Budget Support: Synthesis Report. Paris: OECD. Pasinetti, L. L. (1962). Rate of profit and income distribution in relation to the rate of economic growth. The Review of Economic Studies, 29(4), 267–279. Robinson, J. (2013 [1956]). The Accumulation of Capital. New York: Palgrave Macmillan: New York. Rodrik. D. (2008). The Real Exchange Rate and Economic Growth. Brookings Papers on Economic Activity. Washington, DC: Brookings Institution.

216  Handbook on the politics of international development Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. Sengupta, A. (1993). Aid and development policy in the 1990s. Economic and Political Weekly, 37(11), 453–464. Solow, R. M. (1956). A contribution to the theory of economic growth. Oxford Review of Economic Policy, 23(1), 3–14. Stokey, N. L. (1995). R&D and economic growth. The Review of Economic Studies, 62(3), 469–489. Stoltenberg, T. (1989). Towards a world development strategy. In L. Emmarij (ed.), One World or Several? Paris: OECD Publishing. TT-SSC (2011). Unlocking the Potential of South-South Cooperation Policy Recommendations from the Task Team on South-South Cooperation. https://​www​.oecd​.org/​dac/​effectiveness/​TT​-SSC​%20Policy​ %20Recommendations​.pdf. United Nations (1954). Report on International Definition and Measurement of Standards and Levels of Living (E/CN. 3/179 E/CN. 5/299). New York: United Nations. United Nations (1961). International Definition and Measurement of Levels of Living: An Interim Guide. New York: United Nations. World Bank (1990). Adjustment Lending Policies for Sustainable Growth. Policy and Research Se­ries. Washington, DC: World Bank.

PART III THE POLITICS OF DEVELOPMENT AGENDAS

14. The global political economy of development finance: myths and new realities in Latin American development finance Ernesto Vivares and Leonardo E. Stanley

1. INTRODUCTION This chapter explores the limitations and bias of the two dominant and contrasting models of development finance – neoliberal and neostructural – given their rationale, political-economic orientations, and historical results. More precisely, this work aims to open a research agenda, an invitation to scholars concerning Development Finance (DF) in global governance (see Chapter 6 by Marx and Otteburn in this volume), in the light of a different time and global conditions that have lagged behind traditional approaches still dominant but designed for a different world. In that sense, this is not a middle way or third path proposal. Accordingly, this work takes stock of who wins and who loses under certain political economic configurations within a specific historical and geographical context, rather than focusing upon the economic view of development finance. This difference is central since, for instance, Economics normally focuses on official and private development finance under different perspectives (e.g., neoliberalism, neo-developmentalism, etc.). Instead Global Political Economy (GPE) concerns who wins and loses under different orientations of ideas, power, agency, and political economic conditions. That sets a different starting point of research far from Economics, a distinct ontology and epistemology about how to assess DF, a GPE approach that includes the dynamics between states and markets and between the domestic and international today in the developed and developing world (Tussie, 2020). For instance, the world of finance for Economics is essentially formal and institutional and can be grasped technically, whereas for GPE it is a terrain of forces, configurations and struggles around different orientations of development pursuing different outcomes. For GPE, the sources, means and orientations of DF can be political and economic, domestic and international, formal and informal. So, in that sense, DF can include official financial sources derived from states’ relations, multilateral development banks, and overseas development assistance. It can also be capital-based such as foreign direct investment (FDI), capital markets, equity investments, junk bonds markets, future markets, interest rate swaps, derivatives and other more sophisticated sources and financial products. And given their importance we must include also illicit DF such as money laundering, tax evasion, and even tax havens. Somewhat surprisingly, the economic literature and debate is still anchored to the formal view of DF. DF in Economics has become approached like a sort of technology of power (with clear winners and losers). The time is now ripe to advance historical, economic and sociological research to provide new substantial knowledge to regain a strategic view of DF (Nemiña and Larreta, 2015). There are copious academic works that highlight the positive or negative roles of either the market-led (neoliberal) or developmentalist (neostructural) perspective of development 218

The global political economy of development finance  219 finance (see Chapter 1 by Ocampo in this volume for a review) when considering Latin America’s political-economic configurations, political instability, and international insertion. We can see that when judging the fortunes and misfortunes of developing regions in economic, political and academic terms, it has become a commonplace to see how regions were framed in a Manichean fashion as the result of two opposite political economies of development. The opinions split between two factions, which have struggled around the orientations of development for decades as if repeating mantras. This situation dates from the end of the Second World War, which triggered the debates on whether political and economic regulation or statism and industrial protectionism were the path to development. On the one hand, there are those who deify and crave for the return to the golden age of “liberal international trade,” small and limited states and the development of comparative advantages. According to the latter theory, those would be the key elements for international insertion, and they would provide essential political economic tools to build and unfold a sound political economy of development finance (Platt, 1985; Edwards, 2010). On the other hand, there are those who claim that developmentalism, import substitution policies, focused industrialization and a state engaged in national economy constitute the cornerstones of development and international positioning (see Chapter 1 by Ocampo in this volume; Prebisch, 1949). Both standpoints, which provide solid arguments, evidence, and appealing concepts, have dominated the regional and international perspective, expounding their particular conceptualizations of long-term development goals (Stanley, 2020; Vivares, 2013). Here we have outlined the basic frame of a historical or contextual approach, something that we can call a Global Political Economic approach anchored to history, context, and configurations. The second section of this chapter deploys key concepts to frame the Global Political Economy of Development Finance, namely world order, development, political economic configurations, and finance. It focuses on the rationale that sustains each model in ontological and epistemological terms. The starting points of historical changes are always difficult to identify but we considered it appropriate to choose the 1973 Chilean coup d’état as a turning point.1 Much has been written on the subject but what we highlight is that the vision and rationale still permeate different governments regardless of the ideological matrix of the ruler in charge. The third and fourth sections explore the historical context and development outcomes of the market-led and developmentalist models during the neoliberal stage of the 1990s and the return of neo-developmentalism at the beginning of the new century. These sections analyze the relations among the respective models, their underlying political economic configurations and social structures, the types of state (see Chapter 3 by Gabusi in this volume) and political order, and the international insertion derived from these settings of power. The conclusions show the similarity between the current situation and the experience at the beginning of the last century. Unfortunately, with the onset of COVID-19, the threats are considerably more significant.

1 Whereas for liberals, democracy is always a precondition for free societies, for neoliberals, preserving markets is more important than preserving democracy: the citizens versus consumer dilemma. For a review of the debate over democracy see Chapter 2 by Marangos and Triarchi in this volume.

220  Handbook on the politics of international development

2.

BEYOND THE BINARY PROBLEM

Crises have historically unsettled even the most deeply rooted concepts, theories, and perspectives, challenging the academic comprehension of reality. Today, we see how COVID-19 has accelerated the decline and fragmentation of the neoliberal global order, stressing the significance of technology to face crises, the importance of social protection and the intimate relation between the reproduction of the environment and society. The first victims of this abrupt change have been the fundamentals of the neoliberal order and the way we sustain and reproduce it. The rise of nationalism, xenophobia, and migration crises are only some of its faces. Quoting Gramsci, “[C]risis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear” (1971, pp. 275–276). Certainly, it is not the pandemic that is undermining the order, but its outcomes, exhaustion, morbid configurations, and the forces that it breeds. Some of those forces are undeniably related to how economies, societies and political orders finance their survival and growth, hence the importance of Development Finance, and in particular its political economy at national, regional, and global level. Development Finance is commonly assumed and approached as a technical aspect of development economics, but without entering into that wide debate we are here looking at it from the simple perspective of who wins, who loses, and what for (Tussie, 2020). Development Finance is primarily a dynamic research field defined by two elements. The first is its structural and inseparable relationship with economic configurations and social structures, political order, and international insertions. Secondly, is the strategic relationship that Development Finance plays in the interaction of social reproduction and environment. Consequently, the essence of Development Finance is not technical but political. The underlying basis of DF emerged after the Second World War and remained anchored to its ideological and philosophical dilemmas: freedom or slavery, free trade or authoritarian protectionism, state regulation or free market, developmentalism or liberalism. In other words, we are constrained to grasp reality through essentialist concepts, that is, without space, time, and action-process being considered. Certainly, when the studies on political economy of development and conflict are attached to essentialist ideas, they can only render partiality and bias. Conversely, different insights can be achieved in the comprehension of reality, based on the understanding of three components of the real world: time, space, and action-process. That is the logical way of developing knowledge, independently of the different roles that theory can have in research to grasp reality. One way is the exploration of reality, based on philosophical concepts; the other is the critical analysis of knowledge derived from the political economy of history or historical sociology. It is clear neoliberal and neo-developmentalist assumptions have both failed in the last three decades, leading to crisis after crisis. The idea of development sprouted slowly in the 1930s, as the financial crisis revealed the drawbacks of the neoclassical macroeconomic approach – external vulnerability and social tensions caused by the export-led growth model during major global downturns (Diaz Alejandro, 1970; Chapter 26 by Rivarola Puntigliano in this volume). The shifts in history between neoliberal and neo-developmentalist approaches reflect the impact of the combination of domestic economic configurations, international insertion, and social and political structures of different world orders (Astorga, 2015; Vivares, 2013; Thorp, 1985). Nevertheless, academia and specialized media still reproduce neo-developmentalist and neoliberal perspectives, considering them as the standards by which to measure the ups and downs, left and right tendencies, and fortunes and misfortunes of world development. Briefly put, both formulas have historically

The global political economy of development finance  221 failed in relation to four situations: (1) the close connection and complex structural relations between the domestic and international levels; (2) the conflict regarding what sectors benefit from each structure of development finance, which is central to comprehend their domestic, political, and social impact; (3) the monetary issue, which has historically been associated with the political economic structures of development finance, but also with the creation of domestic value, private and public financing, and geopolitical insertion (see Chapter 10 by Ugarteche in this volume); (4) the relations among fiscal spending, social development, and environment. Political economic configurations, ideas and policies eventually outline the fate of an economy rather than a philosophy. In the realm of ideas, economy has undergone a profound transformation since the 1970s with the rise of neoliberalism, consolidating the financial side of the liberal international order and triggering a fundamental tension in development at different levels, which we will further explore.

3.

THE RATIONALE OF NEOLIBERAL DEVELOPMENT FINANCE

Globalization brought about and legitimated a new approach to development, which prioritized trade openness and market dynamics. In the immediate post-war period, private international financial markets were almost non-existent and private capital movements were limited to foreign direct investments concentrating in the North Atlantic. After the mid-1970s, things changed abruptly. Lending to developing countries was driven by liquid markets and low US interest rates, facilitated by financial deregulation. Financial market globalization transformed development finance, the dominant (neoliberal) view perceived increased financial activity as beneficial for development and Keynesian-Minskian caveats were suddenly set aside by policymakers and disregarded by mainstream economists around the world. According to the neoliberal discourse, borrowing from international markets would be beneficial for developing countries as they can smooth local consumption and profit from external savings. Obviously, current account imbalances should not be a reason for concern if they reflect private agents’ decisions. This reasoning is behind the traditional literature on current account balances, whose relevance started to wane after the Southern Cone financial crisis of the early 1980s. The region attracted capital flows again in the early 1990s, now under a new format – bonds replaced syndicated bank loans – and adding a new group of beneficiaries, private non-guaranteed debt. The purpose of this section is not to analyze neoliberalism but to outline the weaknesses that this approach currently presents in terms of development finance in order to identify and define new lines for a research agenda on this strategic issue. From a methodological perspective, financial globalization came to vindicate the theoretical framework of general equilibrium and a new idea of development. The neoliberal discourse is based on the idea that markets tend to be perfect and efficient, agents behave in a rational way and information problems can be overcome. The Arrow-Debrew model of complete markets resembles a timeless, spaceless framework, which financially implies that funds could move worldwide, instantly and with few restrictions (Schoenmaker and Schramade, 2019; Vercelli, 2019; Lo, 2017). Within this rationale, as market prices are subject to all types of contingencies, economic agents seek to be fully aware of all information. Current prices, therefore, might reflect present but also future events. No uncertainty remains. A system with perfect markets where nothing is missing is

222  Handbook on the politics of international development tantamount to assuming that all economic agents are omniscient or positing a perfectly stationary universe where there is neither future nor a past (Sapir, 2000). Consequently, these models do not account for cultural, social, or institutional differences. When trying to understand economic development dynamics, however, all these factors emerge as fundamental. There are multiple factors, including technological advancements and market re-regulation, which facilitate immediacy. Technology provides the rational and utilitarian agent with the immediacy of the return, whereas the current institutional framework validates such temporal configuration to bond the yield to maturity. Goods and services could be bought in the present and a contingent contract would suffice and agree on a future price. A new asset is then created. Therefore, financial markets can establish claims against this asset, which is turned into a tradable security (Kay, 2015; Weeks, 2018; Pistor, 2019). If all risks are fully revealed, then it is possible to install an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date. When analyzing the viability of a project, investors only observe their rate of return. This premise lies at the core of the shareholder model. It does not matter if, after achieving the stated objective, the environment is affected, workers are exploited, or the community is affected since these will be costs that are not internalized. It reflects Milton Friedman’s motto, “the business of business is business.” Overall, the attitude corresponds to a world of unlimited natural resources – and without social responsibilities. The scheme ends up strengthening the short-term bias as well as the limited benefits that the company should seek. The influence of the message went beyond the economic realm to reach the institutional setting. For instance, the legislation of the mining industry was radically transformed during the 1990s under the auspices of the World Bank (see Chapter 23 by Mendes Pereira in this volume). The Bank adopted a similar perspective for the energy and food markets, watering down regulations and institutions established after the 1930s (see the following section). The new mining laws privileged the entry of foreign firms over sovereign returns and, despite their rhetoric, they disregarded social rights and environmental issues. Another important issue is related to the idea of the creation of national wealth and how mainstream economics transformed and added complexity to the concept. After the initial contribution of Robert Solow, growth models centered on physical capital accumulation, an outstanding feature of the “Fordist model” of industrialization. Physical capital was also at the heart of all development policies, underlying the importance of capital accumulation with the state leading the big push. Years later, academics started to highlight the importance of education as well as science and technology: innovative forces were rendered endogenous (see Chapter 1 by Ocampo in this volume; Aghion and Howitt, 1998, 2009). However, the relevance of natural resources in wealth creation remained somehow forgotten by academia. This started to change when numerous scholars decided to incorporate the concept into the national account framework and began to internalize the costs that human activity generates to nature. Disregarding externalities implies that natural assets are undervalued, whereas human capital becomes overvalued (Barbier, 2015). In financially globalized national economies, natural resources activities pull most of the funds and deepen the economy’s dual character turning certain fundamentals anachronistic. While moving towards financial globalization, paradoxically, the financial sector still did not appear in macroeconomic models. Finance was considered to be a “veil,” the sliding of which was not problematic for those in the mainstream and remarkably absent from the New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model – “frictions” are

The global political economy of development finance  223 the only motive that justify the presence of money for neo-Keynesians. However, a macro model without the financial cycle is like “Hamlet without the Prince” (Borio, 2012), a level of abstractionism that contrasts with the functioning of modern capitalist societies. The relevance of the financial sector goes beyond “frictions”, its functioning might benefit growth if it is properly regulated but it also generates highly damaging consequences if improperly regulated. The financial cycle is associated with agents’ perceptions of the value and risk that each asset has and their attitudes towards risk and financial restrictions, all of which end up causing booms to end in busts. Financial integration not only amplifies the scope of the crisis but also transforms its character. When the flows reflect a real counterpart – for example, credits that the bank has granted to the exporting sector or funds associated with an income transfer – the current account remains at the center of the analysis. Consequently, net flows reflect the country’s financial position, as it has been doing until the 1990s. However, this approach excludes countless financial operations, which reflect holdings of financial assets of the non-financial private sector. It is liquidity that determines the degree of investment of an economy and not the savings rate. Anyway, for those enrolled in the mainstream, a unique equilibrium prevails that savings should equal investment. Yet, total savings do not equalize the financial pool, at least in modern capitalist societies. If we want to measure the financial situation – and therefore the investment capacity – what we must observe are the gross positions (flows and stocks), which is the debt level (particularly, the amount of private unsecured debt). This position will determine the degree of financial vulnerability of a given country or region (Alves and Toporowsky, 2019; Akyüs, 2017; Caruana, 2016; Borio and Disyatat, 2012). Financial globalization also influenced financial agents’ perception of risk, since a change in the monetary policy made by the United States Federal Reserve alters the direction of capital flows in an unexpected way and independently of the exchange rate regime or the type of monetary policy that the receiving country follows. In short, the only tool to prevent friction from becoming a crisis is to impose capital control (Rey, 2013). Last but not least, neoliberalism neglects the presence of power and therefore, it does not see its role in the domestic–international relation and denies its relevance at the moment of decision-making at a public and private level (Lukes, 2016; Sapir, 2000; Galbraith, 1983). Behind the veil of efficiency it dismisses the distributional problem and how Wall Street outplaces Main Street from the economic center. Periods of tranquility typically encourage excessive risk taking, thereby sowing the seeds of future instability, as proclaimed Minsky, “The Wall Streets of the world are important; they generate destabilizing forces, and from time to time instability, that is, the behavior of the economy becomes incoherent” (2008, p. 4). Moreover, crisis certainly generates winners and losers. After a crash, as noted by Akyüs (2017, p. 51), “inequality is aggravated, and the economy would need even bigger bubbles to recover and grow.” The neoliberal discourse, however, does not consider any role for the state in dealing with developmental issues – actions and plans are left to markets. We will demonstrate that the neostructural discourse gives the public sector a greater but still inappropriate role. The challenges posed by climate change and, at present, COVID-19, raise the state’s importance recognizing the role of authority and political power in decision-making. However, the decisions that are ultimately made are affected by where they are made (space/geography), when they are made (history, institutional legacy, culture) and by the power of the decision-makers. Markets are far from being perfect if their practices reflect the customs of the past. By the end of the 1990s, however, the rational action

224  Handbook on the politics of international development discourse started to be debased, demolished in the lab, and rejected in the field. By that time, a new actor entered the scene – China – and commodities were transforming into a valuable financial asset, a process known as financialization.

4.

THE RATIONALE OF NEOSTRUCTURALISM FOR DEVELOPMENT FINANCE

Post-war development finance geography primarily reflected a North–South pattern, where the former provided the funds and the latter received and accepted donors’ conditions. It was dominated by Washington-sponsored multilateral sources. Projects often responded to the interests of transnational firms in the host country industry, oriented to natural resource projects associated with local elites, and highly dependent on foreign technology and profit repatriation. The pattern of development finance between the rise of the liberal global order up to the decline of neoliberalism followed two lines. As the US was diverted by international conflict, countries tended to develop regional configurations and sought to develop regional sources (see Chapter 28 by Palestini in this volume). However, when the US changed focus, Latin America, for example, became dependent on Washington-sponsored multilateral sources (Vivares, 2013; Halperin Donghi, 1993). The second line is that development finance has always depended on the same relation among domestic political-economic configurations, political orders and elites, and international insertion (Bertola and Ocampo 2012; Thorp 1985). A series of factors led to a commodity boom after 2003, outstandingly, the emergence of China (and India) but also commodity financialization. This last concept relates to “the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies” (Epstein, 2005, p. 3). There is an extensive list of academic articles describing the effects that financialization has on modern capitalist economies (Nölke et al., 2013). In this work, we try to highlight the main effects that increasing financialization in commodity markets generates on producer countries. An example that illustrates this transformation is the agriculture futures markets, which have a rich but controversial history. Institutional changes, in all cases and times, have always reflected a relation of power (Baines, 2017; Newman, 2009).2 By the early 1970s, big financial players were regaining power, but the World Bank had a decisive role in placing the balance in their favor.3 The objective of international financial institutions was not to stabilize prices but to impose a market scheme, where the risk was reflected in the commodity price. The collapse of these institutions generated a reconfiguration of power within the different value chains, inducing a concentration process in the different commodity markets. In any case, to reduce risks, producers could make contracts in the futures market. Despite the invariable speculative bias, however, commodity markets were relatively small and disassociated 2 The Great Depression of the 1930s generated a profound institutional change and US farmers managed to get the government to establish price support policies, control production and maintain collection facilities (Agricultural Adjustment Act, 1933). After the sanction of the Commodity Exchange Act (1936), the authorities established a cap on future prices and directly prohibited those operations that it considered speculative. As a result of the decolonization movement, many producer countries established this type of institution in the Third World – as it was then called. 3 In order to strengthen producers, in the 1954–1989 period various International Commodities Agreements (ICAs) were established with a Compensatory Finance Facility system.

The global political economy of development finance  225 from financial markets. Futures prices rewarded the idiosyncratic risk of operating with a particular good, while at the same time, they did not show co-movements with their stocks. The dot-com bubble stock market crisis generated a renewed interest in commodity futures, attracting new players4 (Kartsakli and Adams, 2017; Cheng and Xiong, 2014; Tang and Xiong, 2012). Financial traders discovered that there was a negative correlation between the stock index and commodities, therefore, transforming commodity futures into a new financial tool.5 Consequently, risks became systematic and strongly related to financial assets. However, financialization also implied the distribution of power along the value chain, with large companies or conglomerates transferring risks to the weakest firms or to informal sectors. Commodities are not only characterized and traded by their real inherent properties, but now they also reflect a financial asset, a characteristic that generates the appearance of new risks. Financial speculation takes over market dynamics and bubbles become normal. After the Global Financial Crisis (GFC), the ultra-easy monetary policy introduced by the Fed and other central banks (European Central Bank, Bank of England, and Bank of Japan), as well as the increasing participation of financial entities in the market, ended up accentuating financialization. Although they are beneficial for funding growth, the possessions in each of these assets can be put together and quickly taken apart (herd behavior), with futures for oil and minerals among the most affected (Kang et al., 2015). All this generates a new channel of uncertainty for public finances and thus, the rapid generation of external gaps on macro stability. This severely affects development financing, including the public arcs of those who would have chosen to control the capital account. Additionally, but strictly related to the issue analyzed here, it is worth noting the FDI contribution to the balance of payments as well as its role in external financial stability (Akyüs, 2017). Two issues are important in this regard. Firstly, the highly ambiguous definition of FDI, taken as a cross-border investment concept that mingles real and financial positions and transactions (IMF, 2009). Loans and advances from parent companies to affiliates are treated as part of direct equity rather than debt, including the local affiliate repayment of an inter-company loan to the headquarters, which might lead to a sudden FDI outflow – as observed in Brazil during 2012 (Akyüs, 2017, p. 172). Secondly, FDI contribution towards long-term, sustainable growth. FDI should not be thought of as a panacea. Long-term funds arriving in the country may not be beneficial and even not desirable to guarantee sustainable development (Stanley and Libman, 2019; Sauvant and Mann, 2017; Goda and Torres, 2013; Ibarra, 2011; Saborowski, 2009; Rodrik and Subramanian, 2009; Claessens et al., 1993). The benefits should not be taken for granted and they will depend on how the recipient country administers them. For example, if the majority of the FDI is directed to traditional exports, it can block the growth of the non-traditional sector. Extractivism induces an increasing 4 This entry is associated with the passing of the 2000 Commodity Futures Modernization Act, which prevents the CFTC from regulating OTC derivatives trading between putatively sophisticated market participants (banks, pension funds and large commercial firms) – another example of Weeks’s (2018) financial re-regulation concept. 5 Five different baskets of commodity indexes were created, each of which is made up of a group of commodities: energy sector (WTI [West Texas Intermediate grade] crude oil, heating oil, gasoline, and natural gas), grains (corn, Chicago wheat, Kansas wheat, Minneapolis wheat, soybeans, soybean oil, soybean meal, rough rice and oats), fruits and tropical crops (coffee, cotton, sugar, cocoa, lumber and orange juice), cattle and other livestock (feeder cattle, read hogs, live cattle and pork bellies) and minerals (gold, silver, copper, platinum and palladium).

226  Handbook on the politics of international development dependence, not less. China exploited that opportunity. Yet governments did not reckon with two risks. The first one was the changes in the external scenario of development finance and the structural domestic transformation that it implied (Chodor, 2015). The second one was the geopolitical dynamics of the US competition with China. Chinese funding, however, allowed governments to proceed with the exploitation of natural resources. The cost was “further fiscal dependency on the extraction and export of natural resources, and, in many cases, a geographical expansion of the extractive frontier, subjecting indigenous communities to displacement and fragile ecosystems to contamination” (Riofrancos, 2017, p. 278). In a short, rather than changing the structure of development finance it went back to practically conservative and unequal-oriented historical formats. In South America, the so called pink tide governments remained attached to the old structuralist ideal placing physical capital at the center of accumulation. To limit the “financial casino” and bring finance back for development, governments should reinstall capital controls (as short-term, speculative flows are correctly associated with financialization disregarding the negative effects long-term capital inflows might have). To regain policy space was the political motto. The Chávez administration, for example, diverted important sums to finance food security and social inclusion projects but failed to diversify the economy. Oil windfall gains also gave radical leaders a sense of financial power and the illusion of changing the influence of traditional multilateral institutions. Banco del Sur and Banco ALBA, two short-lived financial initiatives, envisioned funding projects according to a dated vision of development. Alternatively, the Brazilian BNDES preferred to finance projects in key sectors such as infrastructure, science, and technology. These new financial institutions have a (neo)developmentalist and implicitly extractive perspective, which introduces social inclusion but leaves aside environmental issue. (see Chapter 15 by Newell in this volume). Developmentalism was, moreover, subject to the financial casino. Africa as well as South American countries were particularly benefited by China voracious appetite for natural resources, which not only induced an economic boom but also provided sources of funding. The rise of China has come to challenge Western predominance among foreign investors and multilateral financing, with Beijing offering a cooperative relationship, free from political conditionality. Between 2005 and 2017 Latin America received loans totaling almost US$150 billion, placing Chinese banks among the leading regional leading financial institutions, namely the Andean Financial Corporation and the Inter-American Development Bank. As a source of direct investments and by providing millions of dollars in financing, China plays a leading role in development finance – with the oil and gas industries of particular relevance (Zhou et al., 2018; Ahmad et al., 2018).6 Almost all FDI inflows arriving from China were natural resource related, and these funds were funneled to the extractive industries. In 2013 China became the world’s largest importer of energy. In other words, despite a critical stance towards global financial markets, the boom pushed neodevelopmentalist governments towards commodity financialization. In any case, neither traditional Northern nor Chinese funding helped to transform development from its traditional global insertion model. To make matters worse, when the commodity boom was over by 2013, as in other 6 More than three-quarters of total Chinese loans to Latin America were provided to benefit the non-renewable energy sector (Viscidi and O’Connor, 2017). For the 2003–2016 period, investments in the non-renewable energy sector outperformed those associated to the renewable energy industry by a ratio of 6.25.

The global political economy of development finance  227 periods of falling prices, a race was generated to improve competitiveness. In economies based on natural resources, this implies weakening regulations to protect the environment. The problem, in short, is the global insertion model and its structural relationship with the economic, social, and political configuration of forces. Development finance reflected and still reflects the real side of the economy and therefore reinforces neo-extractivism, the “commodity consensus” model re-installed in the 1990s as the only game in town. The challenge is to find a model of development finance that neither punishes the environment nor hides its costs of reproduction.

5. CONCLUSIONS This chapter has explored the political economy of the two dominant and contrasting models of Development Finance – the neoliberal and neostructural models – based on their rationale, political-economic orientations, and historical results. In doing so, we argued that the poor and, in some cases, disastrous results in terms of development finance prove their limits and perils. The chapter identified the rationale of these models as the market-led (neoliberal) and neo-developmentalist (neostructural) approaches of Development Finance. To assess their efficacy, we critically reviewed and discussed their rationale. We have described the main shortcomings of both. Development desperately needs funds, but above all, a critical view on current financial systems and capital flow dynamics. If leaders aim to build a better and sustainable future, huge amounts of funds will be needed. Several of the innovative financial tools that are already in the market would be useful. If properly regulated, financial engineering could be constructive. In other words, the critical stance adopted here is not addressed to the financial sector but rather to the short-term perspective that financialization has installed. Climate change, to name the biggest challenge we face, urgently needs Development Finance. The chapter identified a set of key elements that limit and bias these models in terms of Development Finance under the current transformation of global governance and the impact of COVID-19. Accordingly, the limitations are related to the fact that these views cannot identify a dynamic domestic-international connection and relationship other than by generating tensions internationally. The first problem here is that these perspectives rest on philosophical or essentialist assumptions derived from their ontologies and epistemologies, which limit their approach regarding context, time and the link or dynamic relationship between domestic and international aspects. The ability and flexibility of the models to grasp strategically that structural relationship render them limited at the moment of facing sudden internal or external shifts in conditions and fundamentals. As a first conclusion, the study asserts that Development Finance cannot not be thought of in abstract or merely technical terms, neither should the concept reflect old practices and ideas. Instead, a global political-economic pluralist and eclectic perspective has historically shown that Development Finance is the result of complex structures and relationships, which are central components for a future research agenda. We started with this research agenda by analyzing the limitations and perils of these perspectives regarding how to grasp the domestic-international links of different global, hemispheric, and regional orders. Within this analysis, we found that Development Finance is conditioned by three structural elements. They can be categorized as follows: the inseparable links among domestic economic configurations

228  Handbook on the politics of international development and social structures; the political order of development; and international/global insertions – which we identified as the domestic-international issue. Changes in any of these elements or configurations necessarily bring about changes or problems in the others. For this reason, it is naive to implement policies following these dominant models of Development Finance instead of adopting a well-founded GPE approach, more flexible and strategic in the global context. The great advantage of an approach based on GPE is that it allows identifying and giving weight to three strategic elements – geopolitics, power, and emergent dynamics of the world order – instead of relying on essentialist assumptions (i.e., free trade or protectionism). Crises have historically crushed even the most ingrained concepts, theories, and perspectives, challenging the comprehension of reality regarding how it is and should be shaped. Humanity is facing a vast and lethal pandemic, which confronts us with an ethical challenge, in addition to the one concerning climate change. The human toll might be tremendous, and it may generate a social disintegration threat that democracies cannot afford to leave unattended. COVID-19 has reinstalled the debate around the role of states, markets, welfare, and communities. It also looks set to transform the relationship between the state, markets, and individual choice. Both debates are also crucial in shaping climate change dynamics. These debates are undoubtedly interrelated, multidisciplinary and involve multiple political, social, and economic issues. Current models of development have been built on myths that profess a blind faith in the market. None of them, however, has played a sole leading role in the debate. Nor is there any significant concern regarding the environment. Perhaps it is time to reject the dichotomy that offers us the choice between a neoliberal or a developmentalist model. This is a discussion that should start today. Financial globalization has resulted in generalized boom-bust cycles in private capital flows. John Kay claims that “many good ideas become bad ideas when pursued to excess” (Kay, 2015, p. 3). This quote remarkably describes the present situation with development finance. Commodity financialization, in sum, has severely changed the essence of real business. The CEOs of oil and gas companies, to name one industry, all follow the dictates of the neoliberal, efficient market hypothesis. Short-term financial rents dominate. Summing up, the dismantling of the welfare state and public health and education pillars in the last thirty years has set up the perfect scenario for the exhaustion of the neoliberal and neostructuralist models of Development Finance. A new approach will only rise by addressing two central issues: the vulnerability and inequality generated by an order that is based on the financialization pillar of world insertion and how unprepared are health systems to protect the most vulnerable as long as marked inequalities persist.

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230  Handbook on the politics of international development Pistor, K. 2019, The Code of Capital: How Law Creates Wealth and Inequality. Princeton, NJ: Princeton University Press. Platt, D. 1985, ‘Dependency and the historian: Further objections’, in C. Abel and C. Lewis (eds.), Latin America Economics Imperialism and the State: The Political Economy of the External Connection from Independence to the Present. London: Institute of Latin American Studies. Prebisch, R. 1949, El Desarrollo Económico de América Latina y Algunos de sus Principales Problemas. Santiago de Chile: CEPAL. Rey, H. 2013, ‘Dilemma not trilemma: The global financial cycle and monetary policy independence’, Federal Reserve Bank of Kansas City Economic Policy Symposium. Riofrancos, T. 2017, ‘Scaling democracy: Participation and resource extraction in Latin America’, Perspectives on Politics, 15(3), 678–696. Rodrik, D. and Subramanian, A. 2009, ‘Why did financial globalization disappoint?’ IMF Staff Papers, 56(1), 112–138. Saborowski, C. 2009, ‘Capital inflows and the real exchange rate: Can financial development cure the Dutch Disease?’ IMF Working Paper No. 09/20. Sapir, J. 2000, Les trous noir de la science economique. Essais sur l’impossiblit de penser le temps de la l’argent. Paris: Editions Albin Michael. Sauvant, K. and Mann, H. 2017, Towards an Indicative List of FDI Sustainability Characteristics. E15Initiative, Geneva: International Centre for Trade and Sustainable Development (ICTSD) and the World Economic Forum. Schoenmaker, D. and Schramade, W. 2019, Principles of Sustainable Finance. Oxford: Oxford University Press. Stanley, L. E. 2020, ‘The IPE of development finance in Latin America’, in E. Vivares (ed.), The Routledge Handbook to Global Political Economy: Conversations and Inquiries. London: Routledge. Stanley, L. E. and Libman, E. 2019, ‘Tratados internacionales de comercio e inversión y límites al control de capital’, Revista Ola Financiera, 12(33). http://​www​.olafinanciera​.unam​.mx. Tang, K. and Xiong, W. 2012, ‘Index investment and the financialization of commodities’, Financial Analysts Journal, 68(6), 54–74. Thorp, R. 1985, ‘Introduction’, in C. Abel and C. Lewis (eds.), Latin America, Economic Imperialism and the State: The Political Economy of the External Connection from Independence to the Present. London: Institute for Latin American Studies. Tussie, D. 2020, ‘The tailoring of IPE in Latin America: lost, misfit or misperceived?’, in E. Vivares (ed.), The Routledge Handbook to Global Political Economy: Conversations and Inquiries. London: Routledge. Vercelli, A. 2019, Finance and Democracy: Towards a Sustainable Financial System. Cham: Palgrave Macmillan. Viscidi, L. and O’Connor, R. 2017, ‘US-Latin America energy investment: Proposal for policy engagement’, InterAmerican Dialogue. Energy Working Paper, May. http://​www​.thedialogue​.org/​wp​ -content/​uploads/​2017/​05/​US​-Latin​-America​-Energy​-Investment​_FINAL​-for​-web​.pdf. Vivares, E. 2013, Financing Regional Growth and the Inter-American Development Bank: The Case of Argentina. London: Routledge. Weeks, J. 2018, ‘Free markets and the decline of democracy’, Review of Radical Political Economics, 50(4), 637–648. Zhou, L., Gilbert, S., Wang, Y., Muñoz Cabre, M., and Gallagher, K. P. 2018, ‘Moving the Green Belt and Road Initiative: From words to actions’, Working Paper. Washington, DC: World Resources Institute.

15. Development and climate: a tale of two crises1 Peter Newell

INTRODUCTION The title of this chapter is taken from an article I wrote for a special issue the of the IDS Bulletin on climate change and development back in 2004 (Newell, 2004). Going back to that article to see what’s changed, the first thing I noted in that piece was the fact that climate change had been so neglected as an issue by the mainstream development community should not come as a surprise. Not only because, despite the rhetoric, most environmental issues had yet to be effectively mainstreamed within development policy and practice at that time, but because climate change, in particular, raises a series of uncomfortable challenges for the theory and practice of development. To the extent that climate change highlights the unsustainability of the fossil-fuelled growth trajectory that underpins the contemporary global economy, it focuses scrutiny on the economic growth strategies promoted by the world’s leading global economic institutions, most notably, the World Bank and the International Monetary Fund (IMF). And because of the enormous global climate footprint that results from the increased movement of goods transported around the world as a result of lower trade barriers, the World Trade Organization (WTO) and the governments that created it, necessarily also enter the spotlight. The relative lack of action at the time I argued, contra to most accounts at the time, had less to do with the painfully slow diplomatic processes required to secure global agreement on solutions to the problem, than to the vested interests, governments included, that benefit, in the short term at least, from protecting the status quo. I also noted how, within the development community, climate change was being interpreted within conventional frames of analysis as a problem of bad governance and inefficient markets. To cite a donor report at the time, “By making public institutions responsive, participative and accountable to those they serve, decision making process and implementation activities can be robust enough to deal with the challenge of climate change” (Sperling, 2003, p. 24). It abounds with ‘win-win’ opportunities and the potential for synergy and, of course, reflecting prevailing wisdom, action was thought to be more likely to be effective if it is ‘demand-driven’, responding to the needs of the poor. My purpose was not to pour scorn on these development mantras, as many, in practice at least, contain valuable insights into the political and institutional dimensions of the climate change problem. Rather it was to show that by not thinking beyond these convenient frames of interpretation, we miss an important opportunity to effect more substantive change to prevent climate change from further immiserating the lives of the poor by critically revisiting the role of conventional development strategies in producing the problem in the first place. So, what has changed in the 18 years since I wrote that piece?

1 This chapter started life as a Sussex Development Lecture given at IDS in 2019. I am grateful to those who attended for their comments and questions which have helped (I hope) to improve the paper.

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232  Handbook on the politics of international development Some things clearly have. Donors and multilateral banks and institutions are much more engaged with the issue than they were then. We can see this in World Development Reports dedicated to the issue of climate change (World Bank, 2009), as well as the creation of new funding mechanisms from the Green Climate Fund and Climate Investment Funds of the World Bank, to greater focus on adaptation including the creation of an Adaptation Fund and moves by the private sector to financialize responses to adaptation with the support of development institutions (Isakson, 2015). The issue of climate change has clearly risen up the international agenda driven by ever more dire warnings from the Intergovernmental Panel on Climate Change (IPCC), the increasing intensity of extreme weather events around the world and an appreciation that it is the poorest in society who have contributed least to the problem that will be hardest hit. So, climate change has gone from being a scientific issue to a policy one, to a development concern to a question of human rights and social justice (Humphreys, 2010). But alongside this story of acceptance, recognition and incorporation, there is a parallel story of negation and denial, blind-spots and cognitive dissonance. In other words, the development industry has struggled to deal with climate change, just as the climate system can no longer support development as usual. What do I mean by that? Despite growing acknowledgement of the climate crisis, we need to unpack the nature of that crisis: For whom is it a crisis? Judging by the lack of action compared with what is required, as pointed out with growing incredulity by the annual UNEP Emissions Gap reports (UNEP, 2019) and the latest Production Gap report (SEI et al., 2020), clearly not everyone sees it is a crisis. So, what is climate change a crisis of? What does it represent? Though I argue here that climate change exposes the limits of (conventional) development as an ideology and set of institutions and practices, that is not a commonly held view. It is not just climate change that casts doubt on the sustainability of dominant development trajectories. A whole range of issues around inequality and the unsustainability of systems of food and agriculture, water and energy to name a few, also draw attention to the flaws of the prevailing development model. The dominant economic system is performing poorly on a range of grounds, though its inability to address climate change is certainly one of them and may turn out to the most catastrophic in its consequences.

THE SCALE OF THE CHALLENGE Where are we at? We have an ‘emissions gap’ and a ‘production gap’ which highlight a chasm between the levels of action that the best available scientific evidence suggests are necessary and the commitments currently contained in governments’ Nationally-Determined Contributions (NDCs), the national plans they have submitted in pursuit of the goals of the 2015 Paris Agreement. The UNEP Emissions Gap report (2019) shows that global greenhouse gas emissions must peak by 2020 and the gap must be closed by 2030. If the emissions gap is not closed by 2030, all hope of 1.5 degrees is lost and it is very plausible that the goal of keeping below 2°C temperature increase is also out of reach. Pathways reflecting current NDCs imply global warming of about 3°C by 2100, with warming continuing afterwards. Eighty to ninety per cent of coal reserves worldwide will need to remain in the ground, if climate targets are to be reached, approximately 35 per cent for oil reserves and 50 per cent for gas reserves. Yet G20 governments more than doubled their support for coal power plants between 2014 and 2017, with their overall backing for coal power currently totalling $64bn a year (Hill and

Development and climate: a tale of two crises  233 Murray, 2019). According to the Production Gap report by the UN Environment Programme and leading research institutions (SEI et al., 2020), governments are planning to produce 120 per cent more fossil fuels by 2030 than would be consistent with limiting warming to 1.5C. Even assuming all countries fulfil their pledges, which is a very unsound assumption since these are voluntary and subject to change, it would account for only about a third of the needed emission reductions to get to 2°C, let alone the Paris Agreement’s aspiration of keeping warming below 1.5 degrees compared with pre-industrial levels. The implications of failing to do this bear reflecting on for a moment to appreciate what these abstract figures would mean in practice, especially for least developed countries, should we fail to get the world on a 2 degree, let alone a 1.5 pathway. The IPCC 1.5 report (2018) suggests “Poverty and disadvantage have increased with recent warming (about 1°C) and are expected to increase for many populations as average global temperatures increase from 1°C to 1.5°C” (2018, p. 180). For example, agriculture is one of the sectors most vulnerable to the effects of climate change. Two and a half billion people globally depend upon agriculture for their livelihood. This is 27 per cent of the world’s population, and the figure rises in sub-Saharan Africa, where on average over 49 per cent of the population works primarily in agriculture (FAO, 2020), a sector that is highly susceptible to temperature increases and variability in precipitation patterns. Thus, even modest changes in rainfall and temperature patterns can push marginalized people into poverty as they lack the means to recover from shocks. Extreme events, such as floods, droughts, and heat waves, especially when they occur in combination, can significantly erode poor peoples’ assets and further undermine their livelihoods in terms of labour productivity, housing, infrastructure, and social networks (Olsson et al., 2014). Clearly even an additional half degree of global warming amounts to development in reverse. The latest IPCC report, meanwhile, noted that the 1.5°C goal is still feasible, though hugely challenging. Limiting warming to 1.5°C requires “transformative systemic change”, involving the upscaling and acceleration of far-reaching climate mitigation across regions and sectors (IPCC, 2018). This is strong language for a body often criticized for being unduly conservative and cautious, here sounding more like something that would not look out of place in The Communist Manifesto. Substantial additional effort is clearly, therefore, required to bring NDCs in line with the 1.5°C goal. While transitions are underway in various countries, limiting warming to 1.5°C will require a greater scale and pace of change to transform energy, land, urban and industrial systems globally. Such transitions have been observed in the past within specific sectors and technologies. But the geographical and economic scales at which the required rates of change in the energy, land, urban, infrastructure and industrial systems would now need to take place, are larger and have no documented historic precedent (IPCC, 2018). In many ways, we are in unchartered terrain, therefore. Given the scale of the challenge, a debate has understandably been triggered about whether the dominant economic system is fit for purpose in terms of tackling climate change (Koch, 2012; Newell and Paterson, 2010). Does the climate crisis change everything then as has been suggested (Klein, 2014)?

THE PRODUCTION OF CLIMATE CHANGE It is helpful at this point to return to the origins of the climate change problem to understand the links to development and the intertwined histories of these two crises. Understanding

234  Handbook on the politics of international development where we have come from and why things are the way they are, helps us to assess the prospects of reform or transformation. In many ways, the origins of the climate crisis are found in the rapid expansion in the use of fossil fuels at the time of the industrial revolution in the late eighteenth century. This was the birth of fossil fuel civilization. But, as Andreas Malm has shown in his (2015) book Fossil Capital, this was not as conventionally assumed, about coal-fired steam offering a cheaper or more abundant source of energy, but rather the superior control of labour that it afforded: allowing capital to concentrate production at the most profitable sites and during the most convenient hours. Not only is this story interesting and important in terms of how lock-in was created (Unruh, 2000), but also in relation to subsequent narratives that have been constructed about how to undo lock-in and create a new (low carbon) industrial revolution by: (i) creating new sites of accumulation for capital, particularly by engaging finance capital, (ii) stimulating and accelerating waves of creative destruction, and (iii) allowing the market to determine which energy sources and technologies should prevail. This is the idea that those solutions which are the most efficient, competitive and for which there is greatest demand will win out. A related narrative which is relevant to our discussion here is that of the Anthropocene which has assumed huge popularity in recent years (Steffen et al., 2007). On one level it describes an obviously a generic problem of human impact on the climate system. But on another, we can be much more specific. According to a study by Richard Heede (2014) published in the journal Climatic Change just 90 companies caused two-thirds of man-made global warming emissions including Chevron, Exxon, Shell and BP. More worrying still, half of the estimated emissions were produced just in the past 25 years – well past the date when governments and corporations became aware that rising greenhouse gas emissions from the burning of coal and oil were causing dangerous climate change. Within and across societies, Kenner (2019) shows it is possible to discern a global ‘polluter elite’ whose role in both accelerating climate and preventing more ambitious responses needs to be taken into account in apportioning responsibility and the obligation to act. It is not just the production of climate change that is socially differentiated, however. What also makes climate change a social crisis as well as an environmental one, is the way, through impacts and dominant responses to the threat, it magnifies, widens and further exploits existing inequalities (O’Brien and Leichenko, 2000). Historically then, the evolution of the fossil fuel era intersects with a mixture of colonialism (or Co2lonialism as activists put it) and patriarchy, producing racialized, class-based and gendered patterns of injustice which climate change exacerbates (Newell, 2005). This is observable in direct impacts and deprivations around impacts on land, loss of livelihood (due to changes in agriculture etc) and disruption from extreme weather events, droughts and flooding. But also, indirectly through green grabs and dispossession of land for carbon sequestration projects (Fairhead et al., 2012). It also forms the basis for carbon trading where the South is the site where emissions reductions are cheaper according to certain metrics, allowing Northern governments and corporations to displace responsibility elsewhere, what has been referred to as ‘accumulation by de-carbonization’ (Bumpus and Liverman, 2008). Fast forwarding in this brief survey of the twin histories of climate change and development, what is referred to as the ‘great acceleration’ of the economy in the post-war period is also very significant. In so far as the contemporary notion of development was invented (as Arturo Escobar and others claim) with President Truman’s declaration in his inaugural address in 1949 that “Greater production is the key to prosperity and peace. And the key to greater production

Development and climate: a tale of two crises  235 is a wider and more vigorous application of modern scientific and technical knowledge” (cited in Escobar, 1995, p. 1), the birth of development coincided with the great acceleration. Hence, at very moment of its inception, development in reverse (in the form of climate change) was set in train. The great acceleration set in train patterns of Fordism, mass consumerism and then globalization that have intensified and globalized these modes of extraction and exchange (Steffen et al., 2015a). The result has been rising temperatures over time. This is not of course a static or geographically even picture. With globalization, we have seen a new geopolitical landscape of emissions take shape with the ascent of so-called ‘rising powers’, blurring lines of responsibility between North and South, though less so within states because what these aggregate national figures disguise are the global inequalities that always bedevil development progress. So, when you look at emissions on a per capita basis you can see a very different picture, where China and India drop down the rankings and Australia, the US and Canada rise to the top. What is also often missed is consumption-based emissions: the way in which more carbon-intensive stages of production are outsourced to for example, China, and so responsibility gets displaced, while finished products continue to be imported into markets in the Global North. Again, the problem is not just climate change, even if climate change is increasingly the most existential of the threats posed by business as usual development. The consequences of transgressing a whole series of planetary boundaries (Steffen et al., 2015b) provide warning signs about the unsustainable trajectory of the global economy in relation to the depletion of a whole series of key ecosystems in relation to food, biodiversity and water. You might have thought this would create a crisis of legitimacy and perhaps should trigger reflection and revision to prevailing development orthodoxies. But has it?

MANAGING CLIMATE CHANGE: TRASFORMISMO OR TRANSFORMATION? Overall, while on the surface of things recognizing the gravity of climate change, huge political effort has nevertheless been invested by key developmental and economic actors in positioning climate change as an opportunity for development and a new site for growth. It has been primarily defined as a question of transition: substituting technologies, switching energy sources, strengthening institutions and better pricing, in the ways I described in the introduction. Deliberately or otherwise, this has been at the expense of recognizing the indictment that climate change poses of the existing global economy and negating the need for broader transformations and shifts in political power. The political attempt to manage this terrain – to ensure that politics and policy reinforce a broadly market liberal approach to transitions within capitalism, as opposed to more sweeping transformations of it – was understood by the Italian Marxist Antonio Gramsci as ‘trasformismo’ (Gramsci, 1971). Herein lies the tension between the increasingly recognized need for transformation and the ability of incumbent actors to narrow the debate about responses to climate change to questions of incremental transition through ‘trasformismo’ (Newell, 2018). This refers to the ability to accommodate pressures for more radical and disruptive change and to employ combinations of material, institutional and discursive power to ensure that those shifts which do occur in socio-technical configurations do not disrupt prevailing social relations and distributions of political power. It describes a process of co-optation that serves “as

236  Handbook on the politics of international development a strategy for assimilating and domesticating potentially dangerous ideas by adjusting them to the policies of the dominant coalition” (Cox, 1983, pp. 166–167). I argue this dynamic is apparent in how development actors have addressed threat of climate change. Firstly, the exercise of material power takes a number of forms. These include what has been referred to as ‘disciplinary neoliberalism’ (Gill, 1995): a set of practices pursued by key international institutions and multilateral development banks, in constraining the policy autonomy and developmental space of poorer countries over which they exercise control through their lending practices, conferring financial support upon policies they approve of, or withdrawing it from those they do not. This is visible in the giving and taking and taking of aid. Kenya, for example, is often compared favourably with neighbours such as Tanzania, on the basis that, as a World Bank official put it, “Kenya has always been private sector focused and avoided the virulent forms of socialism of some of its neighbours” (Newell and Phillips, 2016, p. 43). The receipt of aid is made conditional on adopting the ‘right reforms’: those proscribed by major donors (Tellam, 2000). Power sector reform has been rewarded by support from bilateral and multilateral donors, opening up opportunities for foreign capital to meet the shortfall in energy supply (McDonald, 2009). This has been used to promote private-led model of development (while allowing ample opportunity for the collection of rents by the state), that has significant export potential. This at the very time that state control over energy might be thought to be a good thing from the point of view of manging transitions. Material power has also been used to protect and promote incumbents (Newell and Johnstone, 2018). Even in the face of evidence about the effects of climate change and recent commitments to withdraw some funding streams to fossil fuels, a huge amount of state support continues to be provided to the fossil fuel industry through direct and indirect channels. The International Monetary Fund (IMF) has reported that fossil fuel subsidies (including the non-pricing of externalities) amounted to USD 5.3 trillion. This equates to USD 145 billion per day, USD 600 million per hour, USD 10 million per minute and USD 168,000 per second (IMF, 2015). Multilateral development banks, meanwhile, provided over $9 billion in public finance for fossil fuel projects in 2016 – with the vast majority of transactions approved after the Paris Agreement was reached, while clean energy made up less than a third of multilateral development bank energy finance. Total MDB finance for oil and gas exploration more than doubled from 2015 to 2016, from $1.05 billion to $2.15 billion. The World Bank Group, European Investment Bank, and Asian Development Bank were the largest financiers of fossil fuels in 2016 (OCI, 2017). Secondly, neoliberal transitions require institutions to prepare the ground for foreign investors. For example, to attract foreign capital, the Kenyan state has sought to provide an enabling environment to develop the country’s geothermal sites, channelled through a government-owned special purpose vehicle, the Geothermal Development Company (GDC), which has been established to assume the risk of resource mapping and exploration that the private sector is unwilling to take. In other words, it distributes risk in favour of business (Newell and Phillips, 2016). Sometimes this institutional work is called de-politicization, but it actually it requires immense political work on the part of actors like the World Bank. This includes policing boundaries of what is at stake and preparing the ground for interventions. This involves, for example, consultants preparing a study on the energy sector which inevitably highlights the need for power sector reform, unbundling and privatization (Newell and Phillips, 2016). Donors then help fund a strategy and process to implement this which the

Development and climate: a tale of two crises  237 government is expected to adopt. They then host events and trade fairs for businesses to assess investment opportunities facilitated by donor governments. Then roll out can begin. Thirdly, we can see discursive power exercised in the accommodations and framing around ideas such as ‘climate compatible development’ (Nunan, 2017) or through specific sites like ‘climate smart cities’ or ‘climate smart agriculture’ (CSA) promoted by the Food and Agriculture Organization and World Bank (Newell and Taylor, 2018; Taylor, 2018; Newell et al., 2019). While they have some value, they often obscure the drivers of the climate crisis. We can see this in accommodations of critiques about industrial agriculture and its role in climate change in relation to climate smart agriculture, for example. Rather than embracing an opportunity to reflect upon and address the contribution of agricultural models organized along industrial, high-energy and chemical input, and export-led lines, the advent of CSA has been used to exploit opportunities to consolidate and advance the control of private actors over land, technology and livelihoods in ways that are inimical to addressing either rural poverty or sustainability. This has occurred by advancing controversial agricultural biotechnologies like pesticide resistant GM plants, by promoting agricultural practices with poorly understood social and environmental benefits like biochar and no-till agriculture, and by seeking to finance CSA through new forms of ‘green economy’ financing and global carbon markets whose dubious environmental benefits and negative social impacts have been widely documented (Stephan and Lane, 2015). Attention to the structural and systemic drivers of crises around climate change and food insecurity is thereby distracted by the emphasis on incremental technological, economic and behavioural change, fetishizing individual acts of consumption (through standards and corporate best practice) and realignments in pricing, technology and property regimes (as promoted by actors such as the FAO and World Bank). What these initiatives and collaborations reveal is the significant investment in asserting the capacity of incumbents to successfully manage the challenges that climate change poses to business-as-usual politics and practice in the agricultural sector. Discursively, CSA initiatives are linked to acts of de-politicization that attempt to translate contentious politics into manageable technocratic responses that obscure trade-offs through ‘triple-win’ initiatives. As over 350 civil society organizations declared in a statement from September, 2015: Agribusiness corporations that promote synthetic fertilizers, industrial meat production and large-scale industrial agriculture – all of which are widely recognized as contributing to climate change and undermining the resilience of farming systems – can and do call themselves ‘Climate Smart’. (Climate Smart Agriculture Concerns, 2015)

Solutions proposed under the umbrella of CSA reward and thus consolidate the power of large agribusiness corporations and finance capital. CSA efforts diffuse political threats to the fossil fuel-intensive, technology-driven, export-led food systems upon which the current food regime is organized, while bolstering the bureaucratically secure position of incumbents in accessing the large amounts of climate finance directed to agriculture. CSA has become a site for the attempted resolution of the need for finance to find something to invest in, extending their control over land; for governments and neoliberal global institutions to shore up flagging carbon markets by expanding into agriculture; for biotechnology firms to reinvent genetically-modified organisms (GMOs) as ‘climate-smart’; and for global agricultural institutions to raise their profile and diversify their funding streams by taking on mandates for tackling and responding to climate change. The effect of discursive privileging and institutional

238  Handbook on the politics of international development support for only those solutions consistent with the existing distribution of power, finance and technology in global food systems is to delegitimize – and in some cases appropriate – alternative solutions that offer important alternative pathways for climate change mitigation and adaptation that enhance the security of smallholder farmers, who remain the major source of food production and income for global rural populations (Newell and Taylor, 2018). At a deeper level still, we see this incumbent power exercised in attempts to manage key contradictions by advocating green growth where whatever the problem, more growth is always the answer. The questioning of growth is placed off limits. As a World Bank official candidly told me off the record, despite increasing attention to ideas about post-growth, de-growth or prosperity without growth, there is no space to raise or take on the significance of these issues in the neoliberal institution whose funding comes from the world’s richest capitalist countries. Yet as Greens such as Dobson point out: “Growth, the unexamined assumption that underpins our current political settlement, is nearing its sell-by date” (2014, p. 8). He notes, “We have come to think of the industrial era of Promethean expectation and performance as normality, whereas it is in fact a world historical era of exception” (2014, p. 25). For some, this will occur as limits are placed upon the use of fossil fuels or because of the impacts of climate change causing negative growth, such that more and more state and private investment will be required to prop up existing infrastructures, to pay for emergencies and losses through health and ‘natural’ disasters. We will, in other words, be running to stand still economically. Forward projections of growth spell out the challenge of sustaining growth. When politicians aim to deliver annual growth rates of over 2 per cent per year (much more in many contexts), this implies an expansion of the economy by a factor of ten every hundred years or that in two hundred years the economy will be a hundred times bigger than it is now (Newell, 2019). Overall then, the point here is not to downplay real progress has been made in addressing climate change. Transitions are underway in many sectors and regions around the world today and we have positive examples to draw on from the past (Sovacool, 2016). There are many positive examples of attempts to take back control and do things differently. As co-founder and research director of the Rapid Transition Alliance, I certainly share the view that there are many grounds for what we refer to as ‘evidence-based hope’ about the possibilities of rapid transition from previous ‘new deals’ and energy transitions, to the growth of expanded and even free public transport, divestment from fossil fuels and the growing number of food cooperatives. There have been genuine reforms in the actions, programmes and mandates of development actors and private companies from the European Investment Bank’s recent decision to move out of financing fossil fuels to the emergence of science-based targets whereby some leading corporate actors have committed themselves to align their corporate strategies with a 1.5 trajectory (Walenta, 2019). It is also the case that though it may seem so at times, this is not an unquestioned, hegemonic project. Neoliberalization is best understood as a process, non-linear, not an end state, very uneven, full of contradictions rather than a uniform, imposed project. This provides important entry points for change. As we are seeing with the current coronavirus pandemic, crises disrupt business as usual in unpredictable but lasting ways. Yet overall, we are nowhere near level of ambition required as the discussion above made very clear. What is significant here is not just the direct impacts on climate change from financing infrastructures and industries: it is that the ideology and practice of global development has shaped the tools and constrained the available approaches governments have to tackling climate change. The consequence is a failure to face up to the need for structural change and transformation and to deal with the inherent unsustainability of conventional development

Development and climate: a tale of two crises  239 models. Overall then, it remains the case that the dominant development model is now threatening the very means of reproducing itself amid the rising costs of climate impacts and what I have referred to as ‘development in reverse’.

MOVING BEYOND CRISIS: DEVELOPMENT AS (UN)USUAL Challenging power relations and standing up to powerful incumbent actors who now claim their business is vital to tackling poverty even as it accelerates climate change requires us to undo these tightly woven patterns of social and economic power wherever they manifest themselves: in social, cultural, political and economic spheres, and in whichever form of power they take (material, institutional and discursive). This means engaging with and supporting divestment movements, mobilizations to question the social licence to operate of fossil firms in cultural spheres such as education, the arts and media sponsorship, through reform of political donations and revolving door politics and efforts to deliberately open up politics to a broader range of actors through citizen’s assemblies and the like. This calls for political innovations to consciously and deliberately challenge and displace incumbent actors and give greater voice to those supporting the required transitions and most affected by the impacts of climate change, now and into the future. Contrary to the instincts of some in the development industry, it means focusing attention on the rich (the 1 per cent) when finite carbon budgets are at stake in order to address the intimate connection between inequality and over-consumption (Kenner, 2019). It is not popular to state that how those in the richer part of the world produce and consume energy, food and water and how they meet their transport, heating and dietary needs all need to radically change. It is more comfortable to focus on market pricing, technology or incremental policy reform that can be accommodated within a business-as-usual trajectory, or to pin blame on ‘governance failures’ in the Global South. Yet, we must clearly embrace a more critical view of pricing as the answer to everything and challenge the fetishization of technology as a magic bullet as well as colonial approaches to transition which seek to deal with climate crisis through spatial fixes in the post-colonial world. There is a clear need too to re-purpose key institutions of global governance such as the World Bank and World Trade Organization to bring them in line with the Paris Agreement (Leal-Arcas, 2019). The goals of these institutions can no longer trump the need to address the climate crisis. Moving beyond business as usual approaches means putting down limits rather than leaving it to the market, whereas approaches to date have focused on managing emissions into atmosphere or payments for eco-systems services through carbon trading and carbon forestry, for example. Attention needs to shift to tackling the supply-side, addressing limits on production to fairly leave large swathes of fossil fuels in the ground (Erickson et al., 2018). There were some promising signs at the Madrid climate summit that the ‘f’ word (fossil fuels!) is entering climate policy discourse (Newell and Taylor, 2020) and tentative mention was made of ‘phasing down’ coal and the need to address ‘inefficient’ fossil fuel subsidies in the text of the Glasgow COP, despite the fact that fossil fuels are not even mentioned in the Paris Agreement. Some states have made bold moves in this regard and there are growing calls to generalize this as part of a new treaty to ensure the non-proliferation of fossil fuels (Newell and Simms, 2020) which has now been proposed at the UN Security Council. Internationally, we now have a ‘Powering Past Coal Alliance’ (Jewell et al., 2019) and a Beyond Oil and Gas

240  Handbook on the politics of international development Alliance (BOGA), and nationally, Costa Rica, France, New Zealand and Belize have agreed to leave reserves of oil in the ground. Engaging and redirecting finance is critical in this regard through fossil fuel divestment, phasing out fossil fuel subsidies, shareholder resolutions, as well as support to alternative technologies and infrastructures through proposals for a Green New Deal, for example. There are also important sources of change from below from waves of resistance putting down limits on new frontiers of extraction (around fracking and new pipelines led by environmental defenders and indigenous groups), as well as groups demanding further and more rapid action (such as the global Youth strike 4 climate movement and Extinction Rebellion), through to emerging models of citizen innovation for a new economy (Mathie and Gaventa, 2015) which aim at socially useful production while reducing consumption and waste. In the end, development starts at home. In this sense the SDGs might be seen as an opportunity: their universal and interconnected nature means problems cannot (in theory) be displaced through spatial fixes. In theory, for example, richer countries cannot solve their transport or energy problems by acquiring land for biofuels if it compromises food security of others elsewhere. But more fundamentally and problematically, it means recognizing the unsustainability of the current economic system and going beyond business as usual. Conventional approaches to global economic growth are incompatible with prevention of a dangerous level of warming. This remains a completely taboo subject in development, but it can no longer be. We need to engage seriously with equity-based ideas around ‘contraction and convergence’ which focus on per capita entitlements, for example, as a means of articulating and allocating global responsibilities (GCI, 2018). Thinking in terms of shifting power, placing equity centrally and putting down limits to protect the commons of course is a far more difficult challenge than pricing carbon, mobilizing finance, innovating technology, building new infrastructures and reforming institutions. It is about re-thinking who and what development is for. It will involve a greater degree of regulation, and especially of the conduct of the rich. It will also require a re-definition of progress and well-being beyond growth. This could take various forms. Supporting viable livelihoods for the poor in a warming world over creating ever more sites of accumulation and speculation. Changing structures of ownership and property regimes over energy, land and water. Greater degrees of self-sufficiency and localization. This all takes time and struggle – as all transformations do. It may also sound naïve and utopian. But no more so, I would argue, than to suggest we can merely tweak a model of business as usual development that is demonstrably leading to ecological ruin. The goal should actually be that we do not need climate policy, or any kind of environmental policy, because if trade, energy and transport and agricultural policy were sustainable, there would be no need for a separate, add-on, end of pipe policy to fix the damage caused by business as usual. Ultimately, it is about a re-alignment of priorities in which it is recognized that the economy is a mere sub-system with a global ecology. As activists like to point out, there is after all no economy on a dead planet. This is clearly a more transformational agenda than that which the development industry is currently willing to contemplate. But surely with 11 years in which to avoid climate breakdown, it is time for a wake-up call. As Albert Einstein put it, “We can’t solve problems by using the same kind of thinking we used when we created them”.

Development and climate: a tale of two crises  241

REFERENCES Bumpus, A. G. and D. M. Liverman (2008) Accumulation by decarbonization and the governance of carbon offsets. Economic Geography, 84(2), 127–155. Climate Smart Agriculture Concerns (2015) COP21 statement: Don’t be fooled! Civil society says NO to “Climate Smart Agriculture” and urges decision-makers to support agroecology. http://​www​.cl​ imatesmart​agconcerns​.info/​cop21​-statement​.html. Cox, R. (1983) Gramsci, hegemony and international relations: An essay in method. Millennium: Journal of International Studies, 12(2), 162–175. Dobson, A. (2014) The Politics of Post-Growth. Dorset: Green House. Erickson, P., M. Lazarus, and G. Piggot (2018) Limiting fossil fuel production as the next big step in climate policy. Nature Climate Change, 8, 1037–1043. Escobar, A. (1995) Encountering Development: The Making and Unmaking of the Third World. Princeton, NJ: Princeton University Press. Fairhead, J., M. Leach, and I. Scoones (2012) Green grabbing: A new appropriation of nature? Journal of Peasant Studies, 39(2), 285–307. FAO (2020) Statistical Yearbook 2012: World Food and Agriculture. Rome: FAO. GCI (Global Commons Institute) (2018) Contraction and Convergence. http://​gci​.org​.uk/​. Gill, S. (1995) Globalization, market civilisation and disciplinary neoliberalism. Millennium: Journal of International Studies, 24(3), 399–423. Gramsci, A. (1971) Selections from the Prison Notebooks, ed. and trans. Q. Hoare and G. Nowell Smith. New York: International Publishers. Heede, R. (2014) Tracing Anthropogenic carbon dioxide and methane emissions to fossil fuel and cement producers, 1854–2010. Climatic Change, 122(1–2), 229–241. Hill, T. and J. Murray (2019) Coal addicts: G20 governments have doubled support for coal power plants, report finds. https://​www​.businessgreen​.com/​bg/​news/​3077857/​coal​-addicts​-g20​-governments​-have​ -doubled​-support​-for​-coal​-power​-plants​-report​-finds. Humphreys, S. (ed.) (2010) Human Rights and Climate Change. Cambridge: Cambridge University Press. IMF (International Monetary Fund) (2015) IMF Survey: Counting the Cost of Energy Subsidies. http://​ www​.imf​.org/​external/​pubs/​ft/​survey/​so/​2015/​NEW070215A​.htm. IPCC (2018) Global warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways. Geneva: IPCC. https://​www​.ipcc​.ch/​sr15/​. Isakson, R. (2015) Derivatives for development? Small-farmer vulnerability and the financialization of climate risk management. Journal of Agrarian Change, 15(4), 569–580. Jewell, J., V. Vinichenko, L. Nacke, and A. Cherp (2019) Prospects for powering past coal. Nature Climate Change, 9, 592–597. Kenner, D. (2019) Carbon Inequality: The Role of the Richest in Climate Change. Abingdon: Routledge. Klein, N. (2014) This Changes Everything: Capitalism vs. the Climate. New York: Simon & Schuster. Koch, M. (2012) Capitalism and Climate Change: Theoretical Discussion, Historical Development and Policy Responses. Basingstoke: Palgrave Macmillan. Leal-Arcas, R. (2019) Aiming at sustainable trade in the context of the rule of law: What role for citizens and how international trade can help reduce fossil-fuel consumption. Trade, Law and Development, 11(2), 193–238. Malm, A. (2016) Fossil Capital: The Rise of Steam Power and the Roots of Global Warming. London: Verso. Mathie, A. and J. Gaventa (eds.) (2015) Citizen-Led Innovation for a New Economy. Nova Scotia: Fernwood Publishing. McDonald, D. (2009) Electric Capitalism: Recolonising Africa on the Power Grid. London: Earthscan. Newell, P. (2004) Climate change and development: A tale of two crises. IDS Bulletin, 35(3), 120–126. Newell, P. (2005) Race, class and the global politics of environmental inequality. Global Environmental Politics, 5(3), 70–94. Newell, P. (2018) Trasformismo or transformation? The global political economy of energy transitions. Review of International Political Economy, 26(1), 25–48.

242  Handbook on the politics of international development Newell, P. (2019) Global Green Politics. Cambridge: Cambridge University Press. Newell, P. and P. Johnstone (2018) The political economy of incumbency. In J. Skovgaard and H. Van Asselt (eds.), The Politics of Fossil Fuel Subsidies and their Reform. Cambridge: Cambridge University Press, 66–80. Newell, P. and M. Paterson (2010) Climate Capitalism: Global Warming and the Transformation of the Global Economy. Cambridge: Cambridge University Press. Newell, P. and J. Phillips (2016) Neoliberal energy transitions in the South: Kenyan experiences. Geoforum, 74, 39–48. Newell, P. and A. Simms (2020) Towards a fossil fuel non-proliferation treaty. Climate Policy, 20(8), 1043–1054. Newell, P. and O. Taylor (2018) Contested landscapes: The global political economy of climate smart agriculture. Journal of Peasant Studies, 45, 108–130. Newell, P. and O. Taylor (2020) Fiddling while the planet burns? COP25 in perspective. Globalizations, 17(4), 580–592. Newell, P., O. Taylor, L. O. Naess, J. Thompson, H. Mahmoud, P. Ndaki, R. Rurangwa, and A. Teshome (2019) Climate smart agriculture? Governing the Sustainable Development Goals in sub-Saharan Africa. Frontiers in Sustainable Food Systems, 3, 55. Nunan, F. (ed.) (2017) Making Climate Compatible Development Happen. Abingdon: Routledge. O’Brien, K. and R. M. Leichenko (2000) Double exposure: Assessing the impacts of climate change within the context of economic globalization. Global Environmental Change, 10(3), 221–232. Oil Change International (OCI) (2017) Cross Purposes: After Paris, Multilateral Development Banks Still Funding Billions in Fossil Fuels. http://​priceofoil​.org/​2017/​10/​12/​development​-banks​-still​ -funding​-fossils/​. Olsson, L., M. Opondo, P. Tschakert, A. Agrawal, S. H. Eriksen, S. Ma, et al. (2014) Livelihoods and poverty. In C. B. Field, V. R. Barros, D. J. Dokken, et al. (eds.), Climate Change: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge: Cambridge University Press, 793–832. SEI, IISD, ODI, Climate Analytics, CICERO, and UNEP (2020) The Production Gap: The discrepancy between countries’ planned fossil fuel production and global production levels consistent with limiting warming to 1.5°C or 2°C. http://​productiongap​.org/​. Sovacool, B. (2016) How long will it take? Conceptualizing the temporal dynamics of energy transitions. Energy Research & Social Science, 13, 202–215. Sperling, F. (ed.) (2003) Poverty and Climate Change: Reducing the Vulnerability of the Poor Through Adaptation. Multi-Agency Report. Washington, DC: World Bank. Steffen, W., W. Broadgate, L. Deutsch, O. Gaffney, and C. Ludwig (2015a) The trajectory of the Anthropocene: The great acceleration. The Anthropocene Review, 2(1), 81–98. Steffen, W., P. J. Crutzen, and J. R. McNeill (2007) The Anthropocene: Are humans now overwhelming the great forces of nature? Ambio, 36(8), 614–621. Steffen, W., K. Richardson, J. Rockström, S. E. Cornell, I. Fetzer, et al. (2015b) Planetary boundaries: Guiding human development on a changing planet. Science, 347. doi:​10​.1126/​science​.1259855. Stephan, B. and R. Lane (eds.) (2015) The Politics of Carbon Markets. London: Routledge. Taylor, M. (2018) Climate-smart agriculture: What is it good for? Journal of Peasant Studies, 45, 89–108. Tellam, I. (ed.) (2000) Fuel for Change: World Bank Energy Policy – Rhetoric and Reality. London: Zed Books. UNEP (2019) The Emissions Gap Report 2018. Nairobi: United Nations Environment Programme. Unruh, G. C. (2000) Understanding carbon lock-in. Energy Policy, 28, 817–830. Walenta, J. (2019) Climate risk assessments and science-based targets: A review of emerging private sector action tools. WIRES Climate Change, 11, e628. World Bank (2009) World Development Report 2010: Development and Climate Change. Washington, DC: World Bank Group.

16. The politics of food Thiago Lima and Andrea Santos Baca

1. INTRODUCTION Food cannot be seen as just a module of our lives. It is not something we can turn on and off when convenient or necessary. Food permeates and is permeated by multiple dimensions of social reality. The body needs food as an input to its development and as fuel to move. Food, therefore, is an integral part of human development. Several problems occur when feeding is not considered this way, that is, when it becomes one among a number of other things that we must accomplish throughout our lives. This disconnection makes it easier to ignore how, where, which and by whom food is produced, conserved, and distributed. Simultaneously, in this perspective, food becomes something individual and not an inherently social and shared process. Ultimately, it naturalizes the disconnection of the human being with nature itself and with the society that creates the conditions for living, generating various types of imbalances and injustices that could be avoided, including hunger and underdevelopment. In this sense, the assessment of food’s role in the debate on the politics of development should consider that food is not just a pragmatic issue. Eating well and in a healthy way, for several generations to come, is a structuring element for the development of people and societies. The necessary question is: Why has humanity, with all the technological advances of the last two centuries, failed to guarantee adequate food for all people? The critical trajectory that we offer in this chapter aims to contribute to a vision of this problem that enables adequate food for all as synonymous with social development. The chapter continues as follows: in section 2 we discuss the relationship between hunger, food, and development. In section 3, we present a critique of the mainstream narrative linking agriculture and industrial development. Finally, we argue that food should not be an input to be constantly cheapened, but a fundamental foundation for human development.

2.

FOOD AND NUTRITION INSECURITY AS A CAUSE INHIBITING DEVELOPMENT AND A RESULT OF LACK OF DEVELOPMENT

From the 1980s, the perspective advocated by Amartya Sen (2008) and others, that any development process that wants to lead to freedom should have as its premise and objective entitling people to eat adequately, has gained strength in academic and political debates. Sen’s reflections came in the wake of the first serious global food crisis after the Second World War, in the 1970s. In 1974, the Food and Agriculture Organization (FAO) organized the first United Nations World Food Conference to discuss the crisis and, with it, the issue radiated globally (McKeon, 2015). This movement has helped us think about the boundaries of human rights, including the human right to adequate food, and what political actions need to be taken to ensure them (Kesselring, 2007). 243

244  Handbook on the politics of international development In fact, Article 11 of the International Covenant on Economic, Social and Cultural Rights of the United Nations, approved by the General Assembly in 1966 and in force since 1976, recognizes “the fundamental right of everyone to be free from hunger”, and “States Parties shall take, individually and through international co-operation, the measures, including specific programmes, which are needed” to improve production, conservation and distribution of food, including an “equitable distribution of world food supplies in relation to need”. Before that, Article 25 of the Universal Declaration on Human Rights of 1948 had recognized the right to food as a fundamental element, among others, to ensure a “standard of living adequate for the health and well-being” of each person and their family. These and other international agreements affirm that it is essential to end hunger and promote adequate food to achieve peace and development. Unfortunately, in the twenty-first century food crises continue to ignite or fuel violent domestic and international conflicts (Baviera and Bello, 2009). Even international food aid, which only began to be a systematic practice after the Second World War, remains immersed in controversies about its effectiveness in terms of promoting or limiting conflicts and development in the receiving countries (Clapp, 2012; Clay and Stokke, 2000). Although these international norms and the academic works addressing them have been important in the history of debates on hunger, food and development, they should not distract us from the fact that hunger is a structural problem that has been dragged from the modern to the contemporary world, a problem directly related to a political view of food. Let us take Europe as a vantage point. This Eurasian peninsula has lived for centuries with the problem of food supply (Vanhaute, 2011). With the emergence of the capitalist system and the development of industrialization, hunger was considered a necessary and legitimate impulse for the organization of a new society based on wage labour (Marx, 1979; Polanyi, 2000).1 As it will be exposed in this chapter, it was only with the consolidation of colonial empires, and later on in the spread of post-Second World War international division of labour, that hunger was drastically reduced among several European countries and in the Global North more widely. However, on the way to this stage, the processes of colonization conducted by the European powers since the sixteenth century gradually dismantled the various pre-existing social systems and included in them, among other things, hunger as a legitimate social impulse. This was a process that lasted for centuries, starting with small intensity and then gaining strength in the eighteenth century. Today, globalization is its continuity and has as its main driving force the powers of the Global North, with support from the elites of the Global South. In many countries that were colonies – especially those of exploitation, but also in the settlement ones – the indigenous populations are still fighting against the expansion of the social system that has arisen in Europe and which imposes hunger as a result of domination over the peripheries of the international system (Davis, 2001; Patnaik and Patnaik, 2016). By viewing European development as a protagonist in this process we do not mean that life in the world, prior its expansion, was one of abundance and freedom from hunger. However, as we reflect on the food challenge in the twenty-first century, it is impossible to ignore that, in an international system that must be implemented through institutions, laws and with the use of legitimate violence, hunger has become a legitimate or at least acceptable social impulse.

1 See Marxist category of formal subsumption of living labour under capital in Marx (1979, originally published in 1867).

The politics of food  245 When we refer to hunger as a legitimate social impulse, we are referring to the fact that in the capitalist system, all people need to work to get food, or to make money and buy food. The Marxist tradition attributes this result to the processes of primitive accumulation and dispossession of the objective conditions of existence of individuals. Hunger is the reason that ultimately sets people to work in the capitalist system. For Marx, this is the difference between slaves and wage workers: while the former could be forced to work because they were slaves of others, free workers are forced to work because they are slaves of their own needs (Marx, 1979). Polanyi’s The Great Transformation (2000), originally published in 1944, is one of the most famous texts to explore the installation of this worldview in seventeenth- and eighteenth-century England, a country that became a reference point for understanding the roots of the contemporary world. After the Second World War, advances in national and international law may delegitimize hunger as a social impulse, but in practice it remains legitimate in many places and, even when illegitimate, it is widely tolerated. The generalization of the condition of dispossession and the victory of this political vision on food and hunger, and its worldwide spread with the gradual expansion of the international system of sovereign states and capitalism, is one of the main reasons why this world, even if it can produce enough food to feed all people, experiences persistent hunger in several ways: from starvation crises, through moderate food insecurity, to the obesity epidemic, etc. (Buainain et al., 2016; Clapp, 2016). The unequal distribution of malnutrition in the world largely reflects international relations of power over the past centuries. Data from FAO et al. (2019) show that in 2018 of the 821.6 million malnourished people in the world, 513.9 million were in Asia, 256.1 million in Africa, 42.5 million in Latin America and the Caribbean, and only 2.6 million in North America, Europe and Oceania. We have seen that the COVID-19 pandemic of 2020 resulted in increased hunger in the Global North, but we do not expect people to die from starvation in those countries. The latest global attempt to stimulate development is framed as the Sustainable Development Goals, which have succeeded the Millennium Development Goals (see Chapter 20 by Currie-Alder in this volume). In fact, these agendas form part of a seven-decade sequence in which the United Nations has unsuccessfully tried to promote development. If in the first decades the focus was on the structural change of societies considered backward, by subjugating agricultural production to industrial models, from the 1990s onwards, the fundamental objective was only to fight poverty – including hunger – and to that end developing countries should focus on exporting agricultural and mineral commodities. If in the 1950s the state was the main instrument inducing development, the twentieth century ended with a broad discredit of this institution and with the strengthening of the hope that market forces would be the best weapons against poverty (and against hunger) (see Chapter 1 by Ocampo and Chapter 26 by Rivarola Puntigliano in this volume; Alves, 2015; Koehler, 2015). In the second decade of the twenty-first century, analyses such as those of Françoise Chesnais (2017) and Ladislau Dowbor (2017) recall, by similar means, Polanyi’s conclusion (2000) that market forces, without state intervention, are people grinders, a true satanic mill of social destruction in which hunger is one of its main expressions. Although the UN’s track record of promoting development is not promising, we cannot ignore what its most important global pact today says. The Goal 2: Zero Hunger, from the Sustainable Development Goals, consists of eight targets, including “By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, includ-

246  Handbook on the politics of international development ing infants, to safe, nutritious and sufficient food all year round”.2 It is clear to us that, without structurally questioning the international agri-food systems that have been established since the seventeenth century and which today are a fundamental part of international economic relations, these targets will hardly be achieved. The COVID-19 pandemic crisis and the global impacts of the war in Ukraine leaves these targets even more distant. 2.1

Hunger, Malnutrition and Underdevelopment

The agri-food issue permeates and is permeated by multiple dimensions of social reality (cultural, symbolic, political, economic, psychological, etc.) and is strongly influenced by the natural world because, like so few social objects, food retains a strong bond with internal (physiology of the human body) and external nature (the ecosystems and cycles on which agriculture depends). There is no single defining feature of food, either nutritional or economic, or cultural, that ultimately determines it, as has been widely discussed among anthropologists, historians and social scientists (Malinowski, 1948; Barthes, 2006; Flandrin, 1987; Harris 1985). How then to identify the most relevant elements to be able to influence them? One way is to go back in time and understand how power relations influenced meanings. In the nineteenth century, for instance, when racist theses emerged in all their potency and were based on what was considered the best science available, some peoples were seen as naturally inferior to others. This perspective underwrote several types of policies: from the dehumanization of human beings that could be massacred, to the domination of backward peoples to tutor them to higher stages of civilization. These processes do not occur simply by imposing external actors, of white men, but were also assimilated by the dominated peoples themselves, by the mestizo elites. The comparison between the bodies, not only of their colours, but of their sizes, health and beauty (according to their own aesthetic criteria), contributed to establish mental patterns of domination that ended up being reproduced by the dominated. Under those conditions, paraphrasing the Brazilian philosopher and educator Paulo Freire (1981), in the absence of a liberating education the goal of the oppressed is to become the oppressor. This type of domination can be seen in food relations. Santos and Berruezo (2021), respectively, examined how maize was subjugated as a “plant of civilization” in the Braudelian sense (Braudel, 1982), between the eighteenth and nineteenth centuries, and was considered an inferior food, intended for animals or inferior human beings, that is, for non-white Europeans. This resignification of maize in the Americas was introduced by the colonizers and later incorporated by the mestizo elites who, in the Mexican case, came to believe the consumption of maize would biologically limit the development of the Mexican people. Parallel to that, wheat maintained its status as the human food par excellence (Fiat Panis – let there be bread – is the FAO motto). The French historian Fernand Braudel suggests that the fate of human civilizations is linked to the most mundane materiality such as food, as part of what he called the structures of everyday life. Thus, a plant of civilization – like maize, wheat or rice – can fall into disuse and even be forgotten when the civilization who cultivated it succumbs to internal, ecological or conquest crises: “In short, what we may think of as the success of a plant may also, perhaps, largely be the success of a culture” (Braudel, 1982, p. 107). In this sense, maize’s history is an interesting case to understand culinary colonialism, or any other colonialism that erases local identities in



2

See https://​www​.un​.org/​sus​tainablede​velopment/​hunger/​.

The politics of food  247 the capitalist commodification process, but also the fights, resistances, and the victories of the subaltern civilizations and its material culture. The fight against racism and coloniality through food is another example. It can be called ‘hunger, not inferior race’ (Lima, 2000). At the beginning of the twentieth century, researchers focused on the lack of development in Brazil and, more specifically, in regions such as north-eastern Brazil, a territory marked by drought. The dominant racist theses attributed the failure of these peoples to their genes. However, an epistemic community was able to demonstrate that the delay in the development of the biological body and societies is not determined by genetic roots, but by inadequate nutrition – among other factors. In other words, hunger impaired those people’s physical and cognitive potential development. People were unproductive not because they were naturally lazy or because they had limited minds by nature. The fact was that they lived in a sub-potential state caused by the absence of adequate food and nutrients. Josué de Castro, who was President of the FAO Executive Board between 1952 and 1956, was one of a group of researchers who began to scientifically establish the relationship between food and development (Castro, 1984). They have established the notion that people, food and development constitute a circular relationship, a spiral that expands or contracts in the face of established dynamics. In their view, the first step should be to feed the population well. From there, societies could thrive. Without adequate food, they would go into an energy-saving mode and could function so precariously to the point that human bodies – still alive – become food for microbes. The books El Hambre by Argentine Martín Caparrós (2015) and Destruction massive: Géopolitique de la faim by the Swiss Jean Ziegler (2013), offer us vivid descriptions of these evil processes. Thus, the science of the past century made it clear that the availability of food was a necessary condition for a healthy life, but not a sufficient one. It was necessary for people to ingest certain types of food, in certain combinations, so that the best nutrition of the body could occur. The food should not be monotonous. It should be varied, composed of various fresh foodstuffs. For this, public policies have become indispensable, both to educate the palate, and to direct the production and distribution of certain sets of foods. The problem is that there is a war between the science of nutrition for a healthy life and the corporate interests of the agri-food industry, which profits from a food system that sickens people and the environment (Maluf, 2007; Nestle, 2013). Therefore, we should not fall into the mistake of attributing individual or public health problems, or environmental degradation to people’s food choices. Although at some level diets can be chosen based on the will of the one who eats, for most of the world’s population the options have always been severely limited by political, economic, business, and social structures. Most of those structures stem from the formation of the international system of states and the continuous expansion of capitalism, as discussed by Jha and Yeros (2019). In this sense, reports published in the medical journal The Lancet generated a new impetus on the reflection around diets (Willet et al., 2019; Swinburn et al., 2019). The report of the multinational team headed by Swinburn (2019) gained worldwide attention by postulating that we currently live in a ‘global syndemic’, that is, a worldwide synergy of pandemics. They are: hunger, obesity and climate change. The authors see connections between these three crises that, in short, harm the production of healthier foods and push people, both in the Global North and the Global South, to consume diets that are insufficient in terms of quantity and poor in terms of nutrients. Under these conditions, not only individual health is compromised, but also public health and economic performance and, consequently, the potential for the development of societies.

248  Handbook on the politics of international development The FAO et al. (2019) also reports a pessimistic perspective for the relations between food and development. The State of Food Security and Nutrition in the World 2019, published before the 2020 COVID-19 pandemic, pointed out that the global trend of falling prevalence of undernourished people was reversed in 2015 and slowly rose. Almost 11 per cent of the world’s population was undernourished, which corresponds to more than 820 million human beings. On the other hand, when the number of people who had irregular access to food was observed, a category called ‘moderate and severe food insecurity’, the number of people reached almost 2 billion. According to the FAO, “People who are moderately insecure may not necessarily suffer from hunger, but they lack regular access to nutritious and sufficient food, putting them at greater risk of various forms of malnutrition and poor health” (FAO et al., 2019, p. 3). This is a fundamental point for thinking about the relationships between food and development. Focusing on women makes clear the implications of hunger and inadequate nutrition for the development of people and societies. In fact, these discussions are inseparable from the gender issue (see Chapter 17 by López-Uribe et al. in this volume). The space where food production takes place has been or is usually, historically, a field of violence. However, in recent decades the conditions of poverty and hunger of rural populations, which mainly affect women and traditional communities, have been aggravated by the growing violence, in the form of repression, eviction, expropriation and murders linked to the dispute over natural resources and territories (Elver, 2015b). The Argentine Maristella Svampa (2019) conceptualizes this current process as neo-extractivism, affirming that progressive governments also stimulate it. In the specific case of rural women, the damage is enormous. In a fairly conservative estimate, it is possible to attribute to women the production of 50 per cent of food in the world. But at the same time, “in every continent, the prevalence of food insecurity is slightly higher among women than men, with the largest differences found in Latin America” (FAO, 2019, p. 3). That is, women constitute most of the hungry population. Hilal Elver, United Nations Special Rapporteur on the Right to Food, identifies the set of gender discriminations that affect women in particular. On the one hand, women are linked to reproductive work, in which they produce part of the diet. Women are in charge of the family’s food supply and preparation, which in the case of rural women includes food production. However, women are discriminated against when accessing food, education, the labour market, the ownership of the land they work on, the inputs, the production technology and the productive credit. In many places they are the main food producers, but they are excluded from a significant part of agri-food systems and are highly likely to be the most affected by the consequences of climate change (Elver, 2015b). Women’s position in the global distribution of food reverberates in their gestational capacity, in the health of babies and in the development of children. Therefore, generations may be trapped into an underdevelopment cycle. According to FAO et al. (2019, p. 27), “Maternal and child undernutrition contributes to 45 percent of deaths in children under five” and “one in seven live births, or 20.5 million babies globally, suffered from low birthweight in 2015” (FAO et al., 2019, p. 28). This is an extremely risky condition because babies that are born underweight are more likely to die in the first month of life and survivors are more likely to suffer from deficiencies in physical growth and cognitive development. In addition, these survivors are more prone to obesity and diabetes, and these are diseases with intergenerational transmission. Worldwide, about 200 million children have suffered from some serious physical growth problem and just over 40 million children up to five years old are overweight. Note that the latest data from the FAO et al. (2019) on anaemia in women in reproductive age

The politics of food  249 is scary: one in three women between 15 and 49 years suffered from low haemoglobin in the blood. This is an extremely dangerous disease for the immune system of mothers and babies, and that also compromises the development of children. Anaemia, like obesity and diabetes, is a disease that can be acquired or inherited. In many cases, prevention and treatment of these three diseases can be carried out with an adequate diet in terms of nutrients. However, in 2016, about 13 per cent of the world’s adults were obese. Obesity, a recent pandemic that affects developed and developing countries, carries several health risks: Among adults, obese people have higher rates of mortality due to an increased risk of cardiovascular disease, cancer and diabetes. Children who are overweight are at a higher risk of type 2 diabetes, high blood pressure, asthma and other respiratory problems, sleep disorders, and liver disease. They may also suffer from the psychological effects of low self-esteem, depression, and social isolation. Overweight and obesity during childhood often persist into adulthood, leading to lifelong health problems. (FAO et al., 2019, p. 31)

The FAO et al. (2019) and the Swinburn et al. (2019) reports highlight that these public health problems, among others, are extremely costly for the economy. For example, malnutrition can impose a reduction in the GDP of Africa and Asia of about 11 per cent, approximately USD 3.5 trillion per year. Global economic damage related to obesity alone is expected to add up to about $2 trillion a year, from lost productivity to health care costs. “These costs represent 2.8 percent of the world’s gross domestic product (GDP) and are roughly the equivalent of the costs of smoking or armed violence and war” (Swinburn et al., 2019, p. 793). If the overall costs of obesity, undernourishment and malnutrition are added up, the economic losses would be around USD 3.5 trillion per year. The magnitude of these values is even more evident when we compare them with other numbers. For example, the World Bank estimated that an investment of “$70 billion over 10 years would be needed to achieve the WHO global targets for stunting, anaemia in women, exclusive breastfeeding, and upscaling the treatment of severe wasting by 2025” (Swinburn et al., 2019, p. 807). Note that while nearly 50 per cent of the world’s population survives miserably on less than $5.50 a day, there are 2,200 billionaires whose combined wealth is greater than that of 4.6 billion people combined. As most of the food consumed must be bought on the market – and this does not necessarily have to be so – some argue that hunger is basically a matter of income. Even so, there is no global policy on income redistribution to feed people. We should not lose sight of the fact that both the economic damage and biological deficiencies caused by the lack of adequate food are transferred between generations, contributing to the maintenance of a state of underdevelopment. Structurally ill bodies and societies will never be able to enjoy a productive and happy life, just as they will not be as efficient as they could be in seeking solutions to their individual and collective problems. Moreover, the reflection on food and development should consider that the tripod of economic growth, social justice, and environmental sustainability – the tripod that forms one of the most classic definitions of sustainable development – is actually a trilemma. That is, it seems physically impossible for the planet to expand the three dimensions at the same time (Martine and Alves, 2015). The international agri-food system is one of the main contributors to the climate crises as well as one of the sectors that will be most affected by it due to its sensitivity to climate variables. In the face of global warming and changing water patterns, among other factors, there is (1) a reduction in food availability, a decrease in productivity, the destruction of agricultural land

250  Handbook on the politics of international development or forced migration of rural populations; (2) an increase in food prices; and (3) a drop in the nutritional content of food (De Schutter, 2014; Elver, 2015a). In addition, it is important to take into account that the consequences of the ecological catastrophe are unevenly distributed and that societies that have contributed the least to global warming are the ones that will be most affected, especially in developing countries. These include rural populations, small farmers, rural women, and traditional communities (Elver, 2015a).

3.

FOOD IS NOT JUST ABOUT EATING: PRODUCTION, DISTRIBUTION AND POWER

Food is fundamental for development, and neither of them occur in a vacuum. Since the mid-1800s there has been a narrative about the trajectory of the agri-food issue in modern societies. Throughout the twentieth century, it remained generally deterministic and linear in terms of mythification of the European experience. The narrative is a set of conventions in the modern worldview, based on myths about the past and illusions about the future (Moyo et al., 2013; Patnaik, 2011). Within this narrative, the evolutionary trend of agrarian and food relations consists of three interconnected and more or less simultaneous processes. The first element refers to the transformations in the rural world resulting from the advancement of the modern economy. Cities and industry become central to the conception of development, while the rural world suffers the imposition of new needs and functions, such as the need to increase productivity to meet the growing demand for food (wage-goods), raw materials and the workforce for the urban industry. It is the myth of industrialization or industrialization as an end in itself, as Moyo and his associates argue (Moyo et al., 2013). In this perspective, successful industrialization needs to be accompanied by an equally successful agricultural revolution that transforms the production for self-consumption into the production of inputs and food for the market, one which replaces family production units with large-scale capitalist agriculture, and family work with wage labour, as Karl Kautsky (1968) wrote in 1898. The change in land property relations, the processes of land enclosures against land community property, and agrarian reform against feudal land property are fundamental to this revolution. The success or failure in carrying out these transformations became indicators of the level of development of a society, or the degree to which the transition to a modern, developed economy has been achieved. The second element is the industrialization of agriculture or how food tends to be produced. The increase in agricultural productivity requires, together with the modernization of property relations, the continuous rationalization of food production. This is a process that happened slowly in the nineteenth century, when the achievements of mechanics, chemistry and plant and animal physiology were adopted in agriculture, and some machinery was developed, such as sowers and fertilizer distributors. This was agriculture as science, Kautsky would say (1968). But the most important leap happens in the 1960s with the so-called green revolution that incorporates chemical fertilizers, agrochemicals (insecticides and herbicides), modified (hybrid) seeds and gasoline engines for machinery and irrigation systems. Here, the United States is the paradigmatic example (Goodman et al., 1990; Lima, 2018). They would also be part of the subsequent biotechnological revolution and the most recent attempts to develop climate-smart agriculture (Stabinsky, 2014), and so-called digital agriculture or agriculture 4.0 (De Clercq et al., 2018).

The politics of food  251 The important thing here is not the technology itself, but the meaning contained in it: the productivist convention inherited from the Malthusian paradigm. The British theologist Thomas Malthus (1766–1834) was one of the most common references at the time, influencing the thinking of the politics of food regarding the relationships between the feeding needs of the human population and the social and natural capacity to produce food. Malthusianism thought, in its original formulation, consisted of pessimism about the human condition, in which hunger would be an insurmountable condition and, in fact, would be the mechanism of natural regulation of the human population (Ziegler, 2013). Modern societies subdued this pessimism with faith in technological progress that would allow food production to continuously increase, that is, produce more and more food (De Schutter, 2014). The third element of the narrative is the convergence of dietary patterns in the modern diet or which foods tend to be produced and consumed. As societies develop, food consumption changes. Christian Lorenz Ernst Engel, a nineteenth-century German statistician, noted that as income increases, food spending increases in absolute terms but decreases in relative terms (Engel’s Law). Thus, the level of food expenditure as a proportion of income is used as an indicator of the level of development of a country or group of families (Malassis and Ghersi, 1992, p. 53). Food products are generally considered normal goods, that is, as income increases, their consumption increases, but to a lesser extent. However, not all foods are the same and, within a food group, each product behaves differently. Louis Malassis, a French agronomist, groups changes in food consumption into three laws: the food spending law, the energy consumption law, and the substitution law (Malassis and Ghersi, 1992, p. 67). The loss of relative importance of food expenditures (spending law or Engel’s Law) is accompanied by a change in the structure of food consumption: food consumption expressed in calories tends to increase with higher income, and increased energy consumption is caused not only by the rise in the amounts of food consumed, but also by the modification of its sources. Generally speaking, the studies agree that the change in food intake responds to the following changes: (a) substitution of calories of plant origin by calories of animal origin; (b) the replacement of cheap agricultural calories (cereals, legumes and tubers) with high-value agricultural calories (animal products, fruits and vegetables); (c) substitution of agricultural calories by processed calories; (d) replacing common products with ‘convenience’ products containing more non-agricultural (industrial or service) work and requiring less preparation time; (e) expansion of consumer choice opportunities in time (off-season) and space (food from other regions) (Malassis and Ghersi, 1992; Bermudez and Tucker, 2003; Regmi et al., 2008). While this narrative about agri-food modernization is not false – most of it can be verified empirically – the problem is that it remains on the surface of phenomena and without researching the basic trends that end up naturalizing the specific characteristics that the agri-food issue assumes throughout the sinuous historical processes, full of struggles, oppressions and contradictions. As John Bellamy Foster points out, it is necessary to develop a deeper perspective to locate the characteristics and trends of the current agri-food system in the material conditions underlying capitalist societies (Foster, 2016). 3.1

The Capitalist Agri-Food System: Food and Power

There are challenges to the Eurocentric and linear narrative of agri-food modernization presented in the previous section coming from many fronts, such as from a renewed theory of

252  Handbook on the politics of international development imperialism (Moyo et al., 2012; Patnaik and Patnaik, 2016) or from the multiple developments of the theory of agri-food regimes and their critics (Araghi, 2003; McMichael, 2014; Niederle and Wesz, 2018). Without detaining us in the debates and differences between the different authors of these theoretical approaches, it is possible to identify, in general terms, the key fissures to deconstruct the modernist narrative of the agri-food issue and the basic tendencies of configuration of the capitalist agri-food issue. A first fissure of the modernist narrative lies in the absence of the role of imperialism in the processes. The modernization of agriculture and food has been framed from the beginning in the relations of dominance and exploitation of one region over another. The destinies of nations are intertwined within the history of the capitalist system. It is not, as the Eurocentric narrative intends, endogenous processes whose success or failure depends on the ability of each society, or on the national effort to transform its agriculture and release the forces for development: “the heart of the matter is the historic role of global primitive accumulation in the transition to industrial capitalism” (Moyo et al., 2013, p. 99). The European dependence on the influx of food and raw materials from tropical lands and their subdued populations was not limited to the first moments of modernity, but it is a condition that is preserved and reproduced throughout modern history, as stated by Utsa Patnaik (2011). In essence, the author points out, it is not a coincidence that peripheral regions have, to a greater or lesser extent, a tropical or semitropical climate, which allows a great diversity of food plants and two or more periods of cultivation throughout the year, unlike Europe, whose lands are under snow in the winter period: “Most people in the global South have very little idea how dependent the standard of living in advanced countries actually is on imports from their own richer, botanically diverse lands” (Patnaik, 2011, p. 16). Technological development, she adds, can solve some of the climate limitations of northern countries, but always to a limited extent (Patnaik, 2015). This dependence is not only silenced in developmental and modernist narratives but presented as its opposite: societies in the capitalist periphery need to export primary goods to boost their development (Patnaik, 2011, p. 16). The primary exporting productive specialization carries extremely heavy costs for exporting societies because the land is not a product of human labour nor is its productivity homogeneous. It is not uncommon for an increase in food export capacity to be accompanied by a productive system that turns its back on the needs of the majority of the population. On the contrary, it is common to observe the spoliation and pollution of nature, the possibility of a reduction in the food available in the internal market, the increase in hunger or the deterioration of the working and living conditions of the majority of the population (Osorio, 2012). As a result of the first fissure, a second one can be identified in the supposed loss of importance of the sector or its secondary role in the face of industrialization in the development of capitalism. Without taking the proper view of industrialization, silence on international food relations hides not only imperialism, but also the very centrality of food and agriculture: “Historically, the rise and consolidation of capital has depended centrally on food” (McMichael, 2014, p. 839). It is no coincidence that deep financial and economic crises have never happened without a previous food crisis, such as in 1929, 1973–74, 2008–11, and that it tends to last even after the financial crisis has dissipated (Patnaik, 2011, p. 9). The centrality of the agri-food issue lies in the fact that food is one of the main determinants of the value of the workforce:

The politics of food  253 This perspective brings agriculture and food to the centre of analysis not as a result of a postmodern retreat into locality, anti-urbanism and neo-populist nostalgia for rurality but precisely because global agriculture and food are inseparable from the reproduction of labour power. (Araghi, 2003, p. 51)

As a result, different actors, mainly, but not exclusively states, will aim to project power through the establishment of food routes, productive specializations, markets and food consumption patterns: “Food and agriculture is about world power no less than world accumulation … Each world hegemony provided a new model of agricultural development” (Moore, 2015, p. 459). It could thus be studied as the succession or coexistence of different arrangements or regimes, of agri-food relations. That is, particular configurations of the questions about who, how, what, and for whom food is produced on an international scale. In the long term, the changes or diversification of these arrangements preserve a political view on the centrality of food in the process of social reproduction, so that each arrangement will seek to obtain cheap food (Araghi, 2003; Moore, 2015). Reducing the value of the workforce and increasing the accumulation of capital will be the hidden, Malthusian-minded reason for constant demand to increase agricultural productivity and, as a result, of the ever-constant increase in the amount of food: “The road to the modern world has been paved with Cheap Food” (Moore, 2015, p. 458). But cheap food is not only a quantitative phenomenon. Diets and food consumption patterns are produced and reconstructed as a result of this principle: food engineering is used to produce high-value products with cheap inputs, the so-called ultra-processed foods (Van Der Ploeg, 2010) and global food chains supply affluent markets regardless of the season with the so called ‘food from nowhere’ (McMichael, 2014). In this perspective, food becomes a module, a component to be handled in social relations under capitalism, and not as an integral part of the human being. Finally, a third fissure of the myth of agri-food modernization is that, contrary to the prognosis and continuous aggressive campaigns in successive waves of primitive accumulation, the peasant or family production units were not extinguished. In some cases, they have been strengthened, either with processes back in the field or recampenization, or as an alternative to the civilizing, economic, energy, food and ecological crises of our time (Moyo et al., 2013; Niederle and Wesz, 2018). For Philip McMichael, the current dynamics of the agri-food regime develops in the field of the struggle waged between peasant political culture and the capitalist logic of large agri-food companies. This is the counter position between the logic that favours the production and consumption of now-here foods and the political cultures of foods that are embedded socially and ecologically (McMichael, 2014, p. 457).

4.

FINAL REMARKS: THE POLITICS OF FOOD AMIDST THE COVID-19 PANDEMIC

Food politics is connected with the development debate in at least two essential dimensions. First, food should be seen as an integral element of the human being, an inseparable part of public health, the environment and prosperity. Second, food production has been operated under the dominant influence of the capitalist system, which always aims to reduce its price through increased production, nature plunder, trade regimes and through deteriorating the nutritional characteristics of foods. As configured, these two dimensions have been unable to feed all people and to contribute to the ecological preservation of the planet, even though the

254  Handbook on the politics of international development technical conditions exist for this. While large-scale agricultural production is environmentally destructive, food distribution does not respect the human rights written into international conventions. The arrival of the COVID-19 pandemic in 2020 has amplified these incompatibilities. In just a few months, millions of people in developed and developing countries have been dragged into poverty and hunger. There was no political action close to the minimum necessary to strengthen people’s nutrition as a way to strengthen immunity to fight against this powerful flu. It is estimated that the number of people in famine situation will increase more than 80 per cent compared to the pre-pandemic scenario, totalling 270 million human beings. In practice, it is possible that between 6,100 and 12,200 people died of hunger daily by the end of the year (OXFAM, 2020). What began as a public health crisis is becoming increasingly a food crisis. While agricultural producers in several countries destroy food because the market is unable to profit from it, the profits of corporations in the agri-food industry distributed, in 2020 alone, about USD 18 billion to shareholders (OXFAM, 2020). On the other hand, for at least three decades experts have criticized the potential of the current international agri-food system to produce zoonotic crises of this magnitude (Wallace, 2016). However, instead of strengthening preventive and protective measures, what we have observed is the expansion of trade liberalization agreements that increase and intensify the current food production system based on grains/meat and sugar complexes. Finally, as we reflect on the place of food on the theme of development, we understand that there is no possible way out but by changing the worldview about the role of food for people and societies. This change must be able to modify power relations so that actors, institutions, and policies may mobilize resources to direct the production and distribution of food on principles based on human rights, social justice, and environmental preservation.

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256  Handbook on the politics of international development Osorio, J. (2012). ‘América Latina: o novo padrão exportador de especialização produtiva–estudo de cinco economias da região’. In C. Ferreira, ‎J. Osorio, ‎and M. Luce (eds.), Padrão de reprodução do capital: Contribuições da teoria marxista da dependência. São Paulo: Boitempo. OXFAM (2020). O Vírus da Fome: como o coronavírus está aumentando a fome em um mundo faminto. São Paulo: OXFAM BRASIL. Patnaik, U. (2011). ‘The agrarian question in the neoliberal era’. In U. Patnaik and S. Moyo, The Agrarian Question in the Neoliberal Era: Primitive Accumulation and the Peasantry. Cape TownFahamu/ Pambazuka. Patnaik, U. (2015). ‘The origins and continuation of first world import dependence on developing countries for agricultural products’. Agrarian South: Journal of Political Economy, 4(1), 1–21. Patnaik, U. and P. Patnaik (2016). A Theory of Imperialism. New York: Columbia University Press. Polanyi, K. (2000). A grande transformação. Rio de Janeiro: Campus. Regmi, T., H. Takeshima, and L. Unnevehr (2008). Convergence in Global Food Demand and Delivery. Washington, DC: ERS-USDA. Santos, A. and J. C. de S. Berruezo (2021). ‘Maize and the world market: A history of racism, commodification, and resistance’. In T. Lima and A. Costantino (eds.), Food Security and International Relations: Critical Perspectives from the Global South. Stuttgart: Ibidem-Verlag, Editora da UFPB. Sen, A. (2008). Desenvolvimento como Liberdade. São Paulo: Cia das Letras. Stabinsky, D. (2014). Climate Smart Agriculture: Myths and Problems. Rio de Janeiro: Heinrich-Böll Foundation. Svampa, M. (2019). Neo-Extractivism in Latin America: Socio-Environmental Conflicts, the Territorial Turn, and New Political Narratives. Cambridge: Cambridge University Press. Swinburn, B. et al. (2019). ‘The global syndemic of obesity, undernutrition, and climate change: The Lancet Commission Report’. The Lancet, 393, 791–846. Van Der Ploeg, J. (2010). ‘The food crisis, industrialized farming and the imperial regime’. Journal of Agrarian Change, 10(1), 98–106. Vanhaute, E. (2011). ‘From famine to food crisis: What history can teach us about local and global subsistence crises’. Journal of Peasant Studies, 38(1), 47–65. Wallace, R. (2016). Big Farms Make Big Flu: Dispatches on Infectious Disease, Agribusiness, and the Nature of Science. New York: Monthly Review Press. Willet, W. et al. (2019). ‘Food in the Anthropocene: The EAT–Lancet Commission on healthy diets from sustainable food systems’. The Lancet, 393, 447–492. Ziegler, J. (2013). Destruição em massa: geopolítica da fome. São Paulo: Cortez.

17. The politics of the global gender agenda: a pathway to empowerment María del Pilar López-Uribe, María Alejandra Chávez, María Paula Neira Ahumada and Paulina Pastrana

INTRODUCTION Gender1 equality matters as it is fundamental for economic growth, stability and social development. According to the World Economic Forum in 2019, only 6.9 percent of the countries in the world are close to achieving gender equality. The first initiatives towards gender equality were implemented in 2006 in alliance with the Millennium Development Goals, when the Global Gender Gap Report was initiated to study gender disparities in 153 countries over time. This report included the result of the Global Gender Gap Index, a World Economic Forum initiative to measure gender equality across four main areas: economic participation and opportunity, educational attainment, health and survival, and political empowerment. The results of this index determine a significant part of the construction of the gender agenda worldwide.2 The implementation of a unique global gender agenda is difficult to implement due to the fact that each country’s social context requires different public policy priorities. For example, the 2019 Global Gender Gap Index shows that most countries are close to achieving gender equality in access to health services. However, many countries in Africa still face significant challenges in this area (World Economic Forum, 2019), which implies that the agenda in these countries should be more focused on improving access to health services and removing harmful laws or practices that damage women’s and girl’s health. In addition to the main dimensions of the Global Gender Gap Index (Education, Work, Politics, and Health3), there

1 The definition of the gender agenda is not static. Its organization and structure are subject to international compromises and it depends on each country’s situation and priorities regarding gender disparities. It is appropriate to emphasize that we recognize gender as the social and cultural construction of identity – either female, male, or other – that is not related to people’s sex. However, this chapter focuses on gender as female identity. Also, we recognize, according to the concept of intersectionality, that the information about women presented in this document is not representative for the whole female population, not even if the data are from the same country. In other words, despite not incorporating an intersectional approach, we acknowledge that gender equality is further away for women under more layers of oppression; e.g. it is closer for white rich adult women in developed countries, but further away for black, poor, trans, and indigenous women in any countries. As well, we recognize the need for a diverse age gender agenda that removes economic, legal, and social barriers to provide the necessary foundations for a peaceful and equitable world for all women and girls. 2 The 2019 Global Gender Gap Index also analyzes gender disparities in the professions of the future. We mention this aspect briefly in this chapter as we aim to focus on the actual gender needs. Future jobs do not constitute a significant part of the actual gender agenda. 3 For more details, see the full report available at https://​www​.weforum​.org/​reports/​gender​-gap​ -2020​-report​-100​-years​-pay​-equality.

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258  Handbook on the politics of international development are other spheres concerning gender equality that in the twenty-first century need to be addressed, such as post-conflict, agriculture, and reduction of sexual violence. In general, countries with the highest gender equality register a small gap in the Gender Gap Index’s four dimensions. Northern Europe countries are at the top with the best performance, and the Middle East is at the bottom. This result is attributed to differences in support of gender equality at home, work, and public life, as well as in the effectiveness of policies that promote this goal. Nordic countries were the first to implement women’s suffrage and to introduce legislation that prohibited dismissal from employment due to pregnancy. These facts have led to an increase in women’s participation in the labor market in Nordic countries, especially in leadership positions (OECD, 2018). In contrast, women in the Middle East lag behind gender equality outcomes compared to the rest of the regions. For example, in 2015, only 27 percent of young women participated in the labor force versus 77 percent of men, according to the International Labor Organization (ILO). The situation is more challenging as young women with higher education have fewer chances to enter the labor market than men with less education. As a response, labor market policies for young women have been implemented. They show positive short-term effects on their self-esteem and entrepreneurial attitudes, but there is no evidence of long-term effects (Dalacoura, 2005). In post-conflict societies, women play an active role in increasing confidence and trust within former war zones by creating networks to protect the environment against illegal mining and other non-legal activities (Red Nacional de Mujeres, 2015; United Nations, 2015). Moreover, evidence suggests that the most critical changes in women’s political engagement have occurred in countries that came out of major conflict (Tripp, 2015). Post-conflict Liberia had the first elected woman president in Africa, Uganda had a woman vice president for ten years, and Rwanda has the highest rates of female legislative representation in the world (UN Women, 2019b). A big challenge that remains under discussion in women empowerment is access to information and the chance to fill managerial positions worldwide, by changing institutions that perpetuate women’s inferiority. However, networking has played an essential role in building social capital. Impoverished women have used networks to transform power relations and have achieved new access to land, bargaining skills, participation in agriculture, and other economic activities, including sisterhood4 that help to create organizations or alliances of women for cooperation. Finally, sexual violence against women is a healthcare and human rights concern that will not be solved unless patriarchal behaviors are removed from culture and women have access to justice, and education to identify and prevent sexual violence. This chapter discusses the most important achievements in gender equality over the last 20 years in a number of aspects: politics, health, education, work, post-conflict, agriculture, and reduction of sexual violence. It also includes the challenges that remain under constant debate. Furthermore, it is relevant to emphasize the relation between economic development and gender equality. According to Duflo (2012) development alone can play a major role in driving down inequality between men and women. On the other hand, Kofi Annan, former Secretary General of the United Nations, expressed the view that to accomplish development it is necessary to achieve gender equality including eliminating poverty, reducing infant mortality, and



4

Sisterhood is companionship among women to achieve equality goals.

The politics of the global gender agenda  259 eliminating the gender gap in different areas (United Nations, 2005). For example, when economic development reduces poverty the condition of women improves and gender inequality reduces. In other words, economic development reduces the excess vulnerability of women in different areas such as mortality rates, the resources that are given to girls and women in comparison to men, health attention and treatment, and expanding their opportunities. However, economic development is not sufficient to accomplish equality, and policy action is necessary to stimulate further development (Duflo, 2012). Policies that support women’s access to land, bank loans, property rights, education, and job opportunities are essential for development and gender equality.

POLITICAL EMPOWERMENT: POLICIES TOWARDS WOMEN REPRESENTATION AND PARTICIPATION Women are severely underrepresented in politics. The Global Gender Gap Report shows that this is the area where the least progress has been made. In fact, considering the sum of the seats of all parliaments in the 153 countries covered by the Global Gender Gap Index, only 25 percent are occupied by women (World Economic Forum, 2019). Besides, only 24 percent of national parliamentarians are women in a world population where they represent 49.5 percent (World Bank, 2019). There are countries that have never had a woman in political positions. In terms of performance by region, Europe has the highest percentage of women in parliaments. In contrast, the MENA (the Middle East and North Africa) and Asia Pacific regions have the worst performance on this matter. This result may not be related to economic performance, but cultural disparities in women’s recognition as capable political leaders, limiting their possibility to be candidates, although some cultural factors are associated with different levels of representation (Ruedin, 2013). In addition to women’s participation, it is important to investigate whether women are more likely to vote for women and why. Campbell and Heath (2017) report that women with strong feminist views vote for other women who represent feminist values and perspectives. Additionally, evidence suggests that voters who are worried about levels of honesty and integrity in government have been more likely to vote for women candidates (Dolan, 2004; McDermott, 1998). Although women candidates often believe they have to be better than men to succeed (Fox and Lawless, 2010). However, women represent 36 percent in local government and 25 percent in national parliaments (United Nations, 2020a). Although women are perceived to be better at managing they are not represented fairly in leadership roles. In terms of political participation, women’s suffrage remains unequal compared to men’s even though this has already been implemented in most countries. This issue might be related to women’s lack of knowledge of political functioning in rural areas (Bleck and Michelitch, 2018), physical access to polling stations, unsafe conditions to vote, or ignorance from local authorities about those barriers. These challenges have been addressed through structural changes in public policy as well as in women’s leadership inside their communities, which can increase their aspirations and their participation in politics. Three particular aspects of the political gender agenda have been adopted by countries worldwide: quotas, modeling female leadership, and political training programs. The implementation of quotas has had different outcomes worldwide. In Argentina, the quota law of 1991 showed that reserved seats for women bolstered the stereotype of women’s

260  Handbook on the politics of international development low leadership capacity (Franceschet and Piscopo, 2008) while in India, the restructuring of Panchayati in 19935 led to significant improvements in the provision of public goods (Chattopadhyay and Duflo, 2004). Although this policy has shown different outcomes, most of the literature has proven that such initiatives make communities more likely to associate women with positive leadership and increase their probability of being re-elected (Beaman et al., 2009). The effects are higher when “tandem quotas”, focused on female minorities such as indigenous, black, or farmers, are implemented (Hughes, 2011), which shows that reserved seats for women have positive outcomes in terms of representation. However, men’s power-seeking behavior in politics harms female representation and, therefore, leads to gender political inequality (Okimoto and Brescoll, 2010; Good et al., 1989; Kaufman, 1994). Hence, the public policy design of the implementation of quotas is still a challenge. Several studies6 have analyzed whether political leadership is driven by cultural norms that manipulate the environment and, therefore, political aspirations (Richter, 1994). Female politicians with this kind of political leadership serve as role models inspiring other women to political activity. In fact, quotas have had a positive impact on young women as they are perceived to be a source of leadership and freedom (Campbell and Wolbrecht, 2006). More specifically, Wolbrecht and Campbell (2007) found that the more female members of parliament there are, the more adolescent girls discuss politics with friends and intend to participate in politics as adults. According to the same source, adult women are more likely to discuss and participate in politics. These results are essential to the creation of political and gender consciousness in young women and to contribute to gender equality. Finally, if female political participation is promoted by means that goes beyond exercising the right to vote, gender disparities can be corrected (Goldenberg, 2008). Promoting mentorship, confidence building, media training, and political campaign education are all effective tools to increase women’s political aspirations and efficacy (Foos and Gilardi, 2020). A common approach is to encourage and support spaces that enable women to organize as leaders and engage with local government to achieve change in their communities. For example, the Huairou Commission and Groots International have developed an approach that helps women’s organizations do this in Uganda, Kenya, and Russia through dialogue methods and implementing them in their local contexts, empowering them as leaders.

HEALTHCARE: EMPOWERMENT THROUGH INFORMATION AND ACCESS There has been a great improvement in women’s life expectancy over the years (World Bank, 2017b). This result is associated with increased access to safe water and sanitation, improved public health infrastructure, and child and maternal nutrition (Hosseinpoor et al., 2012). According to the World Health Organization, there are six gender indicators to track women’s performance and access to health over time: maternal mortality ratio; births attended by skilled

5 Due to the 73rd Constitutional Amendment Act, India had a restructuring in its Panchayati Raj institutions. This paved the way for a fundamental change in the way public goods were delivered in rural areas as a percentage of women was elected for perform this task. See Chattopadhyay and Duflo (2004) for more details. 6 See Leadership Studies Organization (LSO) for more information.

The politics of the global gender agenda  261 health personnel; new human immunodeficiency virus (HIV) infections; family planning with modern methods; adolescent birth rate; and coverage of essential health services, including reproductive and maternal health. Regarding maternal mortality, available information shows that levels have declined worldwide, although some sub-Saharan African countries still maintain high indexes (UNICEF, 2015).7 The causes for these deaths can vary from hemorrhage to pre-existing medical conditions and even unsafe abortion, all of which are strongly related to healthcare services and infrastructure. Although midwives in Africa have a positive effect, health professionals have highlighted the importance of health units, running water, and electricity to prevent maternal deaths (Mbonye et al., 2007). Besides, the information regarding maternal mortality in Africa is insufficient. This fact prevents ministries from implementing programs, and analyzing costs, as well as restricting women’s access to available healthcare resources (Mustapha et al., 2019). Therefore, a possible solution may be the implementation of cost-effective programs, based on trustworthy information and including women in deliberative roles in the design of the public policy along with active participation. Experiences in Nepal and Ethiopia show that maximizing services of community health workers through the provision of healthcare facilities – such as mobile phones and bicycles – is an effective way to reach underserved populations that are not able to access healthcare services, particularly in rural areas (Tura et al., 2018). The reduction of maternal and newborn deaths is strongly correlated with having skilled health personnel (WHO, 2016). Access to skilled care during pregnancy and childbirth is vital to ensure prevention, detection, and management of complications. It is important to consider that skilled health personnel are not the only essential input to prevent maternal mortality. However, these services may not adequately reflect women’s access to good quality care, mainly when severe complications arise. There are two main problems that arise from the presence of skilled health workers. First, the definition of a skilled health professional is different in many parts of the world, which directly implies that quality is not the same everywhere. Therefore, high mortality rates may be more prevalent in low-income countries. This issue is even more common in rural and poor areas in Africa. However, recently, an increasing number of health workers are being trained and provided with the necessary supplies and equipment (Adegoke and Van der Broek, 2009). Secondly, many women in low-income countries are dependent on family or partner decisions to have access to skilled personnel services, which is a more difficult problem to solve. A steady program that responded to this issue was the “Save Motherhood Initiative” in Kenya and Ethiopia ten years ago, whose first result was substantial progress in mothers’ decision-making regarding the lives of their babies (Tesfaye et al., 2017). Women’s access to sexual and reproductive health is lower in low-income countries compared to high-income countries (Weaver and Mendenhall, 2014). Access to sexual and reproductive health services can significantly impact women’s health outcomes, in which HIV/ AIDS transmissions constituted one of the key priorities in poor and middle-income countries. Sex workers and young women in Africa are a perfect example of a lack of access to adequate sex and reproductive healthcare services. According to UN AIDS (2019), female sex workers in sub-Saharan Africa present a rate of HIV infections 21 times higher than their male clients and have less access to antiretroviral treatments compared to HIV-positive men. Despite decades of research, the epidemiology of HIV, and the role that structural determinants have 7 According to UNICEF, South Asia achieved the greatest percentage of maternal mortality reduction.

262  Handbook on the politics of international development in mitigating it, access to care for sex workers is poorly understood (Shannon et al., 2014). Not only is their work still criminalized, and condom buying facilities are scarce, but there has not been an increase in access and prevention treatments nor efforts to promote their rights compared to five years ago. Young women also face a challenging situation regarding access to sexual and reproductive health facilities. Unfortunately, prevention efforts are still focused on HIV-infected young women and not on a combination of those who have contracted the virus and those who have not (Baxter and Karim, 2016). These results not only lead to less future work and social opportunities but higher teenage HIV rates and HIV-exposed infants in the long run. On average, young African women are three times more likely than young men to have HIV, which means that gender differences among young women continue to be widespread (UN AIDS, 2019) and have been confirmed over the subsequent decades. These disparities tend to persist until women reach their thirties and are strongly correlated with a demand for consumption of modern goods. Many young African women are situated within stages of their life where access to money, resources, and paid work is tightly constrained (Mojola, 2014). Therefore, regular consumption requires partners with regular income. This fact makes intimate relationships with older and employed men, who have higher HIV prevalence rates, more attractive than those with unemployed men, who have relatively low HIV rates. The above leads – among other things – not only to an increase in HIV rates in young women but also to teenage pregnancy. Teenage pregnancy is considered an obstacle for development and health in the long run (Santelli et al., 2017). Although rates have decreased globally, young women (15 to 19 years old) still face an elevated risk of maternal death and disability (42.45 per 1,000 women)8 mainly due to a lack of access to adequate information on contraceptive use in many parts of the world (Lindberg et al., 2018).9 For instance, even nowadays, several countries have implemented restrictive, abstinence-only policies towards reproductive health as opposed to comprehensive and teenage-friendly health services. These policies are strongly associated with an increase in teenage pregnancy in low and middle-income countries, especially among indigenous communities (Galárraga and Harris, 2019). Finally, neighborhood and community environments are a significant factor in the increase of adolescent pregnancies. More employment prospects, better neighborhood interactions, and higher educational opportunities in a particular community are valuable in influencing adolescent decision-making and help to lower pregnancy rates. In contrast, this is more difficult in poor neighborhoods which are often associated with higher levels of crime, sexual violence, and lower collective action (Decker et al., 2016; Isquick et al., 2018). As access to adequate contraception information is essential, family planning is vital for reducing unintended pregnancies and their health consequences. Only 52.9 percent of women with demand for family planning are using a modern contraceptive method10 due to a lack 8 According to the WHO, newborns and infants of adolescent mothers are also at higher risk of low birth weight and mortality. In addition, early child-breeding is related to cervical cancer and obstetric fistula (a devastating condition that leaves women disabled and in chronic pain) which leads to fewer future job opportunities. 9 The highest adolescent birth rate is found in sub-Saharan Africa (178 per 1,000 women) and the lowest rate in Western Europe and Asia (9 per 1,000 women). 10 According to the WHO, there are eight main modern contraceptive methods: pill, mini-pill, implants, injectable progesterone, patch, intrauterine device (IUD), female sterilization and LAM (lactational amenorrhea method).

The politics of the global gender agenda  263 of healthcare insurance coverage. West and Central Africa show the lowest coverage and South Asia and Latin America the highest (Ewerling et al., 2018). Coverage varies according to wealth, age groups, and urbanization: it is low among women in the poorest quintiles and youngest age groups living in rural areas, which means that special attention is required for these subgroups. The existence of certain social norms as well as the level of education might inhibit the uptake of contraception. Women with little or no education and particular religious beliefs have fewer chances to demand specific family planning methods (Population Reference Bureau, 2019).11 However, the contraception decision is not only made by women themselves. Couple communication about family planning and fertility preferences plays a role in contraceptive use in low-income countries. For instance, the husband’s support for family planning may influence the demand of women for contraceptive use (separately from a women’s sense of self-efficacy and perceived access to contraceptives) (Prata et al., 2017; Komasawa et al., 2020). Access to information to prevent adolescent birth through adequate use of contraception is linked with healthcare coverage, especially primary care (WHO, 2019). Efforts towards universal health coverage (UHC) have been made since 2016, when the WHO and the World Bank created an index for monitoring UHC in 153 countries, focusing on reproductive and maternal health. This approach is supported by the fact that preventive services – such as sexual, reproductive, maternal health, and safe abortion – have strong scientific evidence of their health benefits.12 These preventive services also provide financial protection against catastrophic health costs and out-of-pocket expenses (Nguhiu et al., 2017). In fact, women consistently experience a higher burden of out-of-pocket costs for healthcare services than men, who have similar insurance coverage levels due to non-coverage or limits on coverage for sexual or reproductive health services. Even co-payments (common in many insurance programs) may represent a significant barrier if women or adolescents do not have access to or control over cash, especially in rural areas and low-income countries (Sully et al., 2019; Leslie et al., 2017). Finally, women are both consumers and providers of healthcare – more than men – and are central to UHC’s success (Knaus et al., 2018). Nevertheless, this goal cannot be achieved if women remain marginalized, and their health is not prioritized. Unsafe abortion is also a public health problem worldwide, especially in developing countries. The WHO defines unsafe abortion as a procedure for terminating an unintended pregnancy carried out either by people lacking the necessary skills or in an environment that does not conform to minimal medical standards, or both (WHO, 2020). Dr. Haldfdan Maher, emeritus general director of the WHO in 2007, stated that a woman dies every eight minutes somewhere in a developing country due to complications arising from unsafe abortion. Women, including adolescents, with unwanted pregnancies resort to unsafe abortion when they do not have access to safe means. Barriers in accessing to safe abortion may be restrictive laws, no health services available to perform the procedure, high costs, stigma, the conscien11 According to the Population Reference Bureau (2019), both men and women with at least secondary education report wanting fewer children than those with non-secondary education. 12 The Affordable Care Act (the health insurance reform legislation passed by Congress and signed into law by former US President Obama on March 23, 2010) helped make prevention affordable and accessible for all Americans by requiring health plans to cover preventive services and by eliminating cost-sharing for those services. According to the US Department of Health and Human Services, coverage needs to be focused on preventive services that have strong scientific evidence of their health benefits.

264  Handbook on the politics of international development tious objection of healthcare providers, and formal but unnecessary requirements, such as mandatory waiting periods, mandatory counseling, provision of misleading information, third-party authorization, and medically unnecessary tests that delay care (WHO, 2020). As mentioned above, restrictive laws are a great impediment for women’s access to safe abortion. The Center of Reproductive Rights classifies abortion laws in five different categories according to their permissiveness. Currently, 90 million women (5 percent of the female population) within 26 countries are not permitted abortion under any circumstance, not even when the woman’s life or health is at risk. Some examples are Egypt, Angola, Philippines, El Salvador, Nicaragua, and the Dominican Republic. Also, 359 million women (22 percent of the female population) within 39 countries, such as Mexico, Brazil, Paraguay, Chile, Afghanistan, Iran, and Indonesia, are allowed to abort only when the women’s life is at risk. Similarly, 237 million women (14 percent of the female population) live in countries where safe abortion is permitted based on health or therapeutic grounds; some these countries are the Democratic Republic of Congo, Botswana, Saudi Arabia, Pakistan, Poland, Costa Rica, Colombia, Argentina, and Peru. Likewise, 386 million women (23 percent of the female population) live in countries like India, Ethiopia, Great Britain, and Finland, where safe abortion is possible under certain economic, social, and environmental circumstances. Finally, 590 million women (36 percent of the female population) within 67 countries have access to safe abortion on request, varying the gestational limits in each country; some of these countries are China, Canada, Uruguay, Mongolia, Cambodia, and Vietnam. Most European countries and Australia have this type of legislation too (Reproductiverights.org, 2019). One of the most critical conventions where this topic was discussed was the International Conference on Population and Development (ICPD) held in Cairo in 1994. This conference is considered a milestone in terms of global reproductive health and rights because 179 governments agreed to adopt the Program of Action policy. This program promoted people’s access to comprehensive reproductive healthcare, including family planning, safe pregnancy, and the prevention and treatment of sexually transmitted infections. Additionally, it was established that “every woman has the human right to decide freely and responsibly without coercion and violence the number, spacing, and timing of their children and to have the information and means to do so, and the right to attain the highest standard of sexual and reproductive health” (UNFPA, 1994), and safe abortion is key to the realization of these rights. Another critical point is that two of the Sustainable Development Goals (Good Health and Wellbeing, and Gender Equality), established in 2015, are also in line with women’s reproductive rights. The effects of international conventions are vast. Even though there is a long way to go, significant progress has been made due to these events. The institution of the International Conference on Population and Development Beyond 2014, showed that since the ICPD in 1994, the percentage of countries nor permitting abortion under any circumstance have dropped from 8 percent to 3 percent in 2011 and the percentage of countries where abortion is permitted on request has increased from 22 percent to 30 percent. Also, from 1994 to 2008, 70 countries made abortion laws more permissive, in contrast to 11 countries that made abortion laws more restrictive. Besides, the number of deaths due to unsafe abortion declined from 69,000 in 1990 to 47,000 in 2008, which corresponds to an annual decline in unsafe abortion-related mortality ration of 6 percent in Latin America, 4 percent in Asia and 1 percent in Africa. Also, the death-rate due to unsafe abortion has also declined globally at a rate of nearly 3 percent annually in developing countries (UNFPA, n.d.).

The politics of the global gender agenda  265 However, despite global agreements, each country advances at its own pace; but certain characteristics facilitate their progress. For example, governments in developing regions are four times more likely to have restrictive abortion policies than those in developed regions (United Nations, 2014). Also, even though some governments and health organizations have become more aware of the importance of women’s reproductive health and accept the term “reproductive rights,” the conversation on safe abortion remains complicated. Its complexity is derived from the fact that this procedure might go against certain cultures and religious beliefs. For this reason, the debate often moves from technical and medical arguments to emotional and heated discussions. At the moment, apart from multilateral organizations, feminist movements are the ones who tend to debate the issue most intensely and bring up the conversation of safe abortion as a woman’s right, especially in Latin American countries.

ECONOMIC PARTICIPATION: TRADE-OFF BETWEEN MOTHERHOOD AND WORK? Since the advent of the new wave of feminism in the 1960s, claims for gender equality in economic life have mostly been phrased in terms of employment and working conditions. Initially, this was focused on the desirability of women having a decent job, earning their own money, and realizing their potential in a larger setting than the family sphere (Engelstad, 2012). Later, the notion of economic gender equality was extended to cover equal pay at work environments, and since then, this issue has been a real challenge for reaching gender equality from a labor perspective. At a global level, the labor force participation rates for both men and women have increased over the last two decades (ILO, 2019). However, in some regions, women’s participation rate has increased much more than that of men.13 In Europe, the financial crisis of 2006 led to the “added worker effect,” which was the increase of female labor participation to compensate for the loss of family income when their husbands became unemployed (Branisa et al., 2013). In some Asian countries, women’s labor participation has increased due to the economic integration and the labor demand in the export-oriented sectors (ILO, 2018). In Latin America, the improved education of women, health factors (such as reduced fertility), and increased subsidized childcare helped increase female labor force participation in the last 20 years (Abramo and Valenzuela, 2005; Bando et al., 2019). Finally, women’s participation rate in Africa has increased by 32 percent. This enormous improvement is due to the absence of sufficient alternative income inside their family unit (ILO, 2019). However, more waged employment for women does not necessarily mean good quality employment, as many women might find themselves in informal or insecure jobs. Women often work in occupations (such as domestic workers) with informal work arrangements, preventing them from accessing social protection (Guarnizo and Rodriguez, 2017). Also, women mainly constitute the labor force dedicated to unpaid care work inside the household (ILO, 2019; Institute for Women’s Policy Research, 2020; OECD/ILO, 2019), which, as in the case of informal jobs, might impede them to access to social protection. The situation is even more

We refer in this section to labor participation rates in the formal sector.

13

266  Handbook on the politics of international development worrying for young women14 as they face more obstacles than men to enter the job market because of the school-to-work transition, independent of their education (Verashchagina, 2009), leading to broader gender gaps. The gender wage gap is a policy concern that will not disappear only through economic growth.15 It also cannot only be attributable to differences in work experience or in the entrance to the job market itself because, due to cultural reasons, women tend to dedicate more working hours to family responsibilities, a job that is currently unpaid and that should be equally shared with male partners. The relationship between gender, family, and employment is often depicted as the outcome of allocation between paid work and time spent on family-related tasks. If spouses (or partners) have similar earning capacity, they may decide to spend relatively equal time on family-related tasks and paid work. Unfortunately, this is often not the case even though women and men have equal work capacities (work experience, soft skills, technical abilities, among others). In this scenario, women tend to dedicate more time to family matters, which implies fewer hours in the job market (Engelstad, 2012). A situation of lower hours dedicated to salaried employment has, therefore, consequences in terms of pensions and high-paid jobs (Behrendt and Woodall, 2015), as women are more likely to work part-time. Fewer years worked can result in gender gaps in access to social protection and retirement allowances. This fact causes shorter careers for women than for men (Cameron and Moss, 2007) and lower salaries because, as discussed above, women tend to concentrate in low-paid job occupations that require fewer work hours (Banerjee, 2014). Addressing the gender wage gap can include policies such as establishing a clear legislative framework that ensures fair access of women to the labor market. Also, strengthening women’s negotiation power through unions (Ledwith, 2014) can normalize good quality part-time jobs and, finally, change attitudes towards unpaid care work to overcome the motherhood wage gap. Another common way to increase women’s economic participation and representation in high-quality jobs has been labor quotas. They can challenge male-only networks in the business world and ensure that qualified women have access to managerial positions (OECD, 2019). Most countries in Western Europe have implemented this measure to address persistent gender imbalances in managerial roles (25 percent of women in Europe occupy these positions). However, quotas themselves do not necessarily improve women’s representation since this also depends on the workplace environment. Leibbrandt and Vecci (2019) found that approval for gender quotas is low if women are not disadvantaged in the manager-selection process. The implementation of these kinds of policies in such environments can lead to lower effort levels and low wages. In contrast, environments where women are disadvantaged in the selection process have a higher approval of quotas as well as higher effort levels and higher wages. In the scenarios where quotas are implemented to disadvantaged women, having female board members seems to improve board attendance, and there are positive effects on the career development of women at the lower levels of an organization. Besides, there is a stricter monitoring of company executives and even lower variability on stock market prices (Smith, 2018; Meyerinck et al., 2018; Ferrari et al., 2018). This evidence shows that, as women have less 14 According to the ILO, unemployment and informality rates are extremely high in MENA countries, where women face three times more unemployment and informality than men do. 15 Evidence shows no correlation between the size of the gender gap and GDP per capita (ILO, 2019).

The politics of the global gender agenda  267 access to labor opportunities, quota effects are positive in most cases, but what about family responsibilities? Should women undertake tasks in both childcare and paid work? What are men’s responsibilities for childcare and housework? All these questions are essential, taking into account women’s economic rise in this century. Increasingly, both mothers and fathers are expected to play an equal role in raising children. Nonetheless, sexist attitudes toward men and women remain and facilitate the gendered division of childcare (Gaunt and Pihno, 2018) perpetuating a gendered hierarchy concerning housework and family responsibilities. The advantages of shared childcare are vast: higher-quality relationships, better sexual relationships, children with fewer mental health problems, and parental involvement during pregnancy (Carlson et al., 2016; Gaunt, 2016), so, why does gender imbalance in this matter persist? The answer to this question is not straightforward. However, some evidence suggests that fewer men are interested (especially in low-income countries) in promoting the position of women in the labor market due to sexist ideas over childcare. Nevertheless, high-income countries give an example of how better couple relationship outcomes are achieved when fathers increase their involvement in childcare through the extension of paternity leave (O’Brien and Wall, 2017).

EDUCATION: EQUAL VOICES IN SAFE ENVIRONMENTS Gender equality in education has been a priority of UNESCO’s international development agenda for the last ten years (UNESCO, 2014). This objective is highly reasonable as women and girls have been denied access to education throughout history for different stereotypes, which nowadays makes women education not only a historical achievement in women’s rights but a valuable investment for their development and empowerment. Also, it is important to consider the type of education that women receive and the safe environments that education centers create for girls and women. In fact, statistics show that girls who receive education and do not abandon it early, are less likely to marry young and more likely to be financially independent (UNICEF, 2019b; Malik and Courtney, 2011). However, it is still a challenge that girls and women feel equal in class, especially in careers or assignments that men are considered to be better at. It is important to eliminate gender roles and create safe environments for girls and women to participate, lead, and learn. In addition, earning higher salaries and participating in the decisions that most affect them, subsequently creates better futures for themselves and their families. Since 1970, gender parity in school enrollment (primary and secondary) has increased16 from 0.78 to 0.99 nowadays. Despite the evidence showing the importance of girls’ education for development, gender disparities persist in low-income countries (Central Africa, Yemen, and Pakistan). This scenario is explained by poverty,17 child marriage, gender-based violence, and favoritism for boys in low-income families when it comes to investing in education

16 The Gender Parity Index for gross enrollment ratio is calculated by UNESCO and accounts for the ratio of girls to boys enrolled at primary and secondary levels in public and private schools. A Gender Parity Index less than 1 suggests girls are more disadvantaged than boys in learning opportunities. 17 According to the World Bank, in Nigeria only 4 percent of poor young women can read, compared with 99 percent of rich young women.

268  Handbook on the politics of international development (UNICEF, 2019a). Moreover, in many countries of Central Africa, schools do not meet safety, hygiene, or sanitation needs for girls, resulting in gender gaps in learning skills and development (UNESCO, 2019). The picture is less encouraging in higher education, as only high-income countries – mainly Western Europe and North America – show a substantial increase in women’s participation since 1960 and middle-income countries show a minimal increase since 1990 (Moore, 2006). Nevertheless, education goes beyond access to school or university. It is also about girls and women feeling safe and supported in classrooms and the in subjects and careers they chose to pursue, including those in which they are often underrepresented. Having any disability, belonging to a minority ethnic group, or living in places where gender stereotypes are still strong, can influence women’s safety and confidence in educational institutions. For example, black women have endured more discrimination than other women due to historical racism and sexism that challenged – and continue to do so – their efforts to participate in the education system fully and equally (Gaetane and Lloyd-Jones, 2011). Even in those conditions, the scientific and theoretical contributions of black women in the United States have led them to high academic positions. For example, Georgiana Simpson, the first African-American woman to receive a PhD in philology, Sadie Tanner Mossell, the first African-American woman to receive a PhD in economics, and Carolyn Parker, the first woman of color that received a PhD in physics are just a few examples of these great achievements. Although the recognition of women of color in the academy has increased, other marginalized women still experience high discrimination in the US education system, even more in STEM (Science, Technology, Engineering and Mathematics) areas of knowledge. According to the US Department of Education, the percentage of bachelor’s degree obtained by women in STEM areas is 2 percent for Latin women, 2.8 percent for Asian women and 0.1 percent for native/indigenous women (Camacho and Lord, 2013), which reinforces the importance of inclusive policies even in a high-income country. Inclusive policies should be implemented by giving girls the importance they deserve in school environments. The Global Campaign for Education shows that around the world, 1 in 5 secondary school girls reported being unhappy with being a girl18 in 2016 – compared with less than 3 percent of boys who felt unhappy with their sex at the same level of education. All these feelings of inferiority rooted at such a young age have led to high female attrition rates compared to male students of the same age. In sub-Saharan Africa, rural India, and Syrian refugee camps, one out of ten girls dropped out of school for not feeling safe and being mocked in classrooms (Rop et al., 2016). Unfortunately, some of this discrimination and mockery is associated with a lack of access to sanitary products such as tampons and towels, which result in girls missing classes or even dropping out of school because they feel ashamed of menstruating. This problem poses a big challenge, as secondary education is widely regarded as the minimum level required for securing and maintaining employment, which is the main route for escaping poverty and contributing to economic development. To have a lasting impact on gender norms and attitudes, interventions that aim to remove barriers to education need to focus on reducing or eliminating gender stereotypes in order reach a balance of power and 18 According to this organization, nearly four in ten girls reported being made fun of because they were girls. Moreover, they were generally seen as better at “soft” subjects such as languages, history and music while boys were thought to be better at sports, math, and computing sciences.

The politics of the global gender agenda  269 representation of girls. These outcomes can be achieved by removing household-level barriers (e.g. preferences for males over females, first-son benefits, permission to go to school or enroll in educational institutes, among others), preventing teenage pregnancy and early marriage, reducing the distance to school, and providing girls with the essentials to feel secure in classroom environments through female teachers in schools (Subrahmanyam, 2016). Female teachers work mostly in primary education. Albania, Andorra, Armenia, Azerbaijan, Bahrain, and Belize have more than 97 percent of female teachers in this level of education (UNESCO, 2019). The real challenge is to promote female teaching at higher levels: nowadays, the percentage of female teachers in tertiary education is 42 percent (World Bank, 2018b). Female teaching could help young women to feel more comfortable in class and encourage them enough to pursue their empowerment – especially for girls who belong to a marginalized group. For example, black female teachers represent a constant pillar of hope for black women and their empowerment. Their recruitment and retention are directly related to improving the academic, social, and cultural experiences of African-American and historically marginalized groups in general (not only women) (Allen and Farinde, 2017).

POST-CONFLICT: TOWARDS THE RECOGNITION OF WOMEN’S VOICE AND KNOWLEDGE Women have been victims of conflict throughout history as they are targeted for rape and deprived of their freedom (United Nations, 2020b). Nevertheless, they are active participants in post-conflict peace movements, either directly or by supporting other women (Stewart, 2010). Gold Star Families for Peace, a peace movement organization, mobilized women to oppose the Iraq War in 2005 (Kutz-Flamenbaum, 2011) when several mothers lost their recruited children. After the First World War, women’s movements in Western Europe, Poland, and Austria promoted the so-called “cultural demobilization,” a dismantling of mindsets that supported the war (Sharp and Stibbe, 2011) and that was crucial to return to peace and reintegrate men into civil society. Moreover, women’s movements during conflict have created and strengthened networks to increase minority groups’ participation in post-conflict times. During the Colombian armed conflict, the exchange of experiences between women of diverse groups and backgrounds19 –including Afro-Colombian and indigenous – supported the creation of informal networks to overcome obstacles for peace and reconciliation (Moser and Clark, 2001; Stewart, 2010) that were helpful when the conflict ended. However, women’s movements in post-conflict have not had the sole goal of bringing peace in a country destroyed by war; some have been crucial in the achievement of women’s political empowerment. Mass Action for Peace, a Libyan women’s movement, played a significant role not only by bringing peace after 14 years of conflict but also in the election of Africa’s first female president, Ellen Johnson Sirleaf

19 In 2000, the “Latin American Experiences of Gender, Conflict and Building Sustainable Peace” Conference has held in Bogotá, Colombia. The conference took a practical and operational approach and was attended by some 170 representatives of civil society, government, and international organizations. It brought together men and women from El Salvador, Guatemala, Nicaragua, and Peru to discuss their experiences of gender in conflict and building sustainable peace as well as to identify lessons from Colombia. For more information see Moser and Clark (2001).

270  Handbook on the politics of international development (Debusscher and Martin, 2016). This first step in African women empowerment has served as a successful example for other countries immersed in war and an opportunity to modernize politics through gender equality. Most important changes in political modernization in terms of gender have occurred in countries that came out of major conflict (Tripp, 2015), especially in Africa,20 where there are high female legislative representation rates. Post-conflict Rwanda21 had the highest ratio of women in parliament in 2003 (UN Women, 2019b). By 2007, Rwandan women held 56 percent of the country’s legislative seats, reaching 64 percent in the 2013 elections (IPU, 2014). The decline of conflict in Africa occurred in a phase of emergence of new democracies that mitigated the return of conflict (Knight, 2009). This phase implied a shift towards greater political liberalization and democratization – a move from military to civilian rule and from one-party states to multiparty states – as well as the inclusion of contested elections (Tripp, 2015). Therefore, most African countries could experience greater freedom of expression and saw an increase in political and civil liberties, which created a window of opportunity for the incorporation of women in political life and the establishment of gender outcomes. Uganda was the first post-conflict country in Africa that introduced quotas to increase the representation of women in politics combined with the emergence of international norms that gave women new impetus to demand political presence (Wang, 2013). However, post-conflict African countries are not the only ones who have succeeded in the task of increasing female representation. Female militants of the Nicaraguan Frente Sandinista de Liberación Nacional (FSLN) increased their representation in politics after the demobilization of the Nicaraguan resistance in 1990 through the adoption of quotas (Luciak, 1998). Despite their political achievements, women are much less active in formal peace negotiations (CFR, 2019; UN Women, 2012). Between 1992 and 2018, women have represented only 3 percent of mediators, 4 percent of signatories, and 13 percent of negotiators in all significant peace processes, according to the UN Women and Council on Foreign Relations. In addition, only two women in this time period have served as chief negotiators in a peace agreement – Miriam Coronel-Ferrer from the Philippines and Tzipi Livni from Israel (Idris, 2019). Nonetheless, few steps have been taken to incorporate women in peace negotiations. In the current Syrian war, the international community has agreed on giving a voice to women, the most affected population in this war,22 in the first steps of any negotiation by creating “safe spaces” where they are not uncomfortable with sharing their experiences, needs, and aspirations (Roy, 2017). In the peace conversations between Colombian armed group FARC and the government during 2012–2016, the establishment of Mujeres por la Paz (Women for Peace) was an initiative lead by NGOs and women’s advocacy groups that created the commission 20 Since roughly the early 1990s and after 2000, 29 percent of the countries in Africa ended major civil wars. For more information see Tripp (2015). 21 The conflict in Rwanda was sparked by the genocide in 1994 after the death of the Rwandan president Juvénal Habyarimana when his plane was shot down. Post conflict began after the genocide and when the former government was overthrown by the Rwandan Patriotic Front (RPF). For more information see Richmond and Galgano (2019). 22 The Civil War in Syria has ended the lives of thousands and the number of displaced persons has been accounted as the largest since the Second World War. Researchers have found that the risk of death by shelling, air bombardments, chemical weapons and suicide bombs for children and women is three to five times more than that of men (Roy, 2017).

The politics of the global gender agenda  271 of gender in peace negotiations (Céspedes and Jaramillo, 2018). Some of the advantages of women’s participation in conflict resolutions are: more lasting agreements (International Peace Institute, 2016), higher levels of gender equality, lower propensity of conflict (World Bank, 2017a; Bigio and Vogelstein, 2016; Cohen and Karim, 2021), and efficient gathering of intelligence23 (Egnell, 2016), which is crucial to economic reconstruction. Post-conflict economic reconstruction happens in two main spheres where women play an essential role: reintegration of the combatants into civil life, and agriculture. Regarding the reintegration into civil life, female combatants tend to receive high social acceptance as they contribute to the community with the skills they developed during wartime24 (Annan et al., 2011; Phayal et al., 2015; Suarez et al., 2018). In post-conflict Colombia, former FARC25 female combatants are currently involved in environmental conservation and land usage projects that take place in rural areas,26 promoting tourism and other agricultural activities (Suarez et al., 2018). From an agricultural standpoint, women’s empowerment and negotiation skills have risen due to the war dynamics. As male deaths are high during conflict and wartime, women join the labor force to support their families, becoming the household head and strengthening their decision-making. This transition happens often in rural areas where agriculture is the main economic activity (Hendrickson, 2013; Menon and van der Meulen, 2015; Maconachie, 2008). During the Nepalese armed conflict, the male demographic decline forced women to take responsibility for cardamom and ginger farms, traditionally driven by men (Upreti et al., 2018). As a result, women decision-making in the household increased as well as their negotiation power with the government after the peace agreement provided a tax exemption for land registered under the ownership of women (Goetz and Jenkins, 2016; Upreti et al., 2018). Women’s property rights can be fundamental in agriculture during post-conflict times as they facilitate access to micro-credit that may contribute to farm productivity and economic sustainability.

23 According to the Swedish Defense Research Agency, female security sector officials frequently have access to populations and venues that are restricted to men, which allows them to gather intelligence about potential security risks. 24 Generally during wartime, males are more exposed to direct fighting than women and therefore have higher mortality rates. This leads female combatants to developed long-run survival skills: first aid, food conservation, non-traditional medicine, and environmental conservation. For more information see Suarez et al. (2018). 25 The Revolutionary Armed Forces of Colombia – FARC in Spanish – was an insurgent organization founded in 1964 from a Marxist-Leninist ideology to represent the rural population’s interests. During the last 30 years, it financed its operations through the drug trade, kidnapping, extortion, and illegal mining. Following a peace agreement with the Colombian government in 2016, FARC has officially disarmed and demobilized, and it is now a political party. 26 FARC’s former controlled municipalities were situated in the Colombian forest to hide from the government. Nowadays, their former members’ knowledge of natural species conservation is highly valued in rural areas and natural parks. For more information see Guerra-Cújar et al. (2021).

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MICROFINANCE: THE UPRISING OF RURAL WOMEN Microfinance programs27 have gained acceptance as a tool to alleviate poverty (Bhatt and Tang, 2007; Chemin, 2007; Chowdhury et al., 2005). It is one of the most critical components of the Sustainable Development Goals of the United Nations (2020a). Within developing economies, financial institutions often fail to provide credit to the most impoverished population as they are not cost-effective (Stewart et al., 2010). This situation creates inequalities and constraints for people who desire to run any business or just benefit from financial services, especially women.28 The lack of access to capital, land, and other assets are barriers that women face much more than men (Mahmood, 2011) in developing countries, perpetuating gender disparities that impede women from becoming entrepreneurs. Microfinance institutions have emerged as a subsector of the financial system that has helped to close gender gaps in access to financial services by providing small loans to women for creating or expanding their businesses, contributing to economic development (Mahmood, 2011; Khan and Noreen, 2012; D’Espallier et al., 2013; Khanam et al., 2018). It offers micro-credit, consulting and training for small enterprises (Wasihum and Paul, 2010), and market information (Kiiza and Pederson, 2012), which is often not accessible for women. In Pakistan and Bangladesh, where 55 percent of women live below the poverty line, and only 21 percent work outside their households (Mahmood, 2011), microfinance institutions have funded young women. This help has permitted the creation and expansion of their businesses in urban areas for 92 percent of women beneficiaries who were married and have not had any business training before. The outcome is very different in rural areas, where women access loans only for survival purposes, immediate consumption, or to help their husbands’ businesses, especially in Muslim families (Dutta and Banerjee, 2018). Although microfinance can help women in rural areas improve their living conditions and increase their consumption, their dependence on male family members may drive them to take loans. Besides, when they receive the funds that are meant to be destined to household supplements, men tend to take control over them. These dynamics do not disrupt their traditional roles or give women more bargaining power (Das, 2017). However, this does not mean that rural women cannot support their household’s economy without being dependent on their husbands or male partners. Networks may be a window of opportunity for rural women to become more independent and empowered inside their households and even get involved in community decisions (Das, 2017; Coppock and Desta, 2013; Meier, 2016). Microfinance programs create groups that connect socially isolated women29 into social networks. They foster social capital, solidarity through frequent interactions, mutual identification, and psychological support. They also lead to collective action and 27 Traditionally, collateral free loans provided to poor population that simplify access to resources by improving people’s standard of living and economic self-sufficiency. For more information, see The Hunger Project: https://​www​.thp​.org/​knowledge​-center/​poverty/​microfinance/​. 28 Forty percent of the global female population do not have access to bank accounts or any other financial services (World Bank, 2018a). Therefore, women face more constrains than men in accessing finance generally. 29 Rural women in developing countries have no networks prior to microfinance programs. Once they join for credit purposes, they experience dramatic changes in their lives through social mobilization. For more information see Nawaz (2019).

The politics of the global gender agenda  273 self-empowerment (Sanyal, 2009; Cheston and Kuhn, 2002; Nawaz, 2019). In West Bengal, India, the formation of microfinance groups unified rural women, strengthened entrepreneurial ideas collectively (Das, 2017), and created normative actions that sanction men’s behavior, permissive sexual practices (sexual-violent practices that occur without women’s consent), alcohol consumption, and arranged marriages. In this process, women managed to challenge conventional social practices that perpetuate gender inequalities (Sanyal, 2009). When collective action outcomes result from women’s organization, they begin to feel empowered enough to influence decision-making within the household and, of course, within their communities by helping with providing goods and services. Women empowerment through microfinance can also be reached in the political sphere. Underrepresentation of women in politics is very common in developing countries (World Bank, 2019; WEF, 2019; UN Women, 2017), and local government is considered an essential platform for women’s empowerment (Goetz, 2013). However, although women can reach government positions in developing countries,30 there is a gap between knowledge and engagement in politics that microfinance has helped to close. Bangladesh is characterized by classic patriarchy, poverty, and inequality, as well as a society that devalues women (Chowdhury, 2009). Since the country’s independence, microfinance institutions have helped the state deal with gender inequality by providing women small loans and other financial support (Mia et al., 2017). Before the programs were implemented, women were not motivated or lacked the confidence to participate in politics (voting) due to a lack of knowledge about the electoral political process (Nawaz, 2014, 2019; Horton, 2017). Participation of women in microfinance groups, once they were launched, has shown an increase in solidarity (Horton, 2017), trust (Barai and Adhikary, 2013), and gender consciousness (Nawaz, 2019). These changes led to higher levels of women’s political awareness and interest in electoral processes.31 Finally, microfinance programs have other effects on gender development outcomes that are not necessarily related to collective action. They are evolving as a prospective option for income generation and the reduction of poverty in developing economies (Bharti, 2014). The financial support these programs provide contributes to the reduction of unemployment among rural and unskilled women32 (Sheremenko et al., 2017; Van Tessel, 2004; Basu, 2006). India is an important example of how microfinance can reduce unemployment by increasing female labor demand in micro-enterprises, start their own business or participate in entrepreneurial projects (Kumar, 2009; Bharti, 2014) as well as women’s migration from rural areas as their projects succeed (Kumar, 2009). In Odisha, microfinance institutions help to strengthen the fishing industry by training women with no working experience in the production of high-quality seafood, which initially served as an additional activity in their routines and eventually became their full-time employ30 By 2013, the Prime Minister and the opposition political leader in Bangladesh were women (Nawaz, 2019). 31 In the study conducted in Bangladesh to address the impact of microfinance NGOs, interviewed women admitted that before their involvement in microfinance groups, they were more easily influenced by local leaders who tried to persuade them to vote for certain candidate. After the program, they have the confidence to express their opinion when local elites try to influence their voting choice. For more information, see Nawaz (2014, 2019). 32 Lack of skills has been identified as one of the key barriers to developing micro-enterprises among the poor. Therefore, the provision of training to build human capital is one approach to the promotion of micro-enterprises and generation of employment. For more information see Bharti (2014).

274  Handbook on the politics of international development ment (Panda and Rath, 2015). In Nepal, where 25 percent of people live in extreme poverty (World Bank, 2020), and 40 percent of women have no voting rights,33 micro-credit organizations have contributed to increasing women’s education and ownership of land. This has been achieved through small loans that have had a positive impact on their economic empowerment (Atteraya et al., 2016) and their husbands’ behavior towards them: they gained more respect and household violence from their partners was reduced (Nawaz, 2019).

SEXUAL VIOLENCE: CHALLENGING INSTITUTIONS Violence against women is a major public health and human rights concern (WHO, 2013). Intimate partner violence and sexual violence34 are the most pervasive forms of violation of women’s human rights (Devries et al., 2013; WHO, 2013; Dartnall and Jewkes, 2013). According to the World Health Organization, 35 percent of women worldwide have experienced physical and/or sexual violence from their intimate partner during their lifetime, and male intimate partners commit 38 percent of women’s murders. Such violence can affect women’s physical, mental, sexual, and reproductive health35 with a high probability of effects being passed on to young girls (Centers for Disease Control and Prevention, 2017). Intimate partner violence is strongly correlated with household income level (Li et al., 2010; Schneider et al., 2016; Vanderende et al., 2012), men’s educational level and unemployment (Gass et al., 2011; Ali et al., 2011) even when women’s economic resources are higher than their partners’36 (Dalal, 2011; Rahman et al., 2011). In addition, according to feminist theorists, intimate partner violence is primarily the result of patriarchal systems created by cultural norms and institutions that exert men’s domination and control over women (Larsen, 2016; Rodriguez-Menes and Safranoff, 2012; Dobash and Dobash, 1979); thus, the higher the level of gender inequality in the law, the higher the level of men’s violence against women, especially in the case of non-partner sexual violence.37 The research on this topic has focused on violence within intimate partnerships. However, non-partner sexual violence is a kind of violence that women experience in their daily life (Jadhav et al., 2016; Gender Equality Observatory, 2014; Abrahams et al., 2014). Globally, 7 percent of women have been sexually assaulted by someone other than a partner (WHO, 2021). Besides, women are three times more likely to have alcohol use disorders and two times more likely to experience depression or anxiety due to traumas generated by non-partner

33 In Nepal, rural women’s caste or ethnic affiliation is often an indicator of poverty and social exclusion. Women with Indian roots are the most socially excluded population and have the least access to political participation. For more information see Atteraya et al. (2016). 34 This chapter uses the definition of sexual violence as “any sexual act, attempt to obtain sexual act, or other act directed against women’s sexuality using coercion, by any person regardless of their relationship” (WHO, 2013). 35 Sexual violence may increase the risk of acquiring HIV in some circumstances. 36 Women with incomes greater than their partners’ have a higher likelihood of intimate partner violence because of a disruption in cultural norms and expectations of men as breadwinners. 37 When formal institutions do not support women’s rights or have high gender inequality levels, women are more vulnerable and more exposed to sexual abuse.

The politics of the global gender agenda  275 sexual violence38 (WHO, 2013). The prevalence of this type of violence varies within and between countries but remains characterized by the presence of social factors that foster a culture of violence against women. This type of culture prevents women from reporting – or even recognizing – such violence to local authorities as a violation of human rights (Del Rio and García del Valle, 2016; WHO, 2013) supporting and perpetuating male authority and control over women.39 Under circumstances of underreporting of non-partner sexual violence, the improvement of institutions that protect women from sexual violence is crucial. A fundamental first step is to improve the understanding of this type of violence in societies and granting women safety for them to be able to report it. The 2015 Spanish Survey on Violence against Women was created to analyze different forms of non-partner sexual violence and their mental health consequences (Del Rio and García del Valle, 2016) without making interviewed women uncomfortable during the questionnaires as well as giving information.40 Non-partner sexual violence includes violence against girls.41 According to UN Women (2019a), 2 percent of girls worldwide have experienced forced sex, and only 1 percent of the victims sought professional help or denounced the abuses. Femicides of girls for reasons related to sexual violence are extremely high in Latin and Central America – 10 per 100,000 (Global Americans, 2017) – without counting the number of unreported cases. Mexico, Ciudad Juarez and Ecatepec are known for consolidating a patriarchal system that allows the exercise of violence against women in the last 14 years42 (Michau et al., 2015; Arteaga and Valdés, 2010), becoming the new focus of women and girls’ forced disappearances and femicides (Rodríguez, 2015). In the absence of responses from the State to these disappearances and the acceptance of responsibility by governments, including access to justice, psychological support, and health attention, it has been the girls’ families who have made their own investigations (Rodríguez, 2015), revealing a hostile system towards women in which girls are under-protected and living in extremely vulnerable conditions. Similarly, Guatemala and Honduras have the highest levels of women’s killings and impunity for violence against women in the world (Menjívar and Drysdale, 2017). Even though laws created to protect women exist, they fail in implementation, showing a gap between de jure and de facto laws that impose legal tolls on victims and families that attempt to utilize the justice system (Drysdale and Menjívar, 2016). What kind of institutions should be created to protect women’s and girls’ rights? Is a structural change in existing institutions needed? It is certainly true that socio-cultural factors that perpetuate

38 Findings indicate that rapes by strangers are more violent and have higher risk of involvement of weapons and injury than those by known perpetuators (Cisneros, 2019; Temple et al., 2007). 39 Especially in low-income countries, women victims of sexual violence are blamed, questioned, and treated insensitively. These attitudes make them feel stigmatized, shameful, or guilty and discourage them from disclosing their experiences and from seeking formal help from the legal or health systems. More important, women who have been victims of sexual assault might not acknowledge it as such. For more information see Del Rio and García del Valle (2016). 40 A woman could read the questions and tell the interviewer the number of the selected answer, minimizing the woman’s possible discomfort. 41 Females under 16 years old. 42 The system allows the exercise of violence against women and girls because it is committed with impunity in most of the cases. Also, the violence is contextualized in a drug-cartel conflict scenario between Ciudad Juarez and Sinaloa. For more information see Rodríguez (2015).

276  Handbook on the politics of international development women’s and girls’ inferiority – or even worse, misogyny – need to be fought in all aspects of civil life: work, households, schools, and government. Moreover, sexual violence against women is not only represented in physical and sexual abuse. Sexual harassment43 is a form of discrimination that consists mainly of verbal and nonverbal behaviors that convey exclusion, unwanted sexual attention, and sexual coercion (Johnson et al., 2018). Over the last few decades, diversity in the fields of science, engineering, and medicine has increased due to women’s participation (Connerley and Wu, 2016). However, as women increasingly enter these fields, they face biases and barriers in which sexual harassment plays an important role. There is a growing concern that harassment is being reported as pertinent to higher education contexts also (Morley, 2011; Whitley and Page, 2015). In Spain, the EASIS (Sexual Harassment Survey) was created to measure women’s and men’s perception of sexual harassment within ten universities. It showed a significant gender gap in this type of sexual violence: 11.8 percent of women experienced sexual harassment compared to 6 percent of men, and 1 in 5 women who experienced sexual harassment did not perceive it as such44 (Navarro-Guzmán et al., 2016). The prevalence of sexual harassment can reach workplace environments and impact women’s productivity (Henning et al., 2017). In the worst cases, it can result in job abandonment (ILO, 2017; Institute for Women’s Policy Research, 2018). This evidence illustrates that essential actions are not taken, furthermore, there is a need for new masculinities to denormalize a system based on subordination and violence against women. Society must promote a cultural and institutional change through the questioning of violence, and political leaders must eradicate discourses that endorse violence of any kind against women. Finally, gender agendas must include pathways of accompanying violence victims and strategies to prevent sexual harassment, so that women can exercise their rights, freedom, and political and social roles.

CONCLUDING REMARKS This chapter has aimed to provide a more in-depth explanation of the most significant achievements and challenges women have faced over the last 20 years regarding politics, health, education, work, post-conflict, agriculture, and sexual violence. Gender equality is fundamental for economic growth and stability; it can only be attained when women are completely aware of their rights in any society and can exercise them. The definition of a gender agenda is essential to establish a starting point for women’s empowerment worldwide to provide minimums that governments must achieve. However, the definition of a gender agenda is not static and depends on each country’s situation and priorities regarding gender disparities. In the political sphere, low women’s 43 This can be direct (targeted at an individual) and called quid pro quo, in which generally a superior, colleague or any person asks for sexual favors in exchange for something that affects the development of a women’s career or personal life. Environmental sexual harassment is the conduct (exercised by hierarchical superiors or by people of equal or lower level) that creates an intimidating, hostile and humiliating working environment for the person that is subject to it, in this case, women. For more information, see Johnson et al. (2018) and Navarro-Guzmán et al. (2016). 44 The main types of violence found in this investigation were blackmail, comments about women’s anatomy and note sending asking for sexual favors.

The politics of the global gender agenda  277 suffrage rates and underrepresentation are being addressed as women have access to political training and aspire to participate in local politics. Once they reach political participation, laws that benefit women as well as the entire community start to become implemented, breaking the cycle of discrimination and underrepresentation. Lack of medical equipment and qualified healthcare personnel have been the main causes of maternal and infant mortality in the world, especially in rural areas. However, despite the policies implemented to combat these deaths, many women still depend on their partners’ decision to go to healthcare centers. Women begin to empower themselves once they contact skilled health personnel, leading them to make decisions for their babies’ health and their sexual practices, which can be achieved through access to healthcare services and education on birth control and reproductive rights. These decisions can contribute to decreasing teenage pregnancy rates and raise a level of consciousness towards sexist attitudes on childcare that prevent women from accessing better jobs and therefore, reducing informal employment. In the education field, women’s empowerment begins by providing spaces inside schools where girls feel safe and receive education to be less dependent in the long run. Female-teacher accompaniment positively influences girls’ safety in schools and aids in breaking down gender stereotypes. However, specific barriers to the professional development of female teachers and women in the academy still exist and are shown in the low participation of women in tertiary education. Nevertheless, institutional knowledge is not a warranty of empowerment. In post-conflict countries, the knowledge acquired by women is the result of collective action and networking and the resulting empowerment is reflected in political leadership (Africa), environmental care, development of tourism (Latin and Central America), and agricultural knowledge. Finally, sexual violence and harassment are real concerns worldwide and will continue to be so if societies do not promote a cultural and institutional change that educates men and protects women effectively from all kinds of gender-based violence. Moreover, it is clear that improving women’s access to resources, opportunities, education, and public services is the right path to economic development but what is required are the necessary policies to achieve that goal.

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18. The politics of global health Christiane Struckmann

INTRODUCTION In 1918 a war-torn world experienced its first pandemic influenza. At the time few multilateral institutions existed; countries mainly fought their common microbial enemy alone. A hundred years later, a cluster of novel human coronavirus cases broke out in the Chinese city of Wuhan and subsequently spread like wildfire across the world. Today, an array of multilateral mechanisms exist to confront global public health emergencies, and to address their associated economic, social and political effects. Nevertheless, as Bill Gates famously warned in a TED talk in 2015, the world was completely unprepared for a health crisis of this magnitude. Not only has COVID-19 challenged health systems even in the most industrialized countries of the world, but it has also led to the greatest economic shock the world has experienced since the Great Depression, leaving the suffering of millions of people in its wake. This chapter argues that the history of global health is a chronicle of a death foretold. Since the invention of colonial medicine in the late nineteenth century, technocratic, disease-specific interventions have been privileged over the development of basic health services, and addressing the social determinants of health. The free market, and the health and security of powerful Western nations have triumphed over the health and development needs of the poor. As a result, many countries have been unable to manage and reduce the risk of national and global health emergencies. This chapter begins with an historical account of the evolution of global health. It subsequently identifies the main competing norms that have driven global health agendas, and ends by proposing an alternative agenda that demands structural change.

A HISTORY OF GLOBAL HEALTH In September 1932 the first Pan African Health Conference took place in Cape Town, in the then Union of South Africa. Delegates from various African colonial territories, British India, the League of Nations Health Organisation, and the Rockefeller Foundation gathered to discuss public health issues, and specifically the rising threat of epidemic diseases. A map of newly established African air routes accompanied the conference, illustrating that advances in air travel were increasingly connecting various regions of the world, and therefore also creating new ways for pathogens to spread. The Cape Town conference, as well as the follow-up conference that was held in Johannesburg three years later, focused mainly on the problem of yellow fever, which was spreading from its endemic locations in Latin America and Central West Africa into the rest of Africa, and from there to the jewel in the crown of the British Empire, India. Colonial health representatives were well aware that the international spread of yellow fever, as well as other diseases such as plague and cholera, which were the focus of earlier International Sanitary Conferences, would reap devastating effects (Packard, 2016, p. 13). 286

The politics of global health  287 The League of Nations Health Organisation, which was established shortly after the end of the First World War with the intention of safeguarding the health and well-being of the world’s population so as to prevent future outbreaks of war, viewed the Pan African Health Conferences as an opportunity to spread its influence into colonial territories. What these two conferences, as well as other early international health interventions highlighted, was that the interests of newly established health organizations had become entangled with colonial health and tropical medicine (Packard, 2016, p. 13). This chapter argues that the legacy of this relationship continues to shape global health to this day: technocratic disease-specific interventions continue to be privileged over the development of basic health services and addressing the social determinants of health. In order to understand this pattern, it is essential to return to the history of colonial health. Late nineteenth- and early twentieth-century campaigns to curb the spread of epidemic diseases in and from the colonial world were to a far greater extent based on external interests, rather than on the interests of colonial subjects (Arnold, 1993; Wilmhurst, 1997). Western ideas of health, hygiene, and medicine were, with varying degrees of force, imposed onto the colonies, with little to no concern for local knowledge, infrastructure or input. Instead, local inhabitants were cast as unclean, primitive, and dependent on colonial powers to ensure their good health (Anderson, 1995). Colonial authorities had little interest in developing broad-based health services locally, focusing on the eradication of single diseases instead. The primary concern of colonial health authorities was protecting the health of Europeans and that of colonial personnel who were essential to colonial economies. Disease was seen as economically detrimental to both colony and empire (Palmer, 2010). Economic and security concerns thus came to dominate international health agendas at the end of the nineteenth century, a trend which continues to this day. A second trend has its origins in the bacteriological discoveries of the 1880s, which led to a new conception of public health that focused on the identification and combating of deadly pathogens together with their vectors. The causes of diseases where therefore no longer sought in the environment, but rather under the microscope; powerful new methods of identifying disease cast a shadow on addressing the social determinants of health. The Rockefeller Foundation’s International Health Board, which became the most powerful and influential international health organization during the first half of the twentieth century, was committed to a new public health approach that emphasized the application of biomedical science in attacking diseases at the expense of developing basic health services or addressing the underlying causes of ill-health. The International Health Board, in addition to being the League of Nations Health Organisation’s main source of funding, was further responsible for establishing and funding various public health schools around the world, including those at Harvard and John Hopkins. Colonial medicine therefore played an integral role in shaping the attitudes and practices of American public health experts who would become responsible for leading international health efforts (Palmer, 2010; Packard, 2016, pp. 41–42). A broader vision of health and development, which acknowledged the role of local populations and which placed more emphasis on the social determinants of health, began to emerge in the 1930s. The Second World War, however, disrupted efforts to implement an alternative vision, instead leaving an economic and humanitarian crisis behind it. Acute food shortages and post-war epidemics such as plague, typhus, syphilis, tuberculosis and malaria threatened populations in Europe and Asia, calling for rapid technical solutions to what were in fact complex problems. One of these quick-fixes that was discovered during the war was

288  Handbook on the politics of international development DDT, a long-acting pesticide that made it possible to control, and in some instances even eradicate, deadly diseases such as malaria, yellow fever, plague, and typhus. DDT eliminated the need for other approaches to combat these diseases, including efforts to better the socio-economic circumstances of at-risk populations (Packard, 2007). Penicillin, sulpha drugs, and Streptomycin are further examples of biomedical technologies that were developed during the war whose application brought with it such dramatic improvements in health and social welfare that the social and economic conditions in which these diseases occurred in effect no longer had to be transformed. By the 1950s the World Health Organization, which was established as the UN’s health agency two years after the League of Nations was disbanded in 1946, was rapidly adopting an approach very similar to that of the Rockefeller Foundation, described above: one that focused very narrowly on the application of biomedical technologies to eliminate diseases one at a time. This approach very much belied the WHO’s definition of health as “a state of complete physical, mental, and social well-being, and not merely the absence of disease or infirmity” (WHO, 2006). Very little attention was paid to the social and economic determinants of health or the need to develop basic health services. Further, the organization to a large extent ignored the local knowledges and practices of populations at whom its campaigns were targeted, as well as these people’s ability to meet their own health needs. The WHO’s confidence in the superiority of Western knowledge was exemplified by the fact that its strategies and interventions – which were predominantly aimed at improving the health of African, Asian and Latin American populations – were almost exclusively designed by experts who met in European and North American cities. From this sprouted a new culture of development that cast the underdeveloped world as primitive, backward, powerless and vulnerable, placing local populations in a position of dependence on the guidance and assistance of the West. As André Gunder Frank (1966) and other dependency theorists would later argue, this dependency was responsible for the continued underdevelopment of the then ‘Third World’. By the mid-1950s all international organizations that were involved in improving the health well-being of the world’s population had turned their backs on integrated approaches to health and development, focusing instead on strategies rooted in technical assistance. To the detriment of local populations, diseases could in effect be eliminated without ameliorating social or economic conditions. This changed significantly at the end of the 1970s as non-governmental organizations (NGOs) (see Chapter 12 by Irrera in this volume) became increasingly involved in international health. In September 1978 representatives to the WHO held a meeting in Alma-Ata, Kazakhstan, then a part of the Soviet Union. Around 3,000 delegates representing 134 states and 67 international organizations, together with a number of NGOs, gathered to discuss and promote primary healthcare as a key component in the attainment of ‘Health for All’. At the end of the conference a document was drafted that became known as the Alma-Ata Declaration. The declaration put forward a set of principles that were to guide governments in restructuring their health systems in order to be able to provide primary healthcare to all of their citizens. The document affirmed health as a basic human right, obligating states to ensure the health of their entire populations. The Alma-Ata Declaration was revolutionary in the sense that it paved a new pathway to health, stressing that social and economic development, community participation, and equity were essential in attaining health for all (WHO, 1978). This represented a radical departure from the culture of technical assistance that dominated international health from the 1950s.

The politics of global health  289 Even though the principles set forth at Alma-Ata remain the benchmark of global health to this day, commitment to primary healthcare after 1978 was remarkedly short-lived. The 1980s debt crisis and the accompanying rise of neoliberal economic policies signalled the death of broad-based integrated health approaches, and a return to the world of technical assistance. Structural Adjustment Programmes (see Chapter 1 by Ocampo and Chapter 26 by Rivarola Puntigliano in this volume) succeeded in their aim to reduce government involvement in healthcare, resulting in the widespread deterioration of health infrastructure, a significant reduction in health personnel, as well as the unavailability of lifesaving drugs throughout the African continent. Ironically, HIV/AIDS also became a rising threat in the late 1980s, and by the time the international health community began to respond to the new epidemic, health systems throughout Africa were ruined to such an extent that they were largely unable to support the treatment and prevention of HIV/AIDS. The hopes espoused in the Alma-Ata Declaration stood no chance, and more selective strategies that did not require broader socio-economic development, were once more in favour. Packard (2016) views HIV/AIDS as the catalyst to the paradigmatic shift from international to global health that took place in the mid-1990s. In the face of globalization, or the worldwide integration of the determinants and outcomes of human health, national or international responses to the rising number of health issues (specifically those with transborder implications) no longer proved adequate. During the 1990s the international health community was facing a number of new disease threats, the most important of which was the growing AIDS epidemic, which had come to wreak havoc on sub-Saharan Africa in particular. Linked to the spread of HIV, as well as the failure of health systems to adequately treat tuberculosis (TB) patients, an epidemic of multi-drug resistant TB also took root. These new epidemics were further accompanied by emerging diseases such as Dengue fever, severe acute respiratory syndrome (SARS), and deadly forms of influenza that thanks to the rapid development of globalization were able to travel at great speeds from their endemic locations to all corners of the earth. Plagues were thus no longer limited to the populations of underdeveloped countries; the health (and sickness) of people across the globe had become intimately connected. Resulting fears over travelling microbes, as well as panic over the possible use of pathogens by terrorists after 9/11, led to calls for improved global health surveillance. This was accompanied by massive increases in funding, not only for emergency preparedness measures but also in support of health programmes in the developing world. Fears spread that diseases such as AIDS and malaria would be a major drain on the economic development of resource-poor countries, and that this would undermine the economic and political stability of states and entire regions. Health thus became increasingly securitized and economized (something we will discuss in more detail below). Further, the neoliberalization of health, which aimed to reduce the role of national governments in providing healthcare, privileged the role of national as well as international NGOs, and led to a massive increase in their number in the 1990s. In many rural parts of Africa and Latin America, NGO-run health programmes were the only health services available to these communities. Nevertheless, NGO programmes did not replace the need for well-developed, government-run health systems, given that they mainly targeted specific health problems without providing the basic infrastructure and health personnel required to sustain healthcare. Simultaneously, an increasing number of concerns were also being raised about the ineffectiveness of UN agencies, the WHO in particular, in managing global health funding. As a consequence of its bureaucratic inefficiencies as well as its internal politics, donors came to

290  Handbook on the politics of international development view the WHO as a place where good ideas went to die. Accompanying the huge increase in health funding, a number of new organizations (many of which were explicitly global in orientation) were created in order to help distribute these new financial resources. These included the Global Fund to Fight AIDS, Tuberculosis and Malaria, new public/private partnerships like the Global Alliance for Vaccines and Immunisation (GAVI), and private foundations such as the Bill & Melinda Gates Foundation. What set these new organizations apart was that they strictly demanded accountability and evidence-based public health. The Bill & Melinda Gates Foundation, in particular, pushed for the discovery and implementation of biomedical technologies in solving a host of health problems in the developing world, including those related to vaccine and drug development, maternal and child health, family planning, and disease control and eradication. The foundation has since come to dominate global health funding and, thus, also priority setting, which has, by and large, led to the medicalization of global health. What is absent in this approach is a focus on the development of basic health services – what Paul Farmer calls the four S’s: Staff, Stuff, Space, and Systems – as well as addressing the social determinants of health. As Packard (2016, p. 327) rightly argues, biomedical technologies – supplementation, vaccination, immunization, anti-retroviral drugs, male circumcision, insecticide-treated bed nets, etc. – are all effective interventions that have potentially saved millions of lives and have improved the health of populations around the world. But they should not be seen as solutions in their own right, or as substitutes for building effective health systems and addressing the underlying causes of ill health in society. Yet, increasingly, over the course of the twenty-first century, these technologies have become just that. (Packard, 2016, p. 327)

Global health has come to rely on short-term, Band-Aid approaches to health, mainly to prevent the global spread of disease. These approaches have not provided solutions to huge structural problems, and the consequences of the neglect of health systems were clearly visible in the West African Ebola outbreak that killed over 8,000 people between 2014 and 2015. The Ebola outbreak as well as the current COVID-19 pandemic should be viewed as symptoms of a much larger global healthcare and governance crisis. They have proven that our existing systems, approaches, and funding are inadequate, and that the institution that is most central to addressing matters of global health security is on its knees. Limited financial resources as well as bureaucratic impediments have prevented the WHO from effectively responding to recent pandemics such as the H1N1 flu, Ebola, Zika, and COVID-19. As Stewart Patrick (2020, p. 40) argues, the WHO has a mandate that far exceeds its capabilities. Member states continue to assign an increasing number of tasks to the organization, all the while limiting its independence and resources. At the same time powerful states such as the United States and China have insisted on independent action instead of taking vital leadership roles in fighting the spread of the disease. According to Patrick (2020, p. 40) “[t]he pandemic has revealed both the limits of the existing multilateral system and the horrific costs of the system’s failure”. What the above sketch of the history of global health has illustrated is that despite the investment of billions of dollars in programmes aimed at improving global health, very little

The politics of global health  291 attention has been paid to basic health services, public health infrastructure, and the underlying social and economic determinants of health. This is attributable to a number of factors: 1. Health interventions aimed at the developing world have almost exclusively been designed in the Global North, with few attempts to incorporate local perspectives or to engage effected communities in the planning process. A belief in the superiority of Western medical knowledge and technology has subsisted, thus disparaging the knowledge and agency of local populations. In fact, cultural modelling and victim-blaming have often resulted in aid providers viewing those affected by a disease as part of the problem, instead of the solution. 2. Health interventions are often planned in crisis situations that call for immediate action. Biomedical technologies that present simple and rapid solutions to specific diseases have thus been favoured over the development of basic health services, and addressing the social and political determinants of health. 3. Economic and security concerns have come to dominate global health agendas; however, the focus has largely remained on how improvements in health can stimulate economic growth rather than measuring the impact of socio-economic development on health. 4. The current institutional architecture, which is now more than 60 years old, is unable to respond effectively to contemporary global health threats (Frenk and Moon, 2013, p. 937). An increasing number of powerful states are also withdrawing from their multilateral commitments, and placing their own national interests ahead of international cooperation (see Chapter 22 by Peixoto Batista and Knoop in this volume).

COMPETING NORMS As the history of global health above has illustrated, there is not a single paradigm or norm that drives global health governance. However, for much of the twentieth and early twenty-first centuries, the biomedical paradigm, or what McInnes and Lee (2012) refer to as “evidence-based medicine” has come to define global health priorities. This approach views disease as the enemy, and data-driven, technocratic responses are employed with the aim of rapidly eliminating diseases one at a time. There is no doubt that these simple medical technologies have the potential to save millions of lives almost instantly, and there are a further number of reasons as to why they are so attractive: they are cost-effective, measurable, relatively easy to apply, and they demonstrate rapid results without having to involve local populations, or having to address the complex social and economic conditions that are to a large extent responsible for health problems in the first place. Yet, as the current COVID-19 pandemic has shown, evidence-based medicine has not prepared us for the next pandemic, and the next pandemic may be far bigger and deadlier than the coronavirus (Osterholm and Olshaker, 2020). From time to time, alternative visions of health, specifically those that emphasize the importance of social justice and human rights have challenged the biomedical approach, albeit on a limited basis. These health agendas highlight that diseases cannot be separated from the environment or context in which they occur, and that poverty, inequity, stigma and social disadvantage have a profound impact on an individual’s health (Kickbusch and Liu, 2019, p. 84). This has been clearly demonstrated by the COVID-19 pandemic. At the time of writing, high-income and upper-middle-income countries have been hit hardest by the pandemic, but

292  Handbook on the politics of international development long-standing systemic health and social inequalities in countries such as the United States have put some members of racial and ethnic minority groups at greater risk of contracting the disease, and experiencing severe illness, regardless of age (Centers for Disease Control and Prevention, 2020). Social determinants of health are therefore not only of concern to the developing world but should be addressed globally. The human rights paradigm that was espoused in Alma Ata in 1978 focuses on strengthening healthcare systems; enabling them to address a broad range of health problems instead of just a single disease. According to this approach health is not defined only by the absence of disease, but rather by the more general well-being of a population. It therefore stresses the importance of addressing the social, economic, and political determinants of health, aiming to integrate healthcare into wider development efforts. It further values the participation of local populations in the design and implementation of health interventions. For a number of reasons, the social justice paradigm has, however, failed to garner widespread support. It is viewed as too expensive to promote on a global scale, and the results are seen as too difficult to measure. As is evidenced by the two major development agendas of the twenty-first century (the MDGs and the SDGs), the global aid and development community favours narrow, target-setting frameworks that to a large extent prioritize economic growth over addressing the complex economic, social, and political drivers of underdevelopment and ill-health (Struckmann, 2018). “What gets measured gets done”. The social justice approach, however, demands the empowerment of local people whose conceptions of health, and international relations more broadly, differ greatly from those in the Global North who are hoping to affect change. It further requires a belief in the idea that health is a basic right, and not an individual responsibility. Unfortunately, the majority of those in power have labelled this approach as inefficient and unprofitable, and therefore technical approaches that have their origin in colonial and tropical medicine continue to dominate global health. Since the start of the new millennium, two norms that are closely aligned to the biomedical approach have also come to increasingly drive health agendas. These are security and economism. To these I now turn. Health and Security Pre-1989, the discipline of International Relations was almost exclusively concerned with matters of national and international security, specifically relating to the survival of the state in the anarchical international system. Issues related to conflict, power and self-help have thus come to be defined as ‘high’ politics. This is contrasted with matters that are regarded as non-essential to the survival of the state, such as economic and social affairs, which have hence been termed ‘low’ politics. Up until the early 1990s, health concerns appeared to be largely of domestic concern and were therefore regarded as having little influence on international affairs. If considered by IR scholars at all, health matters were labelled as ‘low’ politics. However, after the fall of the Berlin Wall, the link between health and security gained rapid traction. As described above, intensified globalization led to the emergence of a number of new health risks, and the geographies of health and disease were rapidly changing as a consequence of climate change. Increased population mobility, bioterrorism, environmental change, and a host of other issues were posing new security dangers, as well as challenging traditional notions of national health policy (McInnes and Lee, 2012, pp. 2–3, 31). Studies in the early 2000s also showed that increased disease could have direct negative effects on

The politics of global health  293 the economic and political stability of states, and reduce their overall capacity (Price-Smith, 2002). Emerging health challenges, that would previously have been associated with ‘low’ politics were consequently legitimized as ‘real’ security challenges that fall within the ambit of ‘high’ politics (Fourie, 2015, p. 105). An example of this would be the UN Security Council in early 2000 framing HIV/AIDS as a threat to not only the security and stability of the African continent but the world as a whole (UNSC, 2000). In 2014, the body passed Resolution 2177, designating the West African Ebola epidemic as a “threat to international peace and security”. Ironically, China, which held the rotating presidency of the Security Council in March 2020, blocked it from considering any resolution about the COVID-19 pandemic, arguing that public health matters fell outside the council’s ‘geopolitical’ ambit. The main reason behind China’s posturing was of course to avoid uncovering its lack of transparency in handling the initial outbreak and its campaign of misinformation regarding the virus’s origins (Patrick, 2020, pp. 44, 45). The ‘high’ politics of self-help and state survival therefore triumphed over the potential to save thousands of lives globally in China’s case. McInnes (2015, p. 9) identifies a number of reasons as to why many health issues have come to be considered national security problems. The first is that health crises can have dramatic effects on the global economy. Thanks to globalization, an epidemic can affect economic growth in areas well beyond its reach, and in worst case scenarios, trigger a worldwide recession, posing threats to livelihoods and standards of living even in wealthy countries. The COVID-19 pandemic represents the largest economic shock the world has experienced since the Great Depression, and has caused the first increase in global poverty since 1998 when the Asian Financial Crisis hit (World Bank, 2020). Ironically, sub-Saharan Africa, a region which with the exception of South Africa has been relatively unaffected by the virus from a health perspective, is projected to be the region hardest hit in terms of the increase in extreme poverty (Mahler et al., 2020). A second reason why health issues can be viewed as security problems is that travel and migration increase the risk of the spread of disease. The spread of a deadly disease could potentially destabilize entire regions, and in the case of COVID-19, the entire world. Based on this argument, many politicians, who have been unable to defend their own records in fighting the spread of the novel coronavirus, have deflected attention onto foreigners (Rose, 2020). This has reinvigorated old racist arguments that were partly responsible for the establishment of colonial medicine at the end of the nineteenth century. What the points above illustrate is that health has predominantly come to be viewed from a national or international security perspective, thereby neglecting the security of individuals who may seek protection from the threat of disease, as well as from poverty, hunger, unemployment, violence, discrimination, environmental hazards, etc. which may render them more susceptible to disease. It has securitized the symptoms of disease instead of focusing on the structural causes of poor health (Brown and Stovea, 2015, p. 310). The securitization of health has in effect placed the political and economic stability of the international system, and more importantly the economic and social stability of powerful states, above that of the health and well-being of people who live in resource-deprived states and communities. By implication, it has ignored the relationship between poor health and poverty, as well as the relationship between good health and economic stability. The 1994 Human Development Report famously advocated for a shift in the focus of security from the state to the individual. It argued that security needed to be defined to a far greater extent by an individual’s freedom from want and fear (regardless of whether this fear stemmed from an internal or external source) than by a state’s territorial integrity. The report

294  Handbook on the politics of international development also explicitly identified health as an essential component of human security, and disease as a threat to the latter. By emphasizing the human rights of all people, including the basic right to health, human security confers responsibility on all states, as well as the international community, to strive for the highest attainable standard of health of every individual, irrespective of race, ethnicity, gender, sexual orientation, religion, and social or economic status. These principles are enshrined in the Universal Declaration of Human Rights, in several international human rights instruments, as well as the WHO’s constitution and as its most recently revised International Health Regulations. Nevertheless, human security has failed to establish itself as the main security paradigm. Generally, the definition of the concept has been regarded as too expansive and vague, providing policymakers with little guidance in terms of which policy goals to prioritize (Paris, 2001, p. 88). As a consequence, human security has not had the impact its proponents have hoped for. Further, accompanying the rise of populist nationalism around the world, states will continue to withdraw from their multilateral commitments, and place their own national interests and foreign policy goals ahead of the fight against poverty and inequality (Kickbusch, 2016, p. 352). The Economism of Health There is a particular economic narrative that has its origins in the neoliberal economics of the 1980s (see Chapter 1 by Ocampo in this volume) that has come to both theoretically and normatively dominate global health. This narrative has framed healthcare as an economic issue (the efficient allocation of resources) rather than as a human rights or social justice issue. Neoliberalism advocates for minimal state involvement in the delivery of social services, and an enlarged role for the market and market forces. This approach has little concern for fair and equitable access to social services, instead focusing on cost efficiency and savings. Healthcare reforms of the 1980s led to the introduction of user fees, turning healthcare into a commodity. This had harsh social consequences, especially in low- and middle-income countries, increasing health inequalities, and leading to an unprecedented decline in the health status of the poor. At the same time, this approach led to the creation of public/private partnerships, which has allowed powerful market actors, such as the pharmaceutical, tobacco, alcohol and food industries, to wield increasing influence over international health policy and funding. These major industries have sought to influence global health policy in their favour by funding studies whose outcomes support their commercial interests. Lesser et al. (2007) for example found that when the food industry funds studies linking beverages to health, the conclusions are four to eight times more likely to be favourable to the funder than with studies with no industry funding. New global health players that emerged on the scene in the late 1990s and early 2000s, such as the Bill & Melinda Gates Foundation, have also been more interested in fighting infectious diseases, instead of challenging the powers of large industries which are, as we will argue below, to a large extent responsible for the growing burden of non-communicable diseases (NCDs) worldwide (Kickbusch, and Liu, 2019, p. 87). The WHO has in fact been one of the very few actors in global health that has focused attention on chronic NCDs, such as cardiovascular disease and mental illness. Concerns have also been raised over the fact that that hundreds of billions of dollars have gone into health research that is, on the whole, completely misaligned with the health needs of the majority of the world’s population (McInnes and Lee, 2012, p. 92). In the early 2000s the

The politics of global health  295 Global Forum for Health Research (2004) observed that only 10 per cent of health research globally goes towards studying the health needs of 90 per cent of the world’s population. This is known as the 10/90 gap. The vast majority of health research is produced and consumed by high-income countries, and focuses on the health needs of the relatively wealthy and healthy. Health conditions in poor countries, which are often more prevalent and severe, are consequently neglected. Seeing that the pharmaceutical and biotechnology industries undertake the majority of health research globally, the private sector is to a large extent responsible for this gap in knowledge production. Given that these are profit-seeking companies, they have pursued health research which focuses on health goods and services that promise economic return. This profit-seeking behaviour has led to the global health inequities, including the neglect of diseases that promise insufficient economic returns. Another issue that is largely neglected in the literature is that of NCDs. In 2017 it was estimated that infectious diseases account for less than 20 per cent of total mortality each year. In fact, the total number of deaths caused by infectious diseases worldwide was less than half of that caused by cardiovascular diseases, which killed 17.79 million people in 2017. Collectively, NCDs now account for more than 73 per cent of global deaths (Ritchie and Roser, 2019). The growing burden of NCDs is not only attributable to ageing populations but also to an increase in specific risk factors like obesity, smoking, alcohol abuse, and exposure to pollution (Bresnier and Eikemo, 2019). Global industries are therefore driving the rise in NCDs. Bollyky (2018) calls this phenomenon the paradox of progress in global health. Nevertheless, chronic or lifestyle diseases have garnered far less scholarly and policy attention. Acute and severe infectious disease outbreaks (such as the coronavirus) continue to attract far greater notice, despite other infectious diseases (acute respiratory infections in particular) accounting for a far higher burden of disease, especially in low- and middle-income countries. One possible explanation for this may simply be that the mass media find infectious disease pandemics newsworthy. As Leach and Dry (2010, p. 8) comment, “chronic is the flipside of exciting”. This does not, however, provide the full answer. The two main reasons behind the privileging of acute and severe infectious diseases with epidemic potential have already been covered in this chapter. The first lies in the security narrative. Infectious disease outbreaks are often seen as threats emanating from ‘outside’ the West. Emphasis is placed on the origin of emerging diseases and primary populations are often cast as unclean and primitive. This narrative places blame on the external, casting Western interests as threatened, and ignoring the responsibility of the West in creating and maintaining the structural conditions in which these disease outbreaks occur (McInnes and Lee, 2012, p. 40). The second reason therefore lies in the biomedical narrative, which advocates for a top-down approach in treating disease and controlling its spread rather than a bottom-up approach that addresses the socio-economic and environmental causes of ill-health and disease outbreaks. A Critique Largely attributable to the three major paradigms (biomedical, security and economism) that have driven international and global health agendas for over a century, today, more than 400 million people still lack access to essential health services (WHO and World Bank, 2015), and 40 per cent of the world’s population lacks social protection (ILO, 2014). Africa still loses US$2.4 trillion in productivity due to illness every year, especially because of the growing burden of NCDs (WHO, 2019). Yet, multilateral health agencies continue to support private

296  Handbook on the politics of international development sector and philanthropic efforts that have shown to reinforce health inequities (Kickbusch and Liu, 2019, p. 100). This has led some scholars to argue that global health is a neo-colonial enterprise, supporting a capitalist world order that has maintained massive inequalities in access to knowledge and resources (Biehl, 2016; Dahn et al., 2015). Global health scholarship has also come under increased critique. Too much scholarly work has focused on the perspectives and solutions of Western donors rather than on the needs and contributions of the rest of the world. The majority of this work is published in a Western language (English) and in Western journals; voices from the Global South being largely absent (Sheikh et al., 2017). This has ushered in a new global movement, led by students and other professionals, to decolonize Global Health (see e.g. Affun-Adegbulu and Adegbulu, 2020; Büyüm et al., 2020). Scholars such as Büyüm et al. (2020) have called for a paradigm shift that repoliticizes and rehistoricizes Global Health, grounding it in a health justice paradigm that acknowledges that colonialism, racism, sexism and capitalism continue to pose the greatest threats to health equity.

AN AGENDA FOR CHANGE In September 2015, the international community pledged to achieve a better and more sustainable future for all, emphasizing that no one should be left behind. Even before the novel coronavirus began spreading from Wuhan across the globe, concerns had been raised that the world was not on track to achieve the vast majority of targets under the Sustainable Development Goals; SDG3 on health included. Targets 3.8 (achieve universal health coverage), 3.c (increase health workforce in developing countries), and 3.d (strengthen emergency preparedness of all countries) have throughout the history of global health been neglected. As we have reiterated throughout this chapter, dominant global health approaches have privileged the free market and the security of Western states over addressing health inequalities and the social determinants of health. This final section proposes an alternative global health agenda; one that demands real change by focusing attention on better governance, health systems strengthening, national ownership, and the participation of non-state actors. Health Systems Strengthening For much of the history of international and global health, crisis mode has prevailed, which has led to the privileging of technocratic health interventions or a ‘vertical’ financing model that aims for disease-specific results, and thereby neglects the structural causes of ill-health. As a consequence, health systems throughout the developing world, and in Africa in particular, have remained weak, and largely incapable of managing new and re-emerging health risks. Low- and middle-income countries (LMICs) have also continued to depend on external health funding, and have therefore been unable to define their own health priorities or design their own programmes. While Sachs et al. (2019) have proposed that the world’s billionaires could easily pledge US$5 billion a year to support global health, the answer to the world’s health problems does not lie in more funding but rather better governance and investment in health systems. Many LMICs have started taking initiative. The funding of health services in these countries has grown faster than GDP at 6 per cent on average, with most health system resources coming from government sources (Xu et al., 2018). In Ghana, for example,

The politics of global health  297 a tax-funded national health insurance system covers 95 per cent of diseases that affect Ghanaians, which has enabled financial protection and expanded coverage (Packard, 2016, p. 340). Attention should now be focused on how global governance can support determined domestic political leadership to invest in health, and to build strong public health institutions (Kickbusch and Liu, 2019, p. 97). Furthermore, the global health community needs to broaden its scope by acknowledging that health does not solely depend on strong health systems, but also on quality education, economic growth, gender equality, and migration policy (The Lancet, 2020). National Ownership and Participation of Non-State Actors According to Irurzun-Lopez and Poku (2005, p. 226), “it is time to move from globally designed policies and structures toward strategies tailored to national needs”. Local stakeholders in LMICs should assume leadership in defining strategic priorities that are based on their specific national context, and from there develop relevant programmes and institutions. States should also begin to perceive non-state actors not as a threat to the state’s legitimacy but as an asset (see Chapter 12 by Irrera in this volume). Actions to address health challenges in LMICs should be built on communication and decision-making between state and non-state actors. This may prove particularly useful on the community level. The Bill & Melinda Gates Foundation is for example funding initiatives designed to promote the delivery of health services at the community level, and Jeffrey Sachs has called for the recruitment and training of one million community health workers in sub-Saharan Africa (Packard, 2016, p. 340). These initiatives indicate that there is increased awareness around the need to focus on the basic health needs of the world’s poor. Governance Led in by COVID-19 pandemic, this new decade will require action on some of the toughest challenges global health governance has faced. These include pandemic preparedness, anti-microbial resistance, NCDs, climate change, and migration (Kickbusch and Liu, 2019, p. 99). All these challenges are interrelated, yet global governance structures are not. At the same time, the combined impact of rapid demographic, economic, social, environmental, and technological changes is also making it increasingly difficult to address global health challenges. What the field of global health currently needs more than anything is strong government action and determined political leadership, particularly at the domestic level. Up to date, global health institutions based in the Global North have perpetuated a Eurocentric worldview that has overlooked the health needs of the marginalized majority. To quote Sylvia Wynter (2003, p. 262): “The struggle of our times, one that has hitherto had no name, is the struggle against this overrepresentation [of the western bourgeois Man]”. Leadership at global agenda-setting institutions does not reflect the diversity of people these institutions are intended to serve; a leadership shift is long overdue. It is time that the contributions of leaders in the Global South are recognized, and that gender disparities in global health leadership are addressed. The story of global health cannot continue to be dominated by white men (Dhatt et al., 2017). We need more equitable representation in leadership roles, faculty make-up and academic journals so that contributions from the Global South have more influence in driving discussions and practice, both locally and globally (Büyüm et al., 2020).

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CONCLUSION The COVID-19 pandemic has awakened the international health community to an indisputable reality: we are facing a healthcare and governance crisis. This crisis is attributable to a number of key factors that have been discussed at length in this chapter. Firstly, the current institutional architecture, which has changed little since its establishment post-1945, is unable to respond effectively to contemporary global health threats. Global health institutions based in the Global North continue to disparage the knowledge and agency of local populations and affected communities, perpetuating a Western-centric worldview that does not consider the needs of the marginalized majority. Their focus has largely remained on how improvements in health can stimulate economic growth and protect powerful Western nations against the spread of disease. Instead of addressing the structural causes or social determinants of poor health, global health has come to rely on short-term, Band-Aid approaches that do nothing more than securitize the symptoms of disease. As a consequence, the true health and development needs of the poor have been neglected, rendering many LMICs incapable of managing and reducing the risk of national and global health emergencies. As Büyüm et al. (2020) and others have argued, it is time that Global Health is decolonized, which warrants, firstly, the acknowledgement that colonialism, racism, sexism and capitalism continue to impede health equity. Further, a return to the social justice paradigm, which was first espoused at Alma Ata in 1978 is required to ensure that no one is left behind. Strong government action, determined political leadership, investment in health systems, and most importantly, community participation and the empowerment of local people are essential in attaining health for all.

REFERENCES Affun-Adegbulu, C. and Adegbulu, P. (2020), ‘Decolonising global (public) health: From Western universalism to global pluriversalities’, BMJ Global Health, 5 (e002947), 1–3. Anderson, W. (1995), ‘Excremental colonialism: Public health and the poetics of pollution’, Critical Inquiry, 21 (3), 640–669. Arnold, D. (1993), Colonizing the Body: State Medicine and Epidemic Disease in Nineteenth Century India. Berkeley, CA: University of California Press. Biehl, J. (2016), ‘Theorising global health’, Medicine Anthropology Theory, 3 (2), 127–142. Bollyky, T. J. (2019), The Future of Global Health is Urban Health. https://​www​.cfr​.org/​article/​future​ -global​-health​-urban​-health. Bresnier, E. and Eikemo, T. A. (2019), ‘Health and well-being worldwide’, in Hertie School of Governance (ed.), The Governance Report. Oxford: Oxford University Press, pp. 27–50. Brown, G. W. and Stoeva, P. (2015), ‘Reevaluating health security from a cosmopolitan perspective’, in S. Rushton and J. Youde (eds.), Routledge Handbook of Global Health Security. Abingdon: Routledge, pp. 304–317. Büyüm, A. M., Kenney, C., Koris, A., Mkumba, L., and Raveendran, Y. (2020), ‘Decolonising global health: If not now, when?’ BMJ Global Health, 5 (e003394), 1–4. Centers for Disease Control and Prevention (2020), COVID-19 in Racial and Ethnic Minority Groups. https://​www​.cdc​.gov/​coronavirus/​2019​-ncov/​need​-extra​-precautions/​racial​-ethnic​-minorities​.html. Dahn, B., Mussah, V., and Nutt, C. (2015), ‘Yes we were warned about Ebola’, New York Times. https://​ www​.nytimes​.com/​2015/​04/​08/​opinion/​yes​-we​-were​-warned​-about​-ebola​.html. Dhatt, R., Kickbusch, I., and Thompson, K. (2017), ‘Act now: A call to action for gender equality in global health’, The Lancet, 389 (10159), 1684–1735. Fourie, P. (2015), ‘AIDS as a security threat: The emergence and decline of an idea’, in S. Rushton and J. Youde (eds.), Routledge Handbook of Global Health Security. Abingdon: Routledge, pp. 105–117.

The politics of global health  299 Frank, A. G. (1966), The Development of Underdevelopment. Boston: New England Free Press. Frenk, J. and Moon, S. (2013), ‘Governance challenges in global health’, The New England Journal of Medicine, 368 (10), 936–942. Global Forum for Health Research (2004), 10/90 Gap Report 2003–2004. Geneva. ILO (International Labour Organization) (2014), Addressing the Global Health Crisis: Universal Health Protection Policies. Social Protection Policy Papers 13, Gevena: ILO. Irurzun-Lopez, M. and Poku, N. (2005), ‘Pursuing African AIDS governance: Consolidating the response and preparing for the future’, in A. S. Patterson (ed.), The African State and the AIDS Crisis. Aldershot: Ashgate Publishing, pp. 219–230. Kickbusch, I. (2016), ‘Global health governance challenges 2016 – Are we ready?’, International Journal of Health Policy and Management, 5 (6), 349–353. Kickbusch, I. and Liu, A. (2019), ‘Global health governance’, in Hertie School of Governance (ed.), The Governance Report. Oxford: Oxford University Press, pp. 83–101. Leach, M. and Dry, S. (2010), ‘Epidemic narratives’, in S. Dry and M. Leach (eds.), Epidemics: Science, Governance and Social Justice. Abingdon: Earthscan, pp. 1–22. Lesser, L. I., Ebbeling, C. B., Goozner, M., Wypij, D., and Ludwig, D. S. (2007), ‘Relationship between funding source and conclusion among nutrition-related scientific articles’, PLOS Medicine, 4 (1), e5. Mahler, D. G., Lakner, C., Andres Castaneda Aguilar, R. and Wu, H. (2020), ‘The impact of COVID-19 (Coronavirus) on global poverty: Why sub-Saharan Africa might be the region hardest hit’. https://​ blogs​.worldbank​.org/​opendata/​impact​-covid​-19​-coronavirus​-global​-poverty​-why​-sub​-saharan​-africa​ -might​-be​-region​-hardest. McInnes, C. (2015), ‘The many meanings of health security’, in S. Rushton and J. Youde (eds.), Routledge Handbook of Global Health Security. Abingdon: Routledge, pp. 7–17. McInnes, C. and Lee, K. (2012), Global Health & International Relations. Cambridge: Polity Press. Osterholm, M. T. and Olshaker, M. (2020), ‘Chronicle of a pandemic foretold: Learning from the COVID-19 failure––before the next outbreak arrives’, Foreign Affairs, July/August, 10–24. Packard, R. M. (2007), The Making of a Tropical Disease: A Short History of Malaria. Baltimore: Johns Hopkins University Press. Packard, R. M. (2016), A History of Global Health: Interventions into the Lives of Other Peoples. Baltimore: Johns Hopkins University Press. Palmer, S. (2010), Launching Global Health: The Caribbean Odyssey of the Rockefeller Foundation. Ann Arbor, MI: University of Michigan Press. Paris, R. (2001), ‘Human security: Paradigm shift or hot air?’, International Security, 26, 87–102. Patrick, S. (2020), ‘When the system fails: COVID-19 and the costs of global dysfunction’, Foreign Affairs, July/August, 40–50. Price-Smith, A. T. (2002). The Health of Nations: Infectious Disease, Environmental Change and Their Effects on National Security and Development. Cambridge, MA: MIT Press. Ritchie, H. and Roser, M. (2019), ‘Causes of death’, Our World in Data. https://​ourworldindata​.org/​ causes​-of​-death. Rose, G. (2020), ‘The world after the pandemic’, Foreign Affairs, July/August. Sachs, J. D. Schmidt-Traub, G., and Fajans-Turner, V. (2019), Fully Fulfilling the Global Fund. https://​www​.project​-syndicate​.org/​commentary/​global​-fund​-aids​-tb​-malaria​-replenishment​-round​-by​ -jeffrey​-d​-sachs​-et​-al​-2019​-01​?barrier​=​accesspaylog. Sheikh, K., Bennett, S. C., El Jardali, F., and Gotsadze, G. (2017), ‘Privilege and inclusivity in shaping global health agendas’, Health Policy and Planning, 32 (3), 303–304. Struckmann, C. (2018), ‘A postcolonial feminist critique of the 2030 Agenda for Sustainable Development: A South African application’, Agenda, 32 (1), 12–24. The Lancet (2020), ‘Global health: Time for radical change?’, The Lancet, 396 (10258), 1129. United Nations Security Council (2000), UN Security Council Resolution 1308 (2000) on the Responsibility of the Security Council in the Maintenance of International Peace and Security: HIV/ AIDS and International Peace-Keeping Operations. New York: United Nations. WHO (World Health Organization) (1978), Declaration of Alma-Ata. https://​www​.who​.int/​publications/​ almaata​_declaration​_en​.pdf​?ua​=​1. WHO (World Health Organization) (2006), Constitution of the World Health Organisation. https://​www​ .who​.int/​governance/​eb/​who​_constitution​_en​.pdf.

300  Handbook on the politics of international development WHO (World Health Organization) (2019), A Heavy Burden: The Productivity Cost of Illness in Africa. Brazzaville: WHO Regional Office for Africa. WHO and World Bank (2015), Tracking Universal Health Coverage: First Global Monitoring Report. Geneva: WHO. Wilmhurst, P. (1997), ‘Scientific imperialism’, British Medical Journal, 314 (7084), 840. World Bank (2020), The Global Economic Outlook During the COVID-19 Pandemic: A Changed World. https://​www​.worldbank​.org/​en/​news/​feature/​2020/​06/​08/​the​-global​-economic​-outlook​-during​ -the​-covid​-19​-pandemic​-a​-changed​-world. Wynter, S. (2003), ‘Unsettling the coloniality of being/power/truth/freedom: Towards the human, after man, its overrepresentation––an argument’, CR: The New Centennial Review, 3 (3), 257–337. Xu, K., Soucat, A., Kutzzin, J., Brindley, C., van de Maele, N., Toure, H., Garcia, M. A., Li, D., Barroy, H., Flores, G., Roubal, T., Indikadahena, C., Cherilova, V., and Siroka, A. (2018), Public Spending on Health: A Closer Look at Global Trends. WHO/HIS/HGF/HF Working Paper 18.3. Geneva: World Health Organization.

19. The politics of international migration Fabiola Mieres1

INTRODUCTION International migration is one of the most conspicuous contemporary manifestations of globalization. It has become highly politized by nation-states, and it has consolidated as a ‘global issue’ in policy agendas. The recognition that migration ‘made it’ into the 2030 Agenda for Sustainable Development (UN, 2015) and thus, filling the gaps in the Millennium Development Goals (MDGs), is a testimony of its relevance. Various forms of migration are referred to in a number of goals and targets, specifically, under the Sustainable Development Goal 10 (SDG 10) on ‘reduced inequalities’, under which target 10.7, aims to “facilitate orderly, safe, and responsible migration and mobility of people, including through implementation of planned and well-managed migration policies”. In addition, the notion that cooperation would contribute to achieve this goal and overcome what has historically been considered a ‘fragmented global migration governance’ became evident with the adoption by 164 countries in December 2018 of the Global Compact for Safe, Orderly and Regular Migration (GCM) (UNGA, 2018). Yet, how to operationalize this cooperation when migration is deeply rooted in nation states’ sovereignty remains a challenge. In parallel, the conflict situation in Syria around 2015 led to the forced displacement of many people to Europe and other neighbouring countries. A sense of crisis in the rich world created an unprecedented degree of political and media attention around refugees (Betts, 2018, p. 623). The topic was also addressed in the 2016 United Nations Conference that adopted the New York Declaration on Refugees and Migrants, which laid the groundwork for the creation of two ‘global governance frameworks’: the GCM with its aim to address migration in many forms, and the Global Compact for Refugees. Despite the fact that these two Compacts are treated separately at the global level, the reality on the ground shows evidence of ‘mixed flows’. This chapter traces the politics of international migration, and posits that, over the last decades, it has led to further fragmentation despite important advances at the global level. Even though this fragmentation is not new, it is further exacerbated as the governance frameworks treat forms of migration as ‘issue-areas’ creating spheres of intervention with a logic that potentially isolates migration policies from structural transformation processes. Fragmentation per se might not be a problem, but the risk of sidelining rights-based approaches is. In turn, ideas on ‘migration and development’ that became dominant in policy debates as a result of a long-standing discussions on how ‘migration’ can become a ‘policy tool’ for development have influenced global processes. The uneasy relationship between development and migration outcomes is known as the ‘migration and development nexus’ (Van Hear and

1 The views expressed in this chapter are those of the author and do not represent the position of the organization she is affiliated to.

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302  Handbook on the politics of international development Sørensen, 2003) which aims to unpack the relationship between migration and development. However, we have learned that this link is complex, and not linear as often imagined by some policymakers as well as some researchers (Bastia and Skeldon, 2020, p. 2). Migration is an inherent part of broader processes of structural social, political, cultural and economic transformation. As this chapter was being developed, the COVID-19 pandemic shook the globe. Although it is premature to evaluate and properly assess the multidimensional impacts of the pandemic, it would be naïve to assume that the world can easily transition to a ‘known normality’. The development community is immersed in talks about ‘building back better’ (UNGA, 2020) but it is too early to see if the underlying pillars that have sustained the neoliberal paradigm of development will be removed or shaken enough to sustain a ‘better normal’. One thing is clear: the pandemic has exposed the world to the realization of existing inequalities, which have been exacerbated. These inequalities have been underlying, and socially constructed for many years. For example, during the pandemic, many developed parts of the world have re-labelled their agriculture workers as ‘essential’ (see EU, 2020). These workers, who historically have largely been migrants, have been essential for a long time but their rights and difficult working conditions have not been fully recognized. They are subject to temporary labour migration schemes whose restrictive provisions deny them further mobility and equality of treatment vis-à-vis national workers. Yet ‘temporary schemes’ have been presented as a ‘triple win’ solution for origin, destination countries and migrants alike in migration and development discourses (Agunias and Newland, 2007). In this vein, ideas about ‘migration and development’ shape the international politics of migration. Nevertheless, ideas do not operate in a vacuum: ideas shape interests, and interests shape ideas. Power dynamics sustain this uneasy game in all areas of political life, at the national, regional and global levels. When put to action, certain ideas structure governance and the conditions under which governance mechanisms are applied. Whether the COVID-19 pandemic might contribute to conceive ideas about migration differently it is still premature to tell. In most cases, the relationships between migration and other issue-areas (development, the environment and security) are not objective causal relationships but are based on dominant sets of ideas that are influential in shaping and framing academic and policy debates (Betts, 2011; de Haas, 2007). In this chapter, a pluralist approach is taken to address concerns that also capture migrants’ agency in global governance debates, which have been primarily shaped by a ‘top-down focus’. It analyses and traces the politics of international migration and its relationship to development from an interdisciplinary standpoint – as this is the only way to reflect on the complexities of migration and address its multidimensionality. It places a special focus on labour migration, since 164 million people are migrant workers (ILO, 2018), and some reference is made to refugees inasmuch as migrants and refugees meet in the labour market. It is structured as follows: First, it briefly reviews key ideas around ‘migration and development’ that influenced the evolution of contemporary global governance debates. Second, the chapter addresses how ‘temporary labour migration’ became a ‘good idea’ for some, while it contradicts fundamental issues on rights and emphasizes further fragmentation. Third, it explores the recent evolution of the global governance of migration through the adoption of the GCM, and other fora. Finally, conclusions are drawn while providing initial reflections on the impacts of COVID-19 as areas for further research.

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THE UNEASY ‘MIGRATION–DEVELOPMENT NEXUS’ The ‘migration and development’ nexus is hardly a theory (Samers and Collyer, 2017, p. 127) but a set of ideas based on different theoretical inclinations and methodologies that create a ‘story’ on the relationship between migration and development. This section reviews some of these ideas, without being exhaustive as comprehensive reviews have been done elsewhere (see Bastia and Skeldon, 2020). The notion of development that has traditionally sustained these debates at the policy level refer to economic and financial indicators on countries of origin, sometimes associated to GDP levels. When migrant workers feature as actors, the discourse takes an ‘economic turn’ as migrants matter for the contributions they make to their home countries in terms of remittances, and their ‘human capital’ through augmented skills as well as how productive they are for the host economy. Rarely does a critical assessment of what development constitutes permeate policy debates, even though a strong critical literature has emerged (see Faist, 2008; Raghuram, 2009; Geiger and Pécoud, 2013; Bastia and Skeldon, 2020). The migration and development nexus has been instrumentalized in different ways by various international organizations, who saw the potential of migration to ‘maximize’ development, while ‘development’ could reduce migration when this was considered a ‘problem’. As Skeldon already assessed back in 2008 in a paper that informed the UN Expert Group on International Migration in Asia and the Pacific: One misunderstanding that pre-dated current concerns was the idea that migration was caused by a lack of development: that people left poor areas or poor countries because of lack of opportunities at home. Certainly, this idea contains an element of truth, but close investigation revealed that it was rarely the poorest who moved and rarely the poorest countries that participated most in the global migration system. (Skeldon, 2008, p. 3)

In further research, it was demonstrated that development leads to increasing levels of migration because it simultaneously endows people with the capabilities and the aspirations to move (de Haas, 2007, 2009, 2020). Thus, the idea that development can drive migration either negatively (as a development failure) or positively (as an enabler of migration) has been very strong and an important argument used by various international organizations to include migration in the SDGs (McGregor, 2020a). Some political discourses and the media tend to represent migration as an antithesis to development (de Haas, 2020, p. 17). Thus, many aid proposals aim to support means to ‘develop’ certain regions of the world (mostly developing ones) under the assumption that migration would decrease. Development policies are then portrayed as a solution to problems of poverty, inequality, conflict, violence and other factors understood as root causes of migration. In turn, the need to instrumentalize policy solutions compartmentalizes nations into ‘origin’, ‘transit’ and ‘destination’ leaving aside complex transnational and multidimensional aspects that characterize migratory processes, and, probably most importantly, how these affect migrants themselves in terms of their own development and rights. Even though this division can serve as a heuristic device, and there is no harm in recognizing its utility while acknowledging its limitations, the reality of migration is that the consequences vary across regions, scales of space and actors involved. Over the past decades, the issue of migration and development has sparked a heated debate among the policy and research community, giving way to ‘optimists’ vs. ‘pessimists’ (de

304  Handbook on the politics of international development Haas, 2007). Pessimists focus mostly on two negative outcomes on migration, namely: brain drain and a negative effect of remittances in communities of origin. ‘Brain drain’ refers to the loss of skilled labour, for example, doctors and nurses from developing countries that work in most affluent regions rather than contributing to their countries of origin. The second dimension pertaining to remittances points to the fact that remittances do not necessarily lead to broad-based sustainable economic development. They might be spent in conspicuous consumption rather than investments and contribute to certain households creating inequalities within communities (Garip, 2012). In turn, optimists see a ‘brain gain’ fed by ‘brain circulation’ where ‘circular migration’ (the back-and-forth movement of people between countries of origin and destination) benefits all in terms of skills and remittances. In this case, remittances are used for entrepreneurial activity and to counter effects of economic crisis. As migrants are turned into ‘agents of development’, ‘social remittances’ play a key role through the transmission of ideas, practices and finances that contribute to building schools, roads and other social institutions in origin countries (Levitt, 1998). These two opposing views reflect diverging intellectual roots. While pessimists have been influenced by historical-structural approaches such as neo-Marxism, which focus on exploitation and root causes of inequality, optimists rely on functionalist views nourished by neoclassical theories of migration (de Haas, 2009). Together with these divergent views, notions that ‘migration is a problem’ have emerged positing that ‘it is a problem to be resolved’ (Castles, 2012) and therefore requires a ‘form of management’. The ‘notion of migration management’ argues that origin and destination countries can manage incoming and outcoming flows according to their perceived needs which would in turn reduce the risks of irregular migration, and the exposure to exploitative practices (Chi, 2008; Piper, 2010). Thus, migration policy through the management lens provides the framework to maximize benefits and minimize certain costs of migration. This resembles perspectives entrenched in neoclassical economics approaches to migration such as the new economics of labour migration (NELM) ascribing a particular agency to migrants and thus, proposing policy interventions targeted to maximize certain benefits. For example, a classic NELM approach argues that migration can set in motion a development dynamic by lessening production and investment constraints in households in imperfect market environments as through remittances, income growth linkages are created. Thus, remittances may be a positive factor in economic development and governments may promote policies to increase these (Taylor, 2002). The NELM has been influential in the remittances literature from an economics standpoint as it focused on household dynamics, but as Carling (2020, p. 115) noted: “Many insights from NELM remain valid, but the approach incorporated a somewhat naïve notion of household decisions”. Other scholars have complemented these views with a gender and intra-generational power dynamics lens (see Vullnerati and King, 2011). Thus, the notion of migration management takes many forms and ultimately covers diverse forms of migration. Another example embraces the involvement of the ‘diaspora’ in development. Many low and middle income countries with high numbers of citizens abroad institutionalize relations with these citizens in targeted administrations that are run by the ‘diaspora’ (Gamlen and Delano, 2014). These institutions provide a wide range of services to their citizens and also encourage them to develop a form of loyalty to their home countries – and remittances become key in this aspect (Gamlen, 2008). In recent years, special attention has been paid to diaspora actors labelled as ‘the fourth pillar’ of development cooperation as their

The politics of international migration  305 role has evolved beyond sending remittances: they have been incorporated into programming and planning of development corporations to counteract top-down interventions by NGOs as ‘neo-colonial’ (Wilcock, 2020). In the context of labour migration, this enthusiasm for diaspora engagement was institutionalized in the global consultative forum created in 2006 called the Global Forum on Migration and Development (GFMD) through a platform of partnerships with different diaspora actors (Omelaniuk, 2016). Finally, the instrumental approach to migration management has another important implication: how migrants are included in the labour market. One salient policy prescription revolved around the idea of ‘temporary labour migration’ because it benefits origin and destination countries, as well as migrants themselves (the ‘triple win’ notion). The next section looks at this in greater detail.

TEMPORARY LABOUR MIGRATION One of the ultimate manifestations of the ‘management of migration’ paradigm is the notion that labour migration can be made ‘temporary’ through migration policy design in order to fulfil specific objectives, in particular, labour market shortages in some sectors of the economy (and reduce irregular migration). Migrants under temporary labour migration schemes include all sorts of skills, but the bundle of rights attached to different skills differ. They are not a homogeneous group; vast numbers of temporary migrants in recent years also include students, accompanying spouses, project-tied workers and other categories (OECD, 2019). The rationale is that temporary migrants would fill jobs while hosting governments would not see the need to invest in extensive integration programmes as, in principle, these migrants would return to their home countries. Thus, the idea of ‘circulation’ accompanies these debates as in some sectors, for example, in agriculture, construction and health, migrants would engage in “repeated migration experiences involving more than one emigration and return” (Wickramasekara, 2011, p. 9). These movements have been characterized as representing a ‘triple win’ because it offers destination countries a supply of workers, origin countries benefit from remittances and skills exchange, while migrants gain from the whole experience of migration (Agunias and Newland, 2007). Many scholars, civil society actors and trade union representatives have in recent years called these temporary schemes into question as falling short on many of their promises without realizing the ‘triple win’,2 and in some cases even called them ‘close to slavery’ (SPLC, 2013). The recent COVID-19 pandemic has also exposed some of the deficiencies of these schemes in terms of protection of labour rights and securing a pathway to residence, among many others, while interrogating the very idea of temporariness. When it comes to issues of rights, variation in impacts arise vis-à-vis skills. The human rights to which temporary migrant workers are subject are dependent on the organization of skills and the political priorities of host countries which determine those rules.3 Temporary

2 The literature on temporary labour migration is vast and addressed from many disciplinary perspectives (see Martin, 2016; Ruhs, 2013; Howe and Owens, 2016; Vosko, 2019). 3 At the international level, specific instruments addressing migration and protection of migrant workers include the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, 1990 (ratified by 55 countries, mostly in Latin America and Africa), ILO

306  Handbook on the politics of international development labour migrants do not participate in the determination of the rules that govern their admission, working conditions and social and economic rights. High-skilled workers under temporary schemes are less likely to be subject to restrictive rules, including on whom they can marry in the host country, and whether they can travel with their families (Lenard and Straehle, 2010, p. 290). Wright et al. (2017, p. 1862) find that workers in lower-skilled occupations are more susceptible to mistreatment than those in higher-skilled occupations in employer-sponsored visas schemes in Australia, Canada and Sweden. For lower skills categories, these schemes tend to tie migrant workers to employers through sponsorship in the visa system preventing migrant workers from changing employers without losing the right of residence. In addition, depending on context and sector, many migrant workers under these schemes see their rights to freedom of association and collective bargaining restricted. As mentioned earlier, in the context of the COVID-19 pandemic, for example, many developed economies relabelled their agriculture workers as ‘essential’ recognizing their historical contributions to the society, the economy and food security. In Europe, the US, Australia, and other countries that rely heavily on migrant workers in temporary schemes, the fear of not accessing that labour prompted a series of short-term measures trying to incentivize the local population to perform agricultural work but to no avail (Mieres and Kuptsch, 2020). A clearer picture has emerged of the difficult conditions under which migrant workers in the agriculture sector have been performing: under-paid, some in conditions of irregularity, no protections in terms of health and safety, precarious accommodation (Palumbo and Corrado, 2020) yet still rendered ‘essential’. It also became evident that the assumption that migration is ‘temporary’ does not hold because most economies have become dependent on foreign labour supply, and even if migrants are made to return to their home countries, they are replaced by a new group of ‘temporary’ ones, thus, as Martin (2001) assessed: “There is nothing more permanent than temporary migration”. In this way, the pandemic has also exposed that certain ideas about development and migration that fed the temporary labour migration paradigm might need to be reconsidered. For instance, how sustainable is it to rely on financial remittances for economic development? The World Bank estimated that remittances globally would decline by 20 per cent in 2020 because of shutdowns and the impact of job losses of migrant workers during the pandemic (World Bank, 2020). As of 2019, countries that topped the list of remittance receivers in US dollars included India (83.1 bn), China (68.4 bn), Mexico (38.5 bn), the Philippines (35.2 bn) and Egypt (26.8 bn) (World Bank, 2020). The drop in the flow of remittances represents a huge loss for many households in these countries, which have relied on these forms of financial help from their family members. It is still too early to assess micro-dynamics but much of the enthusiasm over the development impacts of remittances has been based on private financial transfers by migrants aggregated at the ‘national level’.4 The way that ideas about migration and development feed temporary labour migration paradigms is highly influenced by politics. As Chi (2008, p. 502) noted:

Convention 97 on Migration for Employment, 1949 (ratified by 50 countries), and Convention 143 on Migrant Workers, 1975 (ratified by 25 countries). 4 Observations of financial flows at the macro level and compared to official development assistance (ODA) numbers have highly influenced the prominence of remittances in the development agenda in relation to migration (see Carling, 2020).

The politics of international migration  307 It is necessary to rethink the paradigm, but doing so may be difficult because the paradigm is framed as a value-neutral process of designing and implementing the best labour migration program. […] the perception of the paradigm as a set of objective and non-political best practices fosters path dependence and tunnel vision in domestic political and economic decision-making. Thus, the paradigm is not a set of technical best practices but rather a set of political choices.

The wide umbrella of ‘migration and development’ provided a fertile and common ground for opposing views on migration to be further discussed at the global level which paved the way for the inclusion of migration into the SDGs, and later adoption of the GCM. The next section looks into this.

CRAFTING MIGRATION GLOBAL GOVERNANCE On 16 September 2016, the UN General Assembly convened the UN Summit on Refugees and Migrants, which became one of the most high-profile meetings on migration. The meeting resulted in the adoption of the New York Declaration on Refugees and Migrants, and launched an inter-governmental process leading to the adoption of two Global Compacts, one on migration and one on refugees (UNGA, 2016). In order to secure states’ buy-in, the GCM’s final text emphasizes the non-legally binding nature of this cooperative process twice and includes five reaffirmations of states’ national sovereignty in determining migration policy decisions (Kainz and Betts, 2020, p. 16). The agreement was endorsed by 152 countries, 12 abstained and 5 opposed: the United States, Poland, Hungary, the Czech Republic and Israel.5 States who endorsed the agreement see it as ‘politically binding’ in the sense that they accepted and committed to the text as a guiding framework to carry out the institutional changes mentioned in the document (Ferris and Donato, 2020). The United States was the first country to oppose the GCM, and emphasized that “our decisions on immigration policies must always be made by Americans and Americans alone. We will decide how best to control our borders and who will be allowed to enter the country” (United States Mission to the United Nations, 2017, cited in Kainz and Betts, 2020, p. 16). These events went along with another important institutional development: In 2016, the International Organization for Migration (IOM) entered the UN system and since then has been rebranding itself as the ‘UN Migration Agency’. It was tasked by the Secretary General to lead the UN Migration Network (UNMN), which coordinates the support to member states on the implementation of the GCM. In addition, a specific UN financing mechanism was created through a Migration Multi-Partner Trust Fund (MMPTF), with the aim of supporting states towards national implementation of the GCM around five core areas: (i) promoting fact-based and data-driven migration discourse, policy and planning, (ii) protecting the human rights, safety and well-being of migrants, including through addressing drivers and mitigating situations of vulnerability in migration, (iii) addressing irregular migration including through managing borders and combating transnational crime, (iv) facilitating regular migration, decent work and enhancing the positive development effects of human mobility, and (v) including the social inclusion and integration of migrants (MMPTF, 2020).



5

See voting summary: https://​digitallibrary​.un​.org/​record/​1656414​?ln​=​en.

308  Handbook on the politics of international development Each appeal for funding requires the participation of at least two UN agencies, as well as partnership with local authorities and other non-UN stakeholders, including migrants and migrants’ associations to design and implement programmes. As of September 2020, the Multi-Partner Trust Fund showed a financial commitment of US$12 million with real deposits of US$9.4 million.6 Upon its creation in May 2019, it aimed to fundraise US$25 million for 2020 (IOM, 2019). The impact of the COVID-19 pandemic might have affected donor commitment; therefore, at the time of writing, it is still unclear which areas will be prioritized and funding secured. In comparison to other well established and studied ‘regimes’ and ‘cooperation frameworks’ in world politics, the completion of the GCM, by turning migration into a ‘specific area of governance’7 without the support or abstention of powerful countries shows that in this field, and labour migration more specifically, states can still competitively act in their own self-interest. This could be taken as a sign of the consolidation of fragmentation (see Kainz and Betts, 2020). The agreement on a global text such as the GCM which reflects key interests and concerns for both origin and destination countries, with 23 thematic objectives ranging from migration data, securing access to basic services, etc. does not imply that migration is treated with an ‘integrated approach’. The division of migration issues into different streams for funding as reflected in the Multi-Partner Trust Fund could potentially segregate migration into specific ‘issue-areas’ creating specific spheres of intervention through projects that follow particular logics within the migration and development debate. As previously discussed, these are not value-free. Another layer of complexity lies in the fact that in many parts of world, especially the ‘developing’ one, we are seeing more evidence of ‘mixed flows’, caused by displacement due to natural disasters, conflict and other factors. The 2016 UN High-Level Meeting on Addressing Large Movements of Refugees and Migrants and the 2016 New York Declaration led to the United Nations High Commissioner for Refugees (UNHCR)-led 2018 Global Compact on Refugees (GCR) and the Comprehensive Refugee Response Framework (CRRF). These developments provided the framework to embody a “humanitarian-development nexus” (Zetter, 2020, p. 355). There is no unified definition of this recent nexus but Zetter (2020, p. 354) provides a working definition: “it is a multi-agency and multi-sectoral approach to refugee crises that seeks complementarity between humanitarian and development programming, funding, time scales and priorities. It aims to achieve coherence between short-term emergency assistance and sustainable, resilience-building development for refugees and their host communities.” The GCR together with the CRRF are also ways to restructure funding mechanisms and instruments that feed the ‘humanitarian–development nexus’. This nexus is also influenced by particular conceptions of what constitutes development and the means to create sustainable 6 See Multi-Partner Trust Fund Gateway, Start-up Fund for Safe, Orderly and Regular Migration, http://​mptf​.undp​.org/​factsheet/​fund/​MIG00. 7 The ‘governance of migration’ is a made up of a web of variegated fora and actors, for instance, Regional Consultative Processes (RCPs) provide a space for information exchange, with no binding commitments and are also considered informal. The IOM plays a key role in the expansion of this form of engagement, and it acts as a secretariat. There is also the Global Forum on Migration and Development (GFMD) as a space for deliberation among states, civil society actors and other stakeholders in an informal non-binding status (see Rother, 2019).

The politics of international migration  309 livelihoods for populations under conflict. At the global level, both Compacts are ‘treated separately’, while IOM became a UN agency addressing migration and UNHCR took the lead on the GCR. However, on the ground, the distinction between ‘voluntary’ and ‘forced’ migrants is less clear-cut as migration can be mixed in many senses (Van Hear et al., 2009). This complexity in migration flows leads back to a discussion on rights. In spite of the recognition of mixed flows, the GCM makes it clear in its paragraph 4 what type of population movement it aims to govern: Refugees and migrants are entitled to the same universal human rights and fundamental freedoms, which must be respected, protected and fulfilled at all times. However, migrants and refugees are distinct groups governed by separate legal frameworks. Only refugees are entitled to the specific international protection defined by international refugee law. This Global Compact refers to migrants and presents a cooperative framework addressing migration in all its dimensions. (UNGA, 2018, p. 3)

Despite existing on paper, migrant rights are still met with great obstacles in terms of their actual fulfilment (Piper, 2020, p. 280). The presence of temporary schemes for migrant workers in many parts of the world represents a challenge to this universal fulfilment because they show that the general notion of ‘rights’ is still tied to citizenship, as this bestows political membership through the exercise of democratic rights (Benhabib, 2007). Many provisions in labour law, as they apply to the citizens, are not extended to migrants who are ‘governed’ by migration laws (and this includes temporary labour migration schemes). The GCM recognizes the plethora of human rights instruments but power is conferred to sovereign nation-states to apply these rights, therefore divisions between immigration and labour law arise. As labour migration policy design is not necessarily linked to other domains such as trade, industrial policies, and macroeconomics, it runs the risk of sidelining migrant rights when it comes into competition with other policy goals at the national level.8 However, despite the limitations in migration governance frameworks, there is another channel to realize the rights of migrant workers, through the concept of ‘decent work’ (ILO, 1999, 2008). Decent work was incorporated in the SDG Goal 8 and calls for the protection of labour rights of all workers “including migrant workers”. This consideration goes in addition to SDG 10.7 which focuses on “planned and well-managed migration policies”, and does not make any reference to issues of rights.9 For example, the ILO Convention 189 on Decent Work for Domestic Workers is a concrete result, especially since 11.5 million migrant workers were estimated to be domestic workers in 2013 (ILO, 2015). As labour migration cuts across many spheres of the political economy of countries, there is also potential to advance on the issue of rights for migrant workers in other SDGs of the 2030 Agenda. As Piper (2017, p. 236) asserts: international standards and instruments on universal human and labour rights have existed for a long time. In this way, the Agenda 2030 envisages goals and targets that are in line with established human rights instruments. Given that especially migrant worker-related human rights instruments are highly under-ratified, the SDGs will however be an important avenue to protect the rights of migrant workers. […] The SDGs make the important contribution to a holistic approach to migration by addressing the full cycle of migration, and thus addressing the negative aspects of temporary contract migration, especially the situation of the many low-wage workers. Ruhs (2013) analyses this in depth as a trade-off of ‘numbers vs. rights’. SDG 10.7 in full reads: “Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies”. 8 9

310  Handbook on the politics of international development The other important dimension pertaining to the labour rights discussion revolves around ‘refugees’. Refugees are rarely legally recognized as workers (Gordon, 2019), and many regularly work, either in refugee camps or in the informal economy. Recent ‘refugee crises’ have opened up the debate on their livelihoods and in particular, waged work in different contexts. These debates have come with notions on the right to work for refugees, and rights at work through a comprehensive decent work approach, rather than focusing on income-generating approaches (Gordon, 2019, p. 35). This is an important issue because many countries receive mixed flows of refugees and migrants, who are governed by different frameworks and legal systems, but they meet at the labour market adding another layer of complexity to what constitutes ‘development’ and for whom. The realization of the rights-based approach to migration and refugees also depends on the role of civil society actors and the trade union movement, as well as the private sector, beyond governments. All these actors have a role in shaping the process of ‘migration and development’ towards more human governance schemes. The presence of many actors can foster further fragmentation, but as noted in the introduction, fragmentation per se might not be a problem as long as fundamental freedoms and rights are secured towards the well-being of migrant workers.

CONCLUSIONS This chapter reviewed the politics of international migration by showing how certain ideas about migration and development led to the current global governance of migration. It indicated that the conceptualization of the ‘nexus’ – the analysis of the complex relationship between migration and development – has been shaped by the dominant thinking at particular moments of history and across geographies, subject to different paradigms and methodologies. In this process, ‘temporary labour migration’ became a dominant form appealing to donors and the international community. The outbreak of the COVID-19 pandemic has pushed the world into not only a serious health crisis, but also confronts us with the moral task of rethinking and reassessing well-established paradigms and forms of policymaking. Taking into account what was discussed in the previous sections, this conclusion offers three areas for further thinking and future research. First, the chapter traced the politics and ideas that led to the existence and acceptance of a ‘global governance of migration’;10 however, it is fragmented and overlapping, and it is composed of a panoply of actors. In addition, the notion of the ‘management of migration’ embedded in a managerial ideology where problems can be resolved if they are ‘better managed’ has established itself and it seems innocuous. It is also hardly debatable as it is difficult to contradict – who would argue against ‘better management’? However, these are not value-free ideas and certain interests sustain these notions. The means chosen to ‘manage’ and the ‘how’ remain important. For instance, the development of indicators to trace progress is not just a technocratic exercise, but also a highly political one in terms of ‘what’ dimension of migration should be prioritized and ‘who’ benefits. Towards the future, international organizations will benefit from a critical reflection on what dominant paradigms have been guiding

A recent comprehensive historiography is provided in McGregor (2020b).

10

The politics of international migration  311 the ‘politics of indicators and measurement’, to avoid being caught up in what Eagleton-Pierce and Knafo (2020, p. 773) describe as the “generalisation of abstract managerialism which has curtailed the policy or development space, narrowing which ideas are considered authoritative and restricting who has a voice in the process that governs these organizations”. Nation-states seem to remain the main actors in migration policy design, but it should be recognized more honestly that although governments can influence the actual levels and patterns of migration to a certain extent, it would be an illusion to think they can change the overall meta-trends, let alone reverse them (de Haas, 2020, p. 21). Future research into the governance of migration should trace the implementation of the GCM at the national level, observe what projects are funded from the MMPTF and which are not, and inquire into the logics behind funding and the cooperation arrangements that emerge among international organizations and other actors.11 Second, migration is development (Skeldon, 1997) in many complex ways but the politics of migration at different times has led to disparate uses of certain conceptualizations, and policymakers have chosen specific dimensions over others, as remittances, temporary migration, etc. A better recognition of the interconnections between migrants’ decision-making processes and global processes in other domains such as finance, trade, health, security and other fora is needed to embrace an ‘integrated approach’. The COVID-19 pandemic has shown the key role of migrants as workers in specific sectors, and how precarious status exacerbates inequalities. The entrenched and complex dynamics between migration and inequalities came to light; what is needed is a reflexive approach to move beyond neoliberal logic in migration governance that considers them only for their economic contributions. Labour migration policies need to be recast and rethought within the broader scheme of trade systems and debt policies, and acknowledge the linkages with other policy areas in a more systematic way. This is not easy, but a way to begin to correct the historical unbalance generated with uneven participation among regions in the global economy. At the end of the day, it comes with an honest recognition that the politics of migration are about the politics of ‘othering’ and there is ‘emotion’ in the process (not just ‘facts’) so evidence-based policymaking might not always mean the same for all actors involved. Finally, the challenge is to strengthen and realize rights-based approaches. How to secure these beyond the confines of nation-states? It has become common sense that the governance of migration is fragmented and even the adoption of the GCM does not change this, nor upend the structural power asymmetries between origin and destination countries. The international system needs to better recognize that labour migration cuts across many domains of the global economy, and should be incorporated (some call it ‘mainstreamed’) in issues of global production, trade, investment and other policy objectives, because the pre-existing institutional frameworks in these domains pertain and affect migration in complex ways. There is a need to rethink the interweaving processes that led us to this stage of globalization and where we have placed labour (humans) within these. An honest rethinking of how we organize and prioritize factors of production at the global scale might lead us to better enforcement and recognition of

11 There is a rich literature that problematizes the methodological nationalism of migration research and policy design (see Wimmer and Glick-Schiller, 2002; Dahinden et al., 2020). The rich insights from these perspectives have not fully permeated policy circles, as there is a strong attachment to the Westphalian legacy of the nation-state.

312  Handbook on the politics of international development rights-based approaches. Will COVID-19 allow us to free labour migrants from the constraints of their current situation?

REFERENCES Agunias, D. R. and K. Newland (2007) Circular Migration and Development: Trends, Policy Routes and Ways Forward. MPI Policy Brief. Washington, DC: Migration Policy Institute. Bastia, T. and R. Skeldon (eds.) (2020) Routledge Handbook of Migration and Development. London: Routledge. Benhabib, S. (2007) ‘Twilight of sovereignty or the emergence of cosmopolitan norms? Rethinking citizenship in volatile times’, Citizenship Studies, 11, 19–36. Betts, A. (ed.) (2011) Global Migration Governance. Oxford: Oxford University Press. Betts, A. (2018) ‘The Global Compact on Refugees: Towards a theory of change?, International Journal of Refugee Law, 30(4), 623–626. Carling, J. (2020) ‘Remittances: Eight analytical perspectives’, in T. Bastia and R. Skeldon (eds.), Routledge Handbook of Migration and Development. London: Routledge, pp. 114–124. Castles, S. (2012) ‘Understanding the relationship between methodology and methods’, in C. Vargas-Silva (ed.), Handbook of Research Methods in Migration. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, pp. 7–25. Chi, X. (2008) ‘Challenging managed temporary labour migration as a model for rights and development for labour-sending countries’, Journal of International Law and Politics, 40, 497–540. Dahinden, J., C. Fischer, and J. Menet (2020) ‘Knowledge production, reflexivity, and the use of categories in migration studies: Tackling challenges in the field’, Ethnic and Racial Studies. https://​doi​.org/​ 10​.1080/​01419870​.2020​.1752926. De Haas, H. (2007) ‘Turning the tide? Why development will not stop migration’, Development and Change, 38(5), 819–841. De Haas, H. (2009) Mobility and Human Development. New York: UNDP. De Haas, H. (2020) ‘Paradoxes of migration and development’, in T. Bastia and R. Skeldon (eds.), Routledge Handbook of Migration and Development. London: Routledge, pp. 17–31. Eagleton-Pierce, M. and S. Knafo (2020) ‘Introduction: The political economy of managerialism’, Review of International Political Economy, 27(4), 763–779. EU (European Union) (2020) Guidelines concerning the exercise of the free movement of workers during COVID-19 outbreak. Official Journal of the European Union C102I/12, 30 March. https://​eur​-lex​ .europa​.eu/​legal​-content/​EN/​TXT/​PDF/​?uri​=​CELEX:​52020XC0330(03)​&​from​=​EN. Faist, T. (2008) ‘Migrants as transnational development agents: An inquiry into the newest round of the migration-development nexus’, Population, Space and Place, 14, 21–42. Ferris, E. and K. Donato (2020) Refugees, Migration and Global Governance: Negotiating the Global Compacts. London: Routledge. Gamlen, A. (2008) ‘The emigration state and the modern geopolitical imagination’, Political Geography, 27(8), 840–856. Gamlen, A. and A. Delano (2014) ‘Special Issue: Comparing and theorizing state-diaspora relations’, Political Geography, 41, 43–53. Garip, F. (2012) ‘Repeat migration and remittances as mechanisms for wealth inequality in 119 communities from the Mexican Migration Project Data’, Demography, 49(4), 1335–1360. Geiger, M. and A. Pécoud (2013) ‘Migration, development and the “migration and development nexus”’, Population, Space and Place, 19(4), 369–374. Gordon, J. (2019) Refugees and Decent Work: Lessons Learned from Recent Refugee Jobs Compacts. Employment Working Paper No. 256, Employment Policy Department, Geneva: ILO. Howe, J. and R. Owens (2016) Temporary Labour Migration in the Global Era: The Regulatory Challenges. Oxford: Hart Publishing. ILO (International Labour Organization) (1999) Decent Work. Report of the Director General, 87th Session, Geneva, June. https://​www​.ilo​.org/​public/​english/​standards/​relm/​ilc/​ilc87/​rep​-i​.htm.

The politics of international migration  313 ILO (International Labour Organization) (2008) ILO Declaration on Social Justice for a Fair Globalization, 10 June. Geneva: ILO. ILO (International Labour Organization) (2015) ILO Global estimates on migrant workers: Results and methodology, Special focus on migrant domestic workers. Geneva: ILO. ILO (International Labour Organization) (2018) ILO Global estimates on international migrant workers, results and methodology. Geneva: ILO. IOM (International Organization for Migration) (2019) United Nations Launches Multi-Partner Trust Fund Office to Support Cooperation on Safe, Orderly and Regular Migration, 17 July. https://​ www​.iom​.int/​news/​united​-nations​-launches​-multi​-partner​-trust​-fund​-office​-support​-cooperation​-safe​ -orderly​-and. Kainz, L. and A. Betts (2020) ‘Power and proliferation: Explaining the fragmentation of global migration governance’, Migration Studies. https://​doi​.org/​10​.1093/​migration/​mnaa015. Lenard, P. and C. Straehle (2010) ‘Temporary labour migration: Exploitation, tool of development, or both’, Policy and Society, 29(4), 283–294. Levitt, P. (1998) ‘Social remittances: Migration driven local-level of cultural diffusion’, The International Migration Review, 32(4), 926–948. Martin, P. (2001) ‘There is nothing more permanent than a temporary foreign worker’. Center for Immigration Studies, Backgrounder, April. https://​cis​.org/​sites/​cis​.org/​files/​articles/​2001/​back501​ .pdf. Martin, P. (2016) Migrant Workers in Commercial Agriculture. Technical Report, Geneva: ILO. McGregor, E. (2020a) ‘Migration, the MDGs and SDGs: Context and complexity’, in T. Bastia and R. Skeldon (eds.), Routledge Handbook of Migration and Development. London: Routledge, pp. 284–297. McGregor, E. (2020b) A History of Global Migration Governance: Challenging Linearity. International Migration Institute Working Papers 167, September. Mieres, F. and C. Kuptsch (2020) Seasonal Migrant Workers’ Schemes: Rethinking Fundamental Principles and Mechanisms in light of COVID-19. ILO Brief. Geneva: ILO. Migration Multi-Partner Trust Fund (MMPTF) (2020) Pipeline of Joint Programmes, June. https://​ migrationnetwork​.un​.org/​sites/​default/​files/​docs/​pipeline​-programmes​_digital​.pdf. OECD (Organisation for Economic Co-operation and Development) (2019) International Migration Outlook 2019. Paris: OECD Publishing. Omelaniuk, I. (2016) ‘The global forum on migration and development and diaspora engagement’, in A. Chikanda, J. Crush, and M. Walton-Roberts (eds.), Diasporas, Development, Governance. Cham: Springer International, pp. 19–32. Palumbo, L. and A. Corrado (eds.) (2020) Are Agri-Food Workers only Exploited in Southern Europe? Case Studies on Migrant Labour in Germany, the Netherlands and Sweden. Report of the Open Society European Policy Institute and European University Institute, 15 July. https://​ www​ .op​ ensocietyf​oundations​.org/​publications/​are​-agri​-food​-workers​-only​-exploited​-in​-southern​-europe​ #publications​_download. Piper, N. (2010) ‘All quiet on the eastern front? Temporary contract migration in Asia revisited from a development perspective’, Policy and Society, 29(4), 399–411. Piper, N. (2017) ‘Migration and the SDGs’, Global Social Policy, 17(2), 231–238. Piper, N. (2020) ‘Rights-based approaches to migration and development’, in T. Bastia and R. Skeldon (eds.), Routledge Handbook of Migration and Development. London: Routledge, pp. 275–283. Raghuram, P. (2009) ‘Which migration, what development? Unsettling the edifice of migration and development’, Population, Space and Place, 15, 103–117. Rother, S. (2019) ‘The Global Forum on Migration and Development as a venue of state socialisation: A stepping stone for multi-level migration governance?’, Journal of Ethnic and Migration Studies, 45(8), 1258–1274. Ruhs, M. (2013) The Price of Rights: Regulating International Labor Migration. Princeton: Princeton University Press. Samers, M. and M. Collyer (2017) Migration. London and New York: Routledge. Skeldon, R. (1997) Migration and Development: A Global Perspective. Harlow Addison Wesley Longman.

314  Handbook on the politics of international development Skeldon, R. (2008) Migration and Development. United Nations Expert Group Meeting on International Migration and Development in Asia and the Pacific, UN/POP/EGM-MIG/2008/4, 9 September. SPLC (Southern Poverty Law Center) (2013) Close to Slavery: Guestworker Programs in the United States. https://​www​.splcenter​.org/​sites/​default/​files/​d6​_legacy​_files/​downloads/​publication/​SPLC​ -Close​-to​-Slavery​-2013​.pdf. Taylor, E. (2002) ‘The new economics of labour migration and the role of remittances in the migration process’, International Migration, 37(1), 63–88. UN (United Nations) (2015) Transforming Our World: The 2030 Agenda for Sustainable Development, A/RES/70/1. https://​su​stainabled​evelopment​.un​.org/​content/​documents/​21252030​%20Agenda​ %20for​%20Sustainable​%20Development​%20web​.pdf. UNGA (United Nations General Assembly) (2016) New York Declaration for Refugees and Migrants, A/RES/71/1. https://​www​.un​.org/​en/​development/​desa/​population/​migration/​generalassembly/​docs/​ globalcompact/​A​_RES​_71​_1​.pdf. UNGA (United Nations General Assembly) (2018) Global Compact for Safe, Orderly and Regular Migration, A/RES/73/195. https://​www​.un​.org/​en/​ga/​search/​view​_doc​.asp​?symbol​=​A/​RES/​73/​195. UNGA (United Nations General Assembly) (2020) Comprehensive and coordinated response to the coronavirus disease (COVID-19) pandemic, A/74/L.92. https://​undocs​.org/​A/​74/​L​.92. Van Hear, N., R. Brubaker, and T. Bessa (2009) Managing Mobility for Human Development: The Growing Salience of Mixed Migration. Human Development Research Paper 2009/20, June. UNDP. Van Hear, N. and N. N. Sørensen (eds.) (2003) The Migration-Development Nexus. Geneva: IOM. Vosko, L. (2019) Disrupting Deportability: Transnational Workers Organize. Ithaca, NY: Cornell University Press. Vullnetari, J. and R. King (2011) Remittances, Gender and Development: Albania’s Society and Economy in Transition. London: I. B. Tauris. Wickramasekara, P. (2011) Circular Migration: A Triple Win or a Dead End? Global Union Research Network. Geneva: International Labour Office. Wilcock, C. (2020) ‘Diasporas and development in the global age’, in T. Bastia and R. Skeldon (eds.), Routledge Handbook of Migration and Development. London: Routledge, pp. 146–156. Wimmer, A. and N. Glick-Schiller (2002) ‘Methodological nationalism and beyond: Nation-state building, migration and the social sciences’, Global Networks, 2(4), 301–334. World Bank (2020) World Bank predicts sharpest decline of remittances in recent history, 22 April. https://​www​.worldbank​.org/​en/​news/​press​-release/​2020/​04/​22/​world​-bank​-predicts​-sharpest​-decline​ -of​-remittances​-in​-recent​-history. Wright, C., D. Groutsis and D. van den Broek (2017) ‘Employer-sponsored temporary labour migration schemes in Australia, Canada and Sweden: Enhancing efficiency, compromising fairness?’ Journal of Ethnic and Migration Studies, 43(11), 1854–1872. Zetter, R. (2020) ‘From humanitarianism to development: Reconfiguring the international refugee response regime’, in T. Bastia and R. Skeldon (eds.), Routledge Handbook of Migration and Development. London: Routledge, pp. 353–362.

20. The politics of the sustainable development goals Bruce Currie-Alder

INTRODUCTION Upon their adoption in 2015, the Sustainable Development Goals (SDGs) became a global institution, a shared vision of the future world desired by all. Yet the politics of international development have shaped how these goals were set, interpreted, and pursued. This chapter examines the multilateral negotiations that defined the 2030 Agenda (UN, 2015), national autonomy in translating the goals into domestic policy, and how the goals have mobilized the dispersed efforts of local and non-state actors. In setting the goals, the international community reframed and reordered various aspirations within international development. The historical context of ahead of 2015 shaped the goals, including the interaction of ideas, institutions, and material capabilities that guided actors. Negotiating the 2030 Agenda reflected an evolving North–South politics with differentiation within and across hitherto developing countries. In interpreting the goals, national governments choose what and how to embed the 2030 Agenda in the domestic sphere. The goals provided a short-hand language to signal alignment in intention across countries. Governments exercise autonomy in these choices, prioritizing among the goals, while also responding to alternative agendas, and to create a homegrown vision of their future. In pursuing the goals, they have mobilized a global movement inspiring diverse actions distributed across civil society, private sector and the scientific community. Much of the positive momentum is found in the dispersed actions on behalf of local and non-state actors, rather than in national reporting and the High Level Political Forum. This chapter probes how the 2030 Agenda and its goals were set, how they are interpreted, and how they are being pursued. The first three sections examine the processes and actors involved in each of these facets, from the United Nations system of multilateralism, through the national governments exercising their sovereignty, to the dispersed efforts below and beyond the state. The next section considers implications for international development. First, development is now seen as a shared challenge across the Global South and Global North. Second, the SDGs reinsert the environment into the development debate, integrating concern for equity, resilience, adaptation, and transformation. The final section looks towards 2030 at how the goals capture the imagination, inspire action and a politics of hope and transition.

SETTING THE GOALS Momentum towards what was to become the 2030 Agenda was initially divided between two parallel processes: the United Nations’ Secretary General consultations on post-2015 development, and the convening and outcome of the Rio+20 Conference. The key documents that emerged from each process – a high-level eminent persons report (UN, 2013) and the Rio+20 315

316  Handbook on the politics of international development outcome (UN, 2012) – focused respectively on ‘people’ and ‘planet’ representing two unfinished agendas from earlier times. In terms of people, what became the first six of the global goals are rooted in the legacy of the Millennium Declaration (UN, 2000) focused on meeting basic needs and enhancing human well-being. During the latter decades of the twentieth century, international development addressed the experience of people and communities in low-income countries, including quality of life and poverty, as described through indicators of education, health, and income. Building upon the momentum of refining human development (UNDP, 2016; Sen, 1999), the Millennium Development Goals bundled these diverse considerations into an eight-point agenda that had framed official development assistance during 2000–15. The approaching end of this period prompted reflection on what set of goals should follow. Progress had been mixed, with positive momentum on income that made it possible to aspire to eradicating extreme poverty, yet with gaps remaining in child and maternal health that inspired calls to redouble efforts international efforts and support to countries lagging behind (UN, 2011). In terms of planet, an additional four of the global goals trace back to the Brundtland Report, the United Nations Conference on Environment and Development (UNCED) and its conventions on climate change, biodiversity, and desertification (UN, 1992). Collectively these inspired the next decade of international development as meeting “the needs of the present without compromising the ability of future generations to meet their own need” (UN, 1987). The 1990s witnessed an expansion of environmental policy around the world with increasingly sophisticated public administration at the national, regional, and global level. This concept of sustainable development framed official development assistance ahead of the new millennium, yet was constrained by shrinking aid budgets ahead of the year 2000, which was followed by a shift to security issues within development during the first decade of the millennium. Approach the year 2012, the twentieth anniversary of the Earth Summit was an opportunity to rekindle environmental priorities within the politics on international development, inspiring the Planet Under Pressure conference (Brito and Stafford-Smith, 2012) and the Rio+20 Conference on Sustainable Development. Underneath this simplistic contrast of people and planet, the Sustainable Development Goals were also a product of re-negotiating a North–South divide that long characterized the politics of international development. Northern-based donor agencies initially favoured a focus on poverty reduction and simply updating the Millennium Development Goals. Meanwhile some countries in the Global South, championed by Brazil and Colombia, sought to reframe development around equality, ecology, and justice. Thus the context for setting the goals involved an interplay of distinct processes that differed in “histories and visions, actors and epistemic communities, and political dynamics” (Fukuda-Parr and McNeil, 2019). A divide between Global North and Global South harks back to the mid-twentieth-century contrast between former colonial powers and newly independent states. These categories shifted over time with a Global North expressed through the Organisation for Economic Co-operation and Development (OECD) and Group of Seven (G7), while a Global South found political expression through the Non-Aligned Movement and Group of 77 and China.1 With the advent of sustainable development in the late 1980s, the North–South divide took on 1 These bodies represent the positions and growing membership and demonstrate the fluidity of the notions of Global North and South, with new members joining OECD while new states swelled the G77 ranks to more than 130 members.

The politics of the sustainable development goals  317 the added contrast between responsibility for, and impacts of, a changing global environment. A developed North had historically benefited from environmental damage to achieve greater wealth, more advanced technology, and higher standards of living. A developing South was poised to suffer disproportionately from global pollution and environmental damage, while struggling to satisfy the aspirations of its growing populations within now constrained opportunities for development. Sustainable development promised a global ‘green deal’: sharing wealth and technology from the North, enabling the South to forge new development pathways while protecting environmental assets. Each nation was expected to play a role in realizing sustainable development in proportion to its historical contribution to the environmental problems and within the contemporary strengthen of its economy. This expectation was codified as a principle as “common but differentiated responsibilities”.2 The Global North would take on a large share of the financing for development, to compensate the Global South for damage and support it to transition to more sustainable pathways to development. Ahead of negotiating the 2030 Agenda, what constitutes the ‘Global South’ had evolved significantly, growing in influence and fragmenting into distinct subgroups. Southern voices were shifting global politics away from a narrow focus on foreign aid, towards broader engagements on matters ranging from trade and economic cooperation, to global health and regional security. Whether as national or collective powers, developing countries were redefining opportunities for multilateralism and for South–South cooperation, reinforcing the sovereignty of states to pursue their own development while addressing matters ranging from infrastructure to student mobility. Consequently, a new set of global goals were expected to address more than poverty eradication in the South, especially after three decades of unprecedented advances in wealth, health, education, and quality of life for much of the world population (Rosling, 2018). At the same time, the developing nations of the world included not only an increasing number of middle-income countries seeking to consolidate and sustain their gains, but also a persistent set of least-developed countries seeking to revitalize their opportunities, landlocked states seeking to connect to global trade networks, and small island states facing existential threats to their future. The simplistic notion of a unified ‘Global South’ no longer adequately described the world, and the process of setting the goals involved haggling over the prominence given to the distinct priorities of different groups. The twin agendas of people and planet merged through the intermingling of the Rio+20 Declaration, the results of the High-Level Panel on Post-2015 Development Agenda, and an Open Working Group on Sustainable Development Goals (SDGs). Between 2011 and 2014, these processes brought together member states along with the participation of non-state actors. At the same time, the process of negotiating the goals needed to avoid becoming secondary tracks to the existing fora dedicated to security, climate change, or women’s rights.3 The timeline and process of negotiating the goals and the 2030 Agenda demonstrate how these agendas, actors and topics influenced the content of the goals (Kamau et al., 2018; Dodds et al., 2017; Langford, 2016). What became the first six goals in the 2030 Agenda represent a continuity of the people agenda and former Millennium Development Goals. These new goals connected to the legacy of previous United Nations declarations on population, women, and food, as well as efforts Principle 7 of the Rio Declaration (UN, 1992). These topics remained the purview of the United Nations’ Security Council, Framework Convention on Climate Change, and the Commission on the Status of Women. 2 3

318  Handbook on the politics of international development on financing for development (Fukuda-Parr, 2016). In contrast to its predecessor, goal 5 broadens considerations of gender beyond maternal health. Goals 9 to 11 represent elements that overlap both people and planet, including infrastructure and cities, and the concern for inequality that was particularly salient in the wake of the financial crisis of 2008 and Occupy movement. In the two years during which the goals were set, the politics of international development was framed by debates on the causes and consequence of growing concentration of wealth in society, and the prospects for equality in the face of continued technological change (Piketty, 2013; Fuentes-Nieva and Galasso, 2014; Schwab, 2016). Goal 13 was prompted by the 2009–15 impasse in negotiations under the United Nations Framework Convention on Climate Change (UNFCCC), and was effectively replaced by the subsequent Paris Agreement adopted in December 2015. Goal 14 resulted from small island developing states arguing for a specific focus on oceans, reflecting the unique concerns with these states’ viability into the future (Kamau et al., 2018). Beyond the coming together of people and planet, the new set of global goals reflected politics among member states. Negotiations addressed how each goal and its targets were defined, with countries seeking to weaken or strengthen the language pertaining to goals they perceived as being either less or more aligned with their interests. Efforts to address sexual and reproductive rights proved contentious and were eventually relegated to target 3.7, while matters of sexual orientation and lesbian, gay, bisexual, and transgender rights were excluded altogether. Meanwhile goal 16 on peace, justice, and rule of law and goal 12 on sustainable consumption and production represented mutual concessions wherein countries in the Global South agreed to include what were perceived as Western notions of justice, in exchange for including an obligation on the part of countries in the Global North to curtail their use of world resources. The co-chairs overseeing the negotiations admit that the SDGs represent an imperfect compromise, in which each member state “had to swallow hard and accept the parts they were not comfortable with” (Kamau et al., 2018). The preamble text of the 2030 Agenda served to identify issues that arose in negotiations, yet that were not mentioned in a goal and target, for example self-determination of peoples living under occupation. The final text is also silent on the underlying reasons for poverty and inequality, portraying such deprivations as the absence of efforts to transform our world rather than the product of unjust or unequal balance of power within or among nations. While target 2.1 addresses access to food, target 2.3 proposes to double food productivity rather than questioning why people are unable to obtain sufficient nutritious food (Weber, 2017). The global goals also became universal, common to all member states regardless of their size or power. This was neither a foregone conclusion nor a definitive shift. The discourse of ‘for everyone’ was initially resisted by certain member states, in fear that it would diminish the rationale for assistance to developing countries to achieve the goals, putting the onus instead on each country to finance its own development through domestic resource mobilization. The Rio principle of “common but differentiated responsibilities” was included in the 2030 Agenda within paragraph 12. Just three months after the SDGs were adopted by the General Assembly, the Paris Agreement under the UNFCCC also embraced universal language committing all Parties to reduce carbon emissions through nationally determined contributions (NDCs). These mitigation efforts remain predicated on flows of climate finance, similar to

The politics of the sustainable development goals  319 ongoing expectations around development finance.4 Thus the 2030 Agenda retained some long-standing issues underpinning North–South politics, such as calls for capacity building, technical assistance, and financial support (Figure 20.1).

Note: The content of this publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States. Source: https://​www​.un​.org/​sus​tainablede​velopment/​.

Figure 20.1

Sustainable Development Goals contained in the 2030 Agenda

INTERPRETING THE GOALS The 2030 Agenda provides a prominent role for national sovereignty and permits each state to choose which goals to prioritize. The preamble contains three separate references to state sovereignty. Paragraphs 22 and 59 recognize that each country faces specific development challenges and that there are “different approaches, visions, models and tools available to each country, in accordance with its national circumstances and priorities”. Paragraph 63 predicates the global goals on nationally-owned strategies, noting that each country has primary responsibility for its own development, while national sovereignty is codified in target 17.15. These references speak to a pragmatic compromise: securing agreement to the 2030 Agenda required giving countries freedom in how to interpret the global goals. Countries can emphasize the goals that most align with their interests and policy directions, while neglecting 4 Indeed target 17.2 merely reiterates a longstanding commitment to dedicate 0.7% of Gross National Income to official development assistance, while 17.6 and 17.9 refer to North–South support for scientific cooperation and capacity for national development plans.

320  Handbook on the politics of international development others (Fukuda-Parr, 2016). This deference to national sovereignty is shared between the 2030 Agenda and the Paris Agreement on climate change. Given a broad diversity of countries and cultures, the goals have widely differing expressions across the world. The sheer variety of national conditions means that solutions in one context are not necessarily suitable for another. The recent history of reducing poverty and hunger in Vietnam, Brazil and Ghana reflect diverse experiences of these places and cannot be directly applied to efforts in Central African Republic and Madagascar (Liverman, 2018). Kenya chose to frame national development for 2018–22 around food security, affordable housing, universal healthcare and manufacturing – priorities seen to aid in becoming a middle-income country that provides a high quality of life to all citizens by 2030. Senegal chose to frame national development for 2019–23 around three axes: growth and inclusion, human capital and social protection, and governance and security. The country strives to become an emerging country by 2035 with a cohesive society under the rule of law. Both Kenya and Senegal see themselves exiting poverty and joining the ranks of dynamic economies, engaged in regional and global markets. The 2030 Agenda coexists with other development visions. For example, the African Union Agenda 2063 describes a 50-year vision to become an integrated, prosperous, and peaceful continent, driven by its own citizens, representing a dynamic force in the international arena. The African Union’s agenda outlines seven aspirations and 20 goals, ranging from inclusive growth and political unity, to human rights and cultural identity, to equality and taking responsibility for financing Africa’s own development. A careful read of the development plans of Kenya or Senegal reveals not only how these governments choose to interpret the SDGs, but also how they adhere to the Pan-African vision. States recognize political commitments beyond the 2030 Agenda, as a source of identity, affiliation, and specificity. For example, the African Union’s Malabo declaration concerning agricultural and livelihoods not only serves to strengthen the ties among its member states, but offers more detailed language that ties together hunger, poverty and climate that are dispersed among separate SDGs. From Benin to Bolivia, Ethiopia to Estonia, or Nigeria to Nepal each country adopted aspects of the SDGs while crafting their own unique expression of development. If the SDGs form a set of norms for development, nation-states selectively choose which of these norms to follow and which to ignore. The political reality across member states speaks to a plurality of paths to development, permitting each nation to pursue a combination of goals that resonate with their own historic experience and aspirations for the future. The SDGs serve as a lingua franca to articulate aspects of the world that diverse societies envision for themselves, while in practice each country is both more selective and more detailed than the 2030 Agenda. In general, a broad set of countries seek to become ‘emergent’ rather than ‘developing’, aspiring for growth and fulfilment rather than merely addressing poverty and need. Ultimately, translating the global goals into Hindi, Swahili, or Arabic is not only about selecting words from the existing cultural vocabulary to represent these ideas, but about rethinking what the pursuit of human development means for present and coming generations. These ideas are embedded in different ethical stances, worldviews and notions of justice, including views on how to realize a good quality of life. Some aspects of the goals remain truly global, including stewardship of the planetary boundaries for climate action and life on land and below water; yet other goals are rooted in the national experience of development, tackling poverty and prosperity and addressing the aspiration of citizens for a better future.

The politics of the sustainable development goals  321 The diverse paths of national implementation result in a fragmented pursuit of the 2030 Agenda which limits the comparability of data across different countries. Measurement is further complicated by the SDGs including a mix of development goals and means of implementation, describing both what is to be achieved and how to do so. Targets pertaining to means of implementation are denoted by letters, such as 4C on the supply of trained teachers for education, or 9C on access to information and communication technologies.5 Many of the SDG targets were initially incomplete – lacking clear concepts, measures, or data – inspiring further effort to refine definitions, data sources and assessment procedures. For example, a Task Force on Justice (2019) estimated the global gap for goal 16 as including over 200 million people that live in conditions of insecurity, 1.5 billion without access to civil or administrative justice, over 1 billion people that lack legal identity, and more than 2 billion employed in the informal sector.6 On climate change, goal 13 includes less than 150 words with vague targets that urge countries to strengthen, integrate and improve different efforts. It was effectively displaced by the Paris Agreement – just three month later – which contains over 15,000 words and a clear target to keep the increase in the global average temperature to well below 2°C above pre-industrial levels. Having agreed to the global goals for temperature and adaptation (articles 2 and 7), the ongoing politics of climate negotiations centres on increasing the level of national ambition and sufficiency of global action to reach these goals. Measuring progress on the goals remains open to debate over concepts and responsibilities. In 2020, only 35 of the 169 SDG targets had sufficient and timely data to track global progress (Rosling, 2020). A global indicator framework for the SDGs (UN, 2017) balances national and global-level monitoring with data gathering roles for both national authorities and the UN Statistical Division. In 2019, less than half of the 232 SDG indicators were considered well defined and supported by sufficient data at the country level. Another third of the SDG indicators were defined yet lacked regularly collected data, while the remaining indicators still lacked measurement methods (Georgeson and Maslin, 2018; Esquivel, 2016). Such effort is part of an ongoing ‘data revolution’ to better design, monitor, and evaluate the effectiveness of policies for sustainable development. Beyond the mere existence of technology and data availability, there is a need for principles and standards that bridge the disparate worlds of public, private and civil society data and statistics (UN, 2014).

PURSUING THE GOALS Beyond the national-level choices in how to interpret the goals and embed them in domestic policy, the politics of development now provides greater prominence to actors below and 5 Initially, negotiations towards the 2030 Agenda tied these means of implementation to commitments expected at the Financing for Development conference in July 2015 (Dodds et al., 2017), yet the tepid results of that event muted their prominence within the SDGs. 6 Six areas account for most justice problems: violence and crime, disputes involving land, housing or neighbours, unresolved family disputes, problems related to money, debt or consumer issues, or those related to access to public services, and legal needs related to employment or businesses. An estimated USD 20 to 64 per person would be required to provide access to basic justice services in lower and middle-income countries. Yet this amount is excluded from most estimates of the global financing gap for the SDGs.

322  Handbook on the politics of international development beyond the nation-state. Development practice can now describe the world at a meso-level between national averages and local experience. Subnational data offers greater richness and resolution into the lived experience of different people living in different places (Xu et al., 2020). For example, the multidimensional poverty index not only distinguishes among different forms of human deprivation – such as housing, education and health – but uses datasets that compare different states and municipalities with the same country (Alkire et al., 2019). Such meso-level efforts can identify hotspots, or geographic areas at risk of being left behind, based on considerations of factors such as poverty, fragility, ecosystem services, exposure to natural hazard, violence and conflict, and climate impacts (Khan and Cundill, 2019; Szabo et al., 2016). Such units of analysis do not necessarily align with existing administrative boundaries and they can span local and international boundaries. Pursuing the goals within such grounded contexts reveal trade-offs in the 2030 Agenda that remain hidden in the abstract. The goals mask long-standing tension within development among considerations of economic growth, human well-being, environmental sustainability, and equity within and between segments of society (Bowen et al., 2017). Including such diverse aspirations within the 2030 Agenda has not resolved these tensions, but merely displaced them to implementation. The pursuit of development in practice requires considering the priority placed on human and environmental well-being, as efforts to reduce hunger or promote economic growth can come at the cost of life on land or below water. The environment has often been considered secondary to national and regional economic growth, with ramifications for those people who are most reliant upon ecosystem services for their well-being. Rather than looking to Agenda 2030 or national development plans to resolve this tension, the pursuit of development is embedded within particular localities and landscapes (Obura, 2020). For example, in the Sundarbans which straddle Bangladesh and India, traditional farmers are unable to benefit from progressive agricultural techniques given prerequisite need for capital reserves and variability in production (Hutton et al., 2018). Examining how the goals are pursued in a given context reveals conflicts regarding values, priority, and choices regarding whose stakes count. Yet the greatest benefit of the SDGs is how they have inspired action across local governments, civil society, and private sector. To fixate solely on national plans and formal UN processes is to miss much of what is transforming our world. While the annual High-Level Political Forum gathers member states to submit reports and monitor the goals in aggregate, the substance of pursuing the goals comes from the collective efforts of actors between such events. Local and non-state actors take inspiration from the global goals without waiting for the slow refinement of targets, data, and official means of implementations. The goals have captured their imagination and provide a broad canvas upon which to paint their own actions. The result is a mosaic of largely autonomous efforts below and beyond the control of member states and the formal intergovernmental process that established and monitors the goals. The International Institute for Sustainable Development maintains an online SDG knowledge hub complete with an events calendar searchable by goal and by region.7 The sheer number of events speaks to a bewildering array of organizations have taken up the SDGs as a framing logic to their efforts, stretching from private business to the scientific community.



7

See https://​sdg​.iisd​.org/​.

The politics of the sustainable development goals  323 In the private sector, there are strong and growing coalitions that seek to leverage business to help society by identifying and scaling solutions that address the environmental and social goals. The World Business Council for Sustainable Development unites a membership of companies that represent more than USD 8.5 trillion and 19 million employees. The Council created an ‘SDG compass’ to guide companies to align their business strategies and operations with contributing to the goals.8 Member businesses identify solutions that help them manage their risks related to securing needed resources, the integrity of their supply chains, and changes in consumers’ demands. Beyond this tool, the global goals speak to how business can encourage transition towards a circular economy, as well as transformation of cities, mobility, and food. ‘B Corporations’ place a commitment to balance purpose and profit at the heart of their strategy and operations, certifying how they meet high standards of verified social and environmental performance, public transparency, and legal accountability. These firms represent a deeper transformation of business beyond the practice of corporate social responsibility, by intentionally working toward the goals of reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high-quality jobs with dignity and purpose. The non-profit B Lab has created a resource guide for prioritizing the goals, as well as an ‘SDG action manager’ for companies to self-assess, benchmark, and improve how their policies and actions contribute to the goals.9 In the philanthropic sector, there are numerous examples of funders adopting the goals as a basis for strategy and programming. For example, the Global Centre for Pluralism seeks to foster a world where human differences are valued and diverse societies thrive, understanding and sharing how people with different identities and viewpoints find ways to live together. The Centre adopted the SDGs as its core purpose, including efforts on governance, human rights, conflict prevention, and measuring inclusion to advance the 2030 Agenda. The Centre hosts an annual lecture which in 2019 focused on how pluralism advances the SDGs, calling for shifting mindsets towards interdependence with each other and with our environment, policy solutions based on mutual gains, and defining security based on resilient societies and mutual respect. Meanwhile, the BMW Foundation Herbert Quandt aims to advance the SDGs by connecting leaders and investing in impactful organizations. The foundation defines a Responsible Leader as an individual who “beyond her or his professional and personal duties, works towards social change within and between societies – across communities, cultures, and countries”.10 Responsible Leaders perceive social and political challenges in a larger context, and come from all corners of society including entrepreneurs, politicians, activists, journalists, artists, and scientists. They use their knowledge, networks, and influence to deliberately work for a better world. In this, they are guided by a deep respect for other people, their background, identity, and dignity. The foundation convenes a regular series of dialogues inviting such leaders from across the world to discuss and develop solutions together in accordance with the 2030 Agenda. Collectively these dialogues have recruited over 1,700 people into a growing network that continues to collaborate, united by a shared purpose to advance the SDGs. In the scientific community, the SDGs have been used to demonstrate the societal impact of research and responding to global challenges. In the Netherlands, research towards the SDGs is one of the 25 problem areas of societal relevance defined under the 2016 national research

See https://​sdgcompass​.org/​. See http://​bimpactassessment​.net. 10 See https://​twentythirty​.com/​. 8



9

324  Handbook on the politics of international development agenda. The United Kingdom created a GBP 1.5 billion Global Challenges Research Fund to support cutting-edge research that addresses the challenges faced by developing countries. This fund is based on SDGs with a focus on equitable access to sustainable development; sustainable economies and societies; and human rights, good governance and social justice. The European Commission proposed implementing the SDGs as one of the three main goals of the EUR 94 billion framework programme for research and innovation 2021–27. FutureEarth, a global network of scientists, convenes SDG Labs which bring together participants from a range of research disciplines and sectors to develop solutions to complex problems that help to make progress towards implementation of the goals. The International Science Council chose the 2030 Agenda as one of four domains addressed under its Action Plan 2019–21, including the creation of an online tool for mapping and visualizing interactions across the 17 goals. Beyond research funding programmes, the SDGs have also inspired new educational offerings and teaching curricula. For example, ‘how to change the world’ workshops encourage university students in engineering, computer science and management to apply their skills to addressing a particular SDG within paired contexts in the Global North and South.11 Once the purview of a modest number of students majoring in degrees related to international affairs or development studies, the pursuit of the SDGs is now core to a wide range of university departments and college programmes. It is also the focus of a growing set of freely available, online courses such as those offered through the Sustainable Development Solutions Network, drawing on experience from a range of partners around the world, such as the Indian Institute for Human Settlements.12 While setting and interpreting the goals speaks to the politics of multilateral negotiations and national autonomy, the reality of pursuing the goals speaks to a politics of hope and transition. The SDGs have taken root in contemporary imagination as a rallying cry to action for an interconnected global society.

IMPLICATIONS FOR INTERNATIONAL DEVELOPMENT The 2030 Agenda reflects the ideas held – and power exercised – by diverse actors that set, interpret and pursue the goals. The Sustainable Development Goals extend across distinct scales of politics (Table 20.1). The process of setting the goals involved multilateral negotiations within the UN system. Nation-states choose which goals to prioritize and how to integrate them with both domestic and regional visions of development. Yet pursing the goals has mobilized local and non-state actors, stretching across civil society, private sector, and scientific community. Despite ongoing debate regarding definitions and measurement, the goals serve as a lingua franca that both inspire action and allow diverse actors to communicate how they seek to transform the world. Setting the goals was a historic moment of multilateral negotiation, combining distinct agendas for people and for planet. The contemporary politics of international development lie in how the goals are interpreted by states as well as how they are pursued within society by actors below and beyond the state.

See https://​www​.htctw​.org/​. See https://​sdgacademy​.org/​.

11 12

The politics of the sustainable development goals  325 Table 20.1

Scales of politics within the Sustainable Development Goals Actors

Process

Scale

Setting the goals

United Nations

Negotiating the 2030 Agenda &

Multilateral

monitoring its progress

Regional visions

Interpreting the goals

Nation-states

Pursing the goals

Private sector

Defining national development plans National sovereignty Linking autonomous efforts to Local and non-state actors

Civil society

a common agenda

Responsible leadership

Science

The SDGs have served as an organizing principle for international relations after 2015. The years leading to their adoption were ripe for change. The world was seized with rising inequality and recovering from recent global shocks to food security and financial stability. Thinking on development increasingly questioned the predominance of economic growth for poverty reduction. While the SDGs emerged from a political compromise, they became a guiding star and concise language for expressing shared commitment. Beyond the established communities interested in foreign aid and international development, the global goals have influenced the thinking and action of diverse actors stretching across global business, science and civil society. The SDGs do not represent a distinct theory of development (Harriss, 2014) yet draw upon deep intellectual roots regarding human development and sustainability. They allow anyone to readily understand and express aspects of a desired future, acting as proxies for multiple traditions and theories of development. Each goal is underpinned by distinct concepts and causality, yet also usefully permits actors to sidestep the nuance of development theories and how they interact or effect change. One implication of the SDGs is that international development is now universal, including all people everywhere. No society can yet claim to have fully achieved all seventeen goals. The 2030 Agenda sees development as universal in aspiration yet diverse in implementation. The past decades witnessed increasingly differentiated realities within the Global South, with divergent experiences in different regions, countries and districts. The practice of development now seeks to understand and respond to the specific contexts people face in distinct places, including the Global North. The SDGs have rekindled passion to address inequality at home and realize a sustainable just transition of all economies. International development has become a mutual and shared challenge: bridging the wise use of sovereign wealth, foreign aid for poor and vulnerable people abroad, and dealing with global interdependence. It is no longer the sole purview of governments or markets, but a responsibility that extends beyond and below the state. The SDGs have reinserted the environment into the development debate. After more than a decade of focus on reducing poverty and reinforcing security and stability, the advent of the SDGs in 2015 reaffirmed the planet as a necessary condition for development. The 2030 Agenda marks the return of sustainability and living materially within the means of a finite world. Whereas the development debate was often carried on through the language and ideas of economics and social policy, the accelerating impacts of a changing climate and demonstrated fragility of food and financial systems have brought a renewed urgency to dematerialization, renewable energy, and biodiversity (Adams and Jeanrenaud, 2008; Mastrángelo et al., 2019). Previous waves of environmentalism in the 1970s and 1990s privileged planet without people, ultimately with waning political support. In contrast, current thinking and practice is rooted in integrating equity, resilience, adaptation, and transformation. Together with the

326  Handbook on the politics of international development Paris Agreement and Sendai framework, pursuing the SDGs addresses the needs of the most vulnerable by combating poverty and inequality, adapting to climate change and reducing disaster risk.

LOOKING FORWARD The promise of development is the gap between the world we have and the future we want. Five years after adopting the goals, the United Nations portrayed them as integrated ‘global solutions’ in the four areas of climate and planet, poverty and inequality, justice and human rights, and gender equality (UN, 2020). Over twenty of the SDG targets were intended to be achieved by 2020, making certain aspects of the 2030 Agenda already past due even before the advent of the COVID-19 pandemic. As the world contemplates how to recover from a global shock to lives and livelihoods, there are calls to streamline or simplify the SDGs. One proposal is to collapse the goals into six entry points including human well-being, sustainable economies, access to food and nutrition, access to clean energy, urban development, and the global commons (Independent Group of Scientists, 2019). Another proposal situates the SDGs within six transformations needed by 2050 encompassing human capacity, consumption, decarbonization, food systems, cities, and digital technologies (TWI2050, 2018). Toward and beyond 2030, the collective and domestic visions of development will continue to evolve as other agendas and shocks come to prominence in the coming years. Cutting across the goals are the deeper challenges of renewing the social contracts between citizens and their governments, reinvigorating and extending public services and safety nets, and learning to live within the safe operating space for planetary health during the Anthropocene (Steffen et al., 2018). At their heart, the SDGs were shaped by long-standing North–South tensions in international politics and deferred to national sovereignty assuming that a global agenda could be satisfied so long as each country assumes responsibility for implementation within its borders. World politics has now evolved beyond a simplified ‘Global South’ and needs to come to grips with the interdependencies between countries in the pursuit of the global goals. Multiple aspects of the SDGs rely upon and will be affected by tele-connections between distance places, for example the ability to satisfy hunger in West Africa depends in part on the bounty of the rice harvest in Southeast Asia (Benzie and Persson, 2019). The goals have reinserted the environment into development and inspired a global movement. Despite weaknesses in their definition and measurement, the goals mobilized actors to simply get on with the task of transforming our world utilizing whichever means are available to them. The SDGs have stimulated discussion and action towards future development paths, which will ultimately be decided through dynamic relationships at different scales among sectors of societies and groups of nations (Bai et al., 2016). Their greatest value is not as a monitoring and accountability framework or in resolving old politics. It is in how the goals capture the imagination, inspire action and reframe new politics. Above the nation-state, the goals describe what to achieve and how to do it, reiterating simplistic means of implementation. Yet below and across states, the goals speak to the emergent politics around who is responsible – or demonstrates leadership – for realizing development. While setting and interpreting the goals speaks to the politics of multilateral negotiations and national autonomy, the reality of pursuing the goals speaks to a politics of hope and transition.

The politics of the sustainable development goals  327

REFERENCES Adams, W. M. and S. J. Jeanrenaud (2008), Transition to Sustainability: Towards a Humane and Diverse World. Gland: IUCN. Alkire, S., P. Conceição, A. Barham et al. (2019), Global Multidimensional Poverty Index 2019: Illuminating Inequalities. New York and Oxford: UNDP and Oxford Poverty and Human Development. Bai, X., S. van der Leeuw, K. O’Brien et al. (2016), ‘Plausible and desirable futures in the Anthropocene: A new research agenda’, Global Environmental Change 39, 351–362. Benzie, M. and Å. Persson (2019), ‘Governing borderless climate risks: Moving beyond the territorial framing of adaptation’, International Environmental Agreements 19, 369–393. Bowen, K. J., N. Cradock-Henry, F. Koch et al. (2017), ‘Implementing the Sustainable Development Goals: Towards addressing three key governance challenges’, Current Opinion in Environmental Sustainability 26–27, 90–96. Brito, L. and M. Stafford-Smith (2012), State of the Planet Declaration: Planet Under Pressure. http://​ www​.igbp​.net/​publications. Dodds, F., D. Donoghue, and J. Leiva Roesch (2017), Negotiating the Sustainable Development Goals: A Transformational Agenda for an Insecure World. New York: Routledge. Esquivel, V. (2016), ‘Power and the Sustainable Development Goals: A feminist analysis’, Gender & Development 24, 9–23. Fuentes-Nieva, R. and N. Galasso (2014), ‘Working for the few: Political capture and economic inequality’. http://​www​.oxfam​.org/​en/​research/​working​-few. Fukuda-Parr, S. (2016), ‘From the Millennium Development Goals to the Sustainable Development Goals’, Gender & Development 24, 43–52. Fukuda-Parr, S. and D. McNeill (2019), ‘Knowledge and politics in setting and measuring the SDGs’, Global Policy 10, 5–15. Georgeson, L. and M. Maslin (2018), ‘Putting the United Nations Sustainable Development Goals into practice’, Geo: Geography and Environment 5. Harriss, J. (2014), ‘Development theories’, in B. Currie-Alder, R. Kanbur, D. Malone, and R. Medhora (eds.), International Development: Ideas, Experience and Prospects. Oxford: Oxford University Press, pp. 35–49. Hutton, W. C., R. Nicholls, N. Attila Lázár et al. (2018), ‘Potential trade-offs between the Sustainable Development Goals in coastal Bangladesh’, Sustainability 10. Independent Group of Scientists appointed by the Secretary-General (2019), Global Sustainable Development Report. New York: United Nations. Kamau, M., P. Chasek, and D. O’Conner (2018), Transforming Multilateral Diplomacy: The Inside Story of the Sustainable Development Goals. London and New York: Routledge. Khan, A. S. and G. Cundill (2019), ‘Hotspots 2.0: Toward an integrated understanding of stressors and response options’, Ambio 48, 639–648. Langford, M. (2016), ‘Lost in transformation? The politics of the Sustainable Development Goals’, Ethics & International Affairs 30, 167–176. Liverman, D. (2018), ‘Geographic perspectives on development goals’, Dialogues in Human Geography 8, 168–185. Mastrángelo, M. E. et al. (2019), ‘Key knowledge gaps to achieve global sustainability goals’, Nature Sustainability 2, 1115–1121. Obura, D. O. (2020), ‘Getting to 2030: Scaling effort to ambition through a narrative model of the SDGs’, Marine Policy 117. doi:​10​.1016/​j​.marpol​.2020​.103973. Piketty, T. (2013), Le capital au XXI siècle. Paris: Éditions du Seuil. Rosling, H. (2018), Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think. New York: Flatiron Books. Rosling, O. (2020), SDG Progress – the Global Picture. Gapminder Foundation. http://​webtv​.un​.org/​ news​-features/​watch/​sdg​-progress​-​%E2​%80​%93​-the​-global​-picture/​6192384804001/​. Schwab, K. (2016), The Fourth Industrial Revolution. New York: Crown Business. Sen, A. (1999), Development as Freedom. New York: Anchor Books. Steffen, W., J. Rockström, K. Richardson et al. (2018), ‘Trajectories of the Earth system in the Anthropocene’, Proceedings of the National Academy of Sciences 115, 8252–8259.

328  Handbook on the politics of international development Szabo, S., R. J. Nicholls, B. Neumann et al. (2016), ‘Making SDGs work for climate change hotspots’, Environment: Science and Policy for Sustainable Development 58, 24–33. Task Force on Justice (2019), Justice for All. New York: Center on International Cooperation. TWI2050 (2018), Transformation to Achieve the Sustainable Development Goals. Laxenburg, Austria: International Institute for Applied Systems Analysis. UNDP (2016), Human Development Report 2016: Human Development for Everyone. http://​hdr​.undp​ .org/​en/​content/​human​-development​-report​-2016. United Nations (1987), Report of the World Commission on Environment and Development: Our Common Future. UN General Assembly document A/42/427. United Nations (1992), Report of the United Nations Conference on Environment and Development. A/ CONF.151/26. United Nations (2000), Millennium Declaration. UN General Assembly resolution A/RES/55/2. United Nations (2011), Report of the Commission on Information and Accountability for Women’s and Children’s Health. United Nations (2012), The Future We Want: Outcome Document of the United Nations Conference on Sustainable Development. A/RES/66/288. United Nations (2013), A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development. New York: United Nations. doi:​10​.18356/​cdb96f5d​-en. United Nations (2014), A World That Counts: Mobilizing the Data Revolution for Sustainable Development. Report of the Secretary General’s Independent Expert Advisory Group. https://​www​ .undatarevolution​.org. United Nations (2015), Transforming Our World: The 2030 Agenda for Sustainable Development. A/ RES/70/1. United Nations (2017), Global Indicator Framework for the Sustainable Development Goals and Targets of the 2030 Agenda for Sustainable Development. A/RES/71/313 – E/CN.3/2019/2. United Nations (2020), Nations United: Urgent Solutions for Urgent Times. https://​youtu​.be/​ xVWHuJOmaEk. Weber, H. (2017), ‘Politics of leaving no one behind’, Globalizations 14, 399–414. Xu, Z., S. N. Chau, X. Chen et al. (2020), ‘Assessing progress towards sustainable development over space and time’, Nature 577, 74–78.

21. Bioeconomy governance and (sustainable) development Melisa Deciancio, Karen M. Siegel, Daniel Kefeli, Guilherme de Queiroz Stein and Thomas Dietz1

INTRODUCTION Bioeconomy emerged in the Global North, within countries of the Organisation for Economic Co-operation and Development (OECD) and the European Union (EU) (Bioökonomierat, 2015; EU, 2007; OECD, 2009). By definition, it consists of “applying biological principles and processes in all sectors of the economy” (Dietz et al., 2018, p. 1) and the transformation of production from fossil-based raw materials to bio-based resources. It merges the use of natural resources, innovation, biotechnology and industrialization of biomass-related processes, addressing production and access to food while replacing fossil fuels with bio-based products for a more sustainable global economy (Bioökonomierat, 2015). However, bioeconomy is a very broad and contested concept and there is not one bioeconomy model that fits all countries. Rather there are several different ways to develop bioeconomies depending on countries’ characteristics, productive structures and availability of resources and with different impacts on sustainability. This chapter sets out if and in which ways bioeconomy can be considered a sustainable development strategy and its implications to the pursuit of the SDGs and broader sustainability concerns, with a particular focus on South American countries. In this regard, we state that the promotion of bioeconomy has different implications for developed and developing countries, with different trade-offs and consequences. We seek to observe the implications of applying this development strategy in South America in contrast to the experiences in the Global North – mainly Europe – bringing together debates on South American commodity-led development models, their sustainability and the implications of promoting bioeconomy strategies in these countries. The sustainability of economic processes relates to challenges emerging from economic growth, wealth distribution, food security, climate change and the protection of the environment (see Chapter 15 by Newell in this volume). As a response, the Sustainable Development Goals (SDGs) adopted in 2015 established a new framework to address global sustainability and development comprehensively. They focused on development for ‘people and planet’, involving the interplay of distinct processes that differed in “histories and visions, actors and epistemic communities, and political dynamics” (Fukuda-Parr and McNeill, 2019, p. 9). The SDGs are meant to be met by 2030 and consist of 17 goals containing 169 specific targets (UN, 2015) that relate to the bioeconomy in several ways. The relationship between the bioeconomy 1 We would like to thank Diana Tussie for the helpful comments on an earlier draft. Furthermore, we gratefully acknowledge funding by the German Federal Ministry of Food and Agriculture (BMEL) (grant number 2219NR291) for the project Transformation and Sustainability Governance in South American Bioeconomies.

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330  Handbook on the politics of international development and the SDGs is complex, carrying both positive and negative impacts. Although positive synergies between them are identified and contributions to the achievement of some SDGs are highlighted, others are still being questioned, showing that bioeconomy development does not necessarily always lead to more sustainable outcomes or practices. Bioeconomy combines a development strategy that addresses national development concerns at a time where it is important to address global sustainability issues. Examining the relationship between bioeconomy and sustainable development will allow us to think over the traits of interactions between the use of natural resources, industrialization and services, and go beyond traditional conceptions of development to consider sustainability as an important element of social and economic development (see Introduction in this volume). This will bring into light both the positive aspects of bioeconomy strategies and the many concerns and disagreements related to its environmental impacts in diverse sectors and social concerns regarding inequalities, employment, land distribution, food security and health. For example, the impact of intensive agricultural production and agrochemicals in land degradation and water pollution has been strongly questioned as agricultural products became the base of biofuels production (Hertel et al., 2013; Rosegrant et al., 2013). It is therefore important to explore in more depth what the adoption of bioeconomy implies for countries and the benefits and risks that it carries to achieve the SDGs. Different studies have analysed the relationship between bioeconomy, or specific bioeconomy sectors, and sustainability (Aguilar et al., 2019; Pfau et al., 2014; von Braun, 2014), and a few studies have examined the link between bioeconomy and the SDGs (Biber-Freudenberger et al., 2020; Heimann, 2019). However, most studies examining the concept of bioeconomy in relation to sustainability so far have taken a global view or focused on case studies in the Global North and there is not much research on the relationship between bioeconomy and the SDGs in the context of South American countries. These countries share some characteristics in terms of availability of biomass and natural resources and have been in the process of formulating their bioeconomy strategies, either to develop new sectors or apply its principles to pre-existent and already established sectors. The case of agriculture for the production of non-food (oils, resins, fibres, clothing, energy, cosmetics, and plastics) and biofuels is probably the most evident example of this. Since the beginning of the twenty-first century, bioeconomy-related activities drove many aspects of the development model implemented by progressive governments in countries like Argentina, Brazil and Uruguay (see Chapter 1 by Ocampo in this volume). As a result of this experience, many concerns arose concerning its sustainability and socio-environmental impacts (Córdoba et al., 2018; Gudynas, 2011; Lapegna, 2015; Svampa, 2012). At the same time, these countries are also urged to address the most pressing SDG priorities, such as ending extreme poverty, reducing inequality, promoting economic growth and developing sustainable cities, while considering climate change and population growth (ECLAC, 2019). Development studies in Latin America have mainly focused on the different models of regional insertion in the global economy, analysing the characteristics of national strategies in the overall development along with history (Bértola and Ocampo, 2012). As a relatively new and underexplored concept within development studies, the main focus of this chapter will be on introducing the bioeconomy and its main characteristics, explaining its objectives, principles and mechanisms. Focusing mainly on the experience of South American countries the chapter also explores the challenges to reach more sustainable ways of production and consumption and the fulfilment of the SGDs. In the next section, we introduce the bioeconomy

Bioeconomy governance and (sustainable) development  331 as a concept and policy strategy and its introduction to the South American context, and how it was adapted by policy-makers in the region. Second, we present a review of existing literature that has examined the relationship between bioeconomy, sustainability and the SDGs. This shows that bioeconomic development does not automatically strengthen sustainability, but can also lead to trade-offs or undermine it. State policies and international organizations are therefore important to guarantee the sustainability of the bioeconomy model through the regulation and monitoring of its activities. The third section examines the bioeconomy in the Global South, mostly related to environmental and social concerns, that call attention to the risks of implementing this development model without making sustainability a necessary condition. We focus on agriculture, related to the non-food and biofuels sectors in South America as one example in the Global South where bioeconomy strategies are currently being promoted and where risks have already become evident. The last section summarizes the implications that adopting bioeconomy as a development model has in different contexts when more or less attention is paid to its sustainability impacts.

INTRODUCING BIOECONOMY TO DEVELOPMENT DEBATES: A NEW DEVELOPMENT MODEL FROM NORTH TO SOUTH? This section will address bioeconomy as an emerging alternative development strategy from North to South and its adoption and adaptation to the particular context of South American countries. Bioeconomy emerged as a development strategy at the beginning of the twenty-first century, when population growth translated into an increase in the world demand for food, energy, and materials while environmental sustainability and the necessity of promoting growth in a more sustainable way gained greater weight in the political agendas of the Global North. In that sense, bioeconomy carries important political, environmental and socio-economic implications (Bastos Lima, 2018). Initially, the concept of bioeconomy was developed by Nicholas Georgescu-Roegen to highlight the biological origin of economic processes and call attention to the high dependence of humanity on limited natural resources that are also unequally distributed (Mayumi, 2009). Since then, the idea of what bioeconomy is has also been disputed (Birch, 2006; Dietz et al., 2018; Stark et al., 2022) and diverse visions and approaches have evolved according to different realities (Delvenne and Hendrickx, 2013). Many actors intervene with different and often contradictory visions, expectations and interests. Bioeconomy comprises many processes, from a bio-technology approach, focused on innovation, trade, and markets, to circular economy, the preservation of biodiversity, conservation of eco-systems and waste management (reuse and recycle). In a broader definition, bioeconomy includes biotechnology and bioenergy, but also all kinds of other economic activities that rely on biological processes, products, and principles (Biber-Freudenberger et al., 2018). In this sense, the bioeconomy does not refer to a single strategy for development. There are many bioeconomies, responding to the characteristics of each country and also each region within the same country. Thus, the transition to bioeconomy depends on the availability of natural resources, capital and credit, the role of international trade, access to knowledge and enabling technologies, and societal and political support. Since the 2000s, several countries have identified the bioeconomy as a desirable development strategy (Dietz et al. 2018) with a focus on innovation and sustainability. It has been considered important from a climate change perspective (see Chapter 15 by Newell in this

332  Handbook on the politics of international development volume), but proponents of bioeconomy also suggest that a transition to a bioeconomy will address issues related to food security, health, inequalities, industrial restructuring, local development, exports diversification, international insertion and energy security (Bugge et al., 2016). For example, proponents of bioeconomy argue that new and more efficient production methods can increase the availability of food. Increasing the marginal yields thanks to biotechnological developments in seeds and fertilization would lead to an increase in productive areas and production stocks. As a result, it establishes a new strategy for industrial development aiming at more effective and efficient utilization of biomass resources. As a result, as Biber-Freudenberger et al. (2020) point out, bioeconomy can trigger positive as well as negative connotations depending on the sector, the sustainability challenge, and the way the concept has been adopted and adapted in the particular development strategy of each country. Biber-Freudenberger et al. (2020) identify the five main bioeconomy sectors: (1) Bioenergy, (2) Food and Feed, (3) High-volume biomass-based sector – Manufacturing, (4) The low-volume biomass-based sector – Biotechnology, and (5) Waste sector. The main difference between bioeconomy and other fossil-fuels development models is that the former emphasizes advanced scientific knowledge and sustainability in the definition of new alternative and productive (potentially sustainable) transformation pathways. From a bioeconomy perspective, products and value chains acquire a new significance, focusing on the interrelations between the different productive chains, the provision of natural resources, and ecosystem services. It includes the whole universe of products (and their waste) that stem from raw materials, with a focus on the synergies and optimization of the relations between value chains, the circularity of the system, and the total value generated by it. In this sense, the bioeconomy brings to the development debate a new approach that considers the transformation of the productive process going from the environment to the consumer, raising awareness of the impacts the fossil-fuel model has on the planet and the future. To transition from a fossil-based to a bio-based economy, the bioeconomy must follow a series of transformations of the economy and the development model. However, that transformation must be sustainable to address the environmental and social concerns that the bioeconomy generates. As Dietz et al. (2018) affirm, these processes depend, among other factors, on a country’s development level, resources and political system. The driving forces of those transformations are varied and complex, involving economic, environmental, societal and political objectives, and are marked by the country’s specific context and international economic interactions. Those transformation pathways (TP) have been identified as: first, the biomass-based substitution of fossil fuels (TP1); second, increase of primary sector productivity (TP2); third, new and more efficient uses of biomass (TP3), and fourth, the development of industrial applications relying on biological principles and organisms, but without high biomass inputs (TP4). The concept of bioeconomy was taken up as a policy strategy by the American Biomass Research and Development Board in 2001 (Biomass Research and Development Board, 2001), but nowadays, the most widespread definitions of bioeconomy are the EU’s and the OECD’s. Within the EU, two conferences marked the debate.2 As a result, in 2007, the EU launched the concept of a ‘knowledge-based bioeconomy’ as one of the pillars of the European 2 The first one, “New Perspectives on the Knowledge-Based Bio-Economy” was held in Brussels in 2005, and the second one, in Cologne, Germany, under the German presidency of the Council of the European Union, “En Route to the Knowledge-Based Bio-Economy”.

Bioeconomy governance and (sustainable) development  333 economy towards the year 2030 (EU, 2007), and defined it as “transforming life sciences knowledge into new, sustainable, eco-efficient and competitive products” (EU, 2005, p. 1). In 2009, the OECD followed a similar pathway and stated that in “a world where biotechnology contributes to a significant share of economic output, the emerging bioeconomy is likely to be global and guided by principles of sustainable development and environmental sustainability. A bioeconomy involves three elements: biotechnological knowledge, renewable biomass, and integration across applications” (OECD, 2009, p. 22). These visions promoting the bioeconomy led the agenda and drove its diffusion from Europe and the OECD to other parts of the world. In Latin America, the concept of bioeconomy was introduced by the UN Economic Commission for Latin America and the Caribbean (ECLAC) and the Interamerican Institute for Cooperation in Agriculture (IICA), dependent on the Organization of American States (OAS), and discussions have been led by a group of experts of those regional organizations. Two bi-regional projects between Latin America and the European Union in 2011 and 2013 (De Hodson Jaramillo, 2014) introduced bioeconomy to regional development debates. Several conferences organized by ECLAC with support from the EU, the German Cooperation and FAO’s Regional Office contributed to delineate a regional vision on bioeconomy (Rodríguez et al., 2017) and led to different national adaptations. Given the active role of ECLAC in conceptualizing Latin American development and giving policy advice since the 1950s (Prebisch, 1950), its role as a promoter of the concept puts bioeconomy within the regional development debates (see Chapter 26 by Rivarola Puntigliano in this volume) and the discussion on the sustainability of existent models. The next section will explore the relationship between bioeconomy and the SDGs, the main challenges for a sustainable bioeconomy and existing risks of undermining the goals.

PROMOTING SUSTAINABLE DEVELOPMENT? BIOECONOMY AND THE SDGS The bioeconomy concept introduced a new approach to production processes, emphasizing their potential for sustainability. In economic terms, social and environmental concerns have also been understood as a necessary condition for sustainable economic growth and a market opportunity to supply the demand of bio-products (von Braun, 2014). Besides, bioeconomy has been associated by the literature with the 2030 Agenda (see Chapter 20 by Currie-Alder in this volume) as a pathway to reach many of the SDGs through the ‘biologization’ of the regular economy (Ashukem, 2020; Gawel et al., 2019; Lokko et al., 2018). Country strategies both in the Global North and the Global South refer to the SDGs in their official bioeconomy documents (Dietz et al., 2018). As a result, the link between bioeconomy and sustainable development has been widely covered by the bioeconomy literature (Birch et al., 2010; Juerges and Hansjürgens, 2018; Pfau et al., 2014; Sheppard et al., 2011; Smolker, 2008). As Pfau et al. (2014) reveal, optimistic perspectives identify a positive relationship between bioeconomy and sustainability. Many authors refer to ‘sustainable bioeconomy’ or understand sustainability as an inherent condition or goal of the bioeconomy. In turn, other authors have more doubts about these positive impacts and argue that more attention should be paid to bioeconomy impacts on the environment, food availability, land and water use and wealth distribution (Pfau et al., 2014). Priefer et al (2017) identify at least three approaches: (1) sus-

334  Handbook on the politics of international development Table 21.1

Possible opportunities and risks of bioeconomy transformation for the SDGs

Sustainability dimension (SDG)

Opportunities

Risks

Food Security (SDG 2)

Increase via higher yields and new

Reduction due to food price increase

production methods Poverty/inequality (SDGs 1, 10) Natural Resources (SDGs 7, 14, 15) Health (SDG 3) Climate Change (SDG 13)

Reduce via the transfer of technology and

Increase via exclusion from technical

leapfrogging

progress

Conserve by improving production

Degrade/loss through inefficient

methods

production and overuse

Improve through new and refined forms

Risk/damage through improper use of risky

of therapy

technologies

Mitigate through emissions reductions

Exacerbate through direct and indirect land-use change

Source: Dietz et al. (2018).

tainability seen as an implicit result of a bioeconomy; (2) bioeconomy will only contribute to sustainability if certain preconditions are met; and (3) the idea that beneficial impacts might be possible, but adverse impacts are likely to prevail (Priefer et al., 2017, p. 4). Therefore, the impact of the bioeconomy on the SDGs is still a contested field. While contributing to the achievement of some SDGs, bioeconomy development does not necessarily always lead to more sustainable outcomes or practices regarding others, carrying both positive and negative impacts. In this sense, to be sustainable, the bioeconomy should be accompanied by economic and environmental policies that regulate it in line with the protection of ecosystems and biodiversity, the productivity of resources and the control over pollution while preventing an increase in existing inequalities and a widening of the knowledge gap. Otherwise, bioeconomy risks becoming just another extractive process, resulting in an economic, social and environmentally detrimental process, that, while profitable in the short term, will be charging its costs to future generations. As Table 21.1 shows, the bioeconomy brings opportunities and risks for the achievement of many of the SDGs. It could contribute to food security (SDG 2) through the expansion of crops to non-productive areas and the increase in yields by the application of new technologies both to farming (as precision agriculture) and seeds (as for GMOs) but could also undermine it due to an increase in food demand and prices. This also relates to the impact of bioeconomy on natural resources (SDGs 7, 14, 15) and health (SDG 3) and the application of new technologies that could grant their preservation or degrade them by their misuse or overuse. The use, transfer and development of technologies could also have positive impacts on poverty and inequality reduction (SDGs 1, 10), but also carry the risk of leaving people behind due to technological exclusion. As one of the main arguments in favour of bioeconomy states, the transformation could help mitigate climate change (SDG 13) through reductions in carbon emissions but also aggravate it if not enough attention is paid to sustainability issues and the impact of biomass production on land, land use change and water (SDG 15). To better understand the relationship between bioeconomy and the SDGs, BiberFreudenberger et al. (2018) assessed the sustainability performance of bioeconomy in a defined set of countries. They used an SDGs indicators database, focusing on those indicators usually related to the bioeconomy, such as SDG 2 (zero hunger), SDG 7 (affordable and clean energy), and SDG 12 (responsible consumption and production). As a result, they found that new biotechnological developments and innovations might trigger new material flows and processing

Bioeconomy governance and (sustainable) development  335 technologies, while the sole transition from fossil resources to bio-resources will not improve sustainability automatically. From a global perspective, El-Chichakli et al. (2016) identify the way bioeconomy can contribute to individual SGDs, addressing SDG 2 (end hunger), SDG 3 (ensure healthy lives), SDG 6 (water and sanitation for all), SDG 7 (energy for all), SDGs 8 and 9 (sustainable economic growth), SDG 11 (sustainable cities), SDG 12 (sustainable consumption), SDG 13 (combat climate change), SDG 14 (oceans, seas and marine resources) and SDG 15 (terrestrial ecosystems). They provide policy recommendations to be applied at the global level to boost sustainable bioeconomy projects around the world. Similarly, Heimann (2019) examined the relationship between bioeconomy and the SDGs in-depth and how (and if) it contributes to their achievement. He assessed the way the goals relate to bioeconomy activities and identified socio-economic, ecological and economic targets. This analysis shows that without additional measures and efforts, the sustainability of the existing bioeconomy concepts is not assured and an unsustainable bioeconomy is not the desired outcome. Regarding the SDGs, he found variations among goals. Bioeconomy activities appear to have positive outcomes in some of the goals while being detrimental in others. In that sense, to fulfil the targets, the bioeconomy requires more regulations, policies and investment to ensure sustainability, where, as we will argue in the next section, the state acquires a central role. However, Heimann affirms that, “it is beyond doubt demonstrated that the bioeconomy can have a strong potential to be sustainable if implemented wisely. A sustainable bioeconomy that includes […] sustainability measures […] has a strong potential to be a very useful concept to achieve the targets of the SDGs” (Heimann, 2019, p. 55). To highlight one example, an analysis of SDG 1 (no poverty) shows that the potential contradictory effects of the bioeconomy on poverty are similar to those of industrial agriculture and biomass production for biofuels. Producing goods for a bioeconomy may provide new opportunities for value-added industries and this may result in the creation of jobs and help to alleviate poverty. However, the increased demand for land can lead to land grabbing, displacements, unequal distribution of land considering soil quality, and loss of communal land. Also, the transition from food crops toward flex crops (multiple and flexible uses of crops) (Borras et al., 2015) and multipurpose agriculture could potentially increase farmers’ incomes and help reduce poverty, but also increase their dependency on international commodity prices (Bastos Lima, 2018). Bioeconomy has the potential to support the achievement of SDG 1, but only when measures are adopted to mitigate negative impacts (Heimann, 2019). Industrialized countries have made efforts to reduce the negative impacts of their economies through technological fixes but they continue to have some of the highest per-capita carbon footprints. The import of primary commodities by these countries led to the externalization of environmental costs to the producing or sourcing countries (mostly developing countries). This raises the question that while (and if) developing countries shift from commodities-export-oriented economies to more high-tech industries, it can increase the demand for local resources in developed countries, affecting their achievement of the SDGs. International and trade dependencies are central when evaluating sustainability and the externalization of bioeconomy socio-environmental costs; such as pollution, biodiversity loss, land degradation, and marginalization of vulnerable groups (Biber-Freudenberger et al., 2018). While many works state that the main driver for bioeconomy is to reduce the dependence on fossil-based resources and reduce greenhouse gas emissions, some authors affirm that bioeconomy should also help ensure sufficient production of food and clean energy (Priefer et al., 2017). This raises questions on topics such as the competition between food and fuels, issues

336  Handbook on the politics of international development related to availability, competition and concentration of land; as well as socio-environmental impacts as limitations for the sustainable development of bioeconomy (Pfau et al., 2014; Priefer et al., 2017). As a growing share of bioeconomy expansion is devoted to the production of biomass for non-food bioeconomy as oil-crops for the production of biofuels, fibre crops for textile production and cereals for biofuels and bioplastics, the agricultural sector plays a central role. In South America and elsewhere, critics of the agro-industrial strategy and the extensive use of genetically modified seeds and agrochemicals highlight the risks that these technologies carry for soil degradation, land acquisition and the health and labour conditions of rural populations (Giljum et al., 2016). They highlight the negative socio-environmental effects of this development model and document the impacts of natural resource exploitation and the limited environmental management capacity of governments that destroy communities and nature (Arancibia, 2013; Córdoba et al., 2018; Gordillo and Hirsch, 2008; Gudynas, 2011; Porto and Milanez, 2009; Teubal, 2006, 2009). The use of GMOs has also raised alarm. On the one hand, it has been seen as a strategy for progress in the transformation to bioeconomy based on biotechnology applications to increase yields and production; and, on the other hand, as unacceptable by bio-ecology approaches, more concerned with sustainability topics related to, for example, cultivation potentials of sustainable biomass, global fair trade, and wider participation in discussions and decisions on transition processes (Bugge et al., 2016, p. 12). When considering the North–South development gap, the distribution of costs between the more and less industrialized countries from the Global North and the Global South is also a challenge. These issues threaten the possibilities of bioeconomy to contribute to the achievement of the SDGs creating concerns over its adoption and implementation in different regions of the world. As introduced here, the sustainability of the bioeconomy is a key question in bioeconomy debates. Although more research needs to be done on specific national experiences, it is clear that while bioeconomy can contribute to the achievement of some of the SDGs, without regulation and application of measures to mitigate its negative impacts, it can also undermine them. In this regard, as many bioeconomy strategies are starting to be developed around the globe, the sustainability component has to be part of their initial design and considered in all the stages of the transformation process and its implementation. In this endeavour, global and national policies become fundamental, both to promote and regulate the sustainability of bioeconomies around the globe and to address inequalities among countries.

PROMOTION AND REGULATION OF BIOECONOMY: THE ROLE OF THE STATE AND INTERNATIONAL ORGANIZATIONS To what extent bioeconomy can foster sustainable development depends to a large extent on the role played by individual states at the national and global levels, including their political will and capacity to address sustainability concerns. States have a central role both as promoters and regulators of bioeconomy strategies at different levels. To promote and create synergies between the bioeconomy and the SDGs, specific and coordinated policies are crucial (Gawel et al., 2019). The 2030 Agenda is largely predicated on a statist approach to development, relying on national governments to codify the goals into domestic plans and action (see Chapter 20 by Currie-Alder in this volume). In this sense, the development level, resources and political

Bioeconomy governance and (sustainable) development  337 system of each state influence their transformation processes to bioeconomy (Dietz et al., 2018). It requires high degrees of state intervention but also innovative ways of interaction between the public and the private sectors (Mazzucato, 2013). In this endeavour, developed and developing countries understand, adopt and implement bioeconomic principles in a different manner depending on their place in the global economy, their productive structure and social and political contexts. That is the reason why a bioeconomy-based development strategy requires a coordinated design able to bring together all the actors involved – from different areas of public policy (such as macroeconomic, fiscal, trade, agricultural, industrial, science and technology) to the private sector and social actors – as well as the interaction with other economies at all levels. As a result, states act as enablers or constrainers of bioeconomy expansion by providing the institutional design for both its promotion and the regulation of its possible negative impacts. This requires the coordination of policies to integrate the different dimensions of production, creating incentives for the technological transition, providing clear legal frameworks, and promoting new industrial and consumption policies, while regulating the use of soils, the application of biotechnology and equal access to benefits. The 2020 bioeconomy expert survey (International Advisory Council on Global Bioeconomy, 2020) explored bioeconomy governance frameworks and their regulations to identify future transformations in bioeconomy and the necessary conditions for its sustainability. The survey showed that environmental regulations at the national and international level are considered in most bioeconomy strategies, suggesting that the transformation processes are taking place under a regulatory framework. The report concluded that “a sustainable bio-economy requires the synergistic cooperation of many different actors from science, business, politics and civil society, including chang­es in consumer behaviour” (International Advisory Council on Global Bioeconomy, 2020, p. 10). In this process, a sustainable transformation should include government incentives to promote bioeconomic innovations and their dissemination and regulatory boundaries when conflicts between the bioeconomy and the SDGs arise. At the global level, states shape and are also shaped by global governance arrangements that can both contribute to the promotion and regulation of the bioeconomy. In this sense, the sustainability of the bioeconomy acquires special significance at the global level (El-Chichakli et al., 2016). Although no global governance frameworks specifically on bioeconomy have been developed, the bioeconomy transformation pathways tend to involve many transboundary impacts with a global effect. In this regard, international and regional organizations, as well as international cooperation, are expected to have a significant role in the governance of the bioeconomy, its promotion and regulation (Bößner et al., 2021). They promote tools, create incentives and establish norms (for example by pricing ecosystem services, creating tradeable carbon credits, and by making pollution cost). The SDG framework interacts with various existing regulations and initiatives at the regional, national, and supranational levels. Many of the traditional international organizations as the WTO, OECD, UNCTAD, FAO and the G20 and G7 have bioeconomy-related projects and are committed to the 2030 Agenda. As such, their role in bringing together bioeconomy and sustainability is essential.

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THE CASE OF BIOECONOMIC DEVELOPMENT IN AGRICULTURE IN SOUTH AMERICA: RISING CONCERNS AND CHALLENGES FOR THE SDGS The agricultural sector is central to the development of the bioeconomy in South America. The region has positioned itself as a leading exporter of agricultural products. Brazil is the largest agricultural and food exporter (USD 79.3 billion in 2017) in the region, followed by Argentina, (USD 35.0 billion), and Chile (USD 17 billion) (OECD/FAO, 2019, p. 71). Policy documents highlight that due to the availability of biomass, natural resources, land and installed knowledge the region holds strong potential for bioeconomy development (Aramendis et al., 2018; De Hodson Jaramillo et al., 2019; Rodríguez, 2017). Since the late 1990s and especially since the early 2000s, the incorporation of new technologies into agricultural processes had an impact both on productivity growth and their transformation into biofuels. The introduction of GMOs, the soybean ‘technological package’ (GMOs, direct sowing, and agrochemicals) and land expansion made soybean production particularly dynamic, growing 300 per cent from 1995–97 to 2016–18 in Argentina, Brazil, and Paraguay combined (OECD/FAO, 2019) and it became the main agricultural crop in Uruguay (MGAP-DIEA, 2017). Along with maize and sugarcane, it was the base for the development of leading non-food and biofuel sectors in the region and both ethanol and biodiesel have been significant contributors to the increased demand for agricultural commodities in the first two decades of the twenty-first century (OECD/FAO, 2019). Also, bioeconomy-related activities drove many development policies implemented by progressive governments since the beginning of the twenty-first century in countries like Argentina, Brazil and Uruguay, serving as a ‘buffer’ during economic crises. Progressive Southern Cone governments saw biofuels and the rise in the external demand of commodities as means for the economic growth needed to address poverty. Rural poverty was significantly reduced (in Brazil it reduced 42 per cent from 1990 to 2014) (OECD/FAO, 2019) through many state-led projects that translated into economic growth, public investment in infrastructure and public services, and the implementation of social protection programmes – mainly cash-transfer programmes such as Bolsa de familia in Brazil, Universal Child Benefit (Asignación Universal por Hijo – AUH) in Argentina and the New Regime of Family Benefits (Nuevo Régimen de Asignaciones Familiares – NRAF) in Uruguay. However, the expansion of the agricultural and biofuel sector raised many concerns about the sustainability of the model and its socio-environmental impacts (Córdoba et al., 2018; Gudynas, 2011; Lapegna, 2015; Svampa, 2012) and questions regarding the role of the state in the promotion and regulation of bioeconomy. Polarization over this development model is evident in the different views held by the private agricultural sector as a promoter of bioeconomy strategies vis-à-vis civil society actors who demand more and stronger regulatory frameworks. The debate on food sovereignty – related to SDG 2 – as a challenge to bioeconomy strategies has been a source of concern ever since the concept started to be discussed in South America (Altieri and Toledo, 2011; Franchini et al., 2017; Giraldo and McCune, 2019; Viola and Basso, 2016). The potential competition between food and non-food crops (Horlings and Marsden, 2011; Searchinger and Heimlich, 2015) arises from the massive demand for such commodities, which leads their production to prevail over other farming systems; alternative cash crops; or non-agricultural land uses, such as forest conservation (Bastos Lima, 2018). As fossil-fuel prices increased and biofuel alternatives received more attention globally to poten-

Bioeconomy governance and (sustainable) development  339

Source: Authors’ own elaboration based on FAOSTAT data.

Figure 21.1

South American production quantity of main crops (1998–2019)

tially combat climate change (SDG 13) and expand the supply of clean energies (SDG 7), the issue of the impact of bioeconomy on food security (access, availability, stability and resource utilization) has moved to the forefront of the discussion and called into question the sustainability of the processes involved. In South America, social movements such as Via Campesina raised concerns over this topic and they advocate for ‘food sovereignty’ (in opposition to FAO’s ‘food security’ concept), the right of rural populations to land and the transformation of the productive system to agroecology (Lapegna, 2013; Oliveira and Hecht, 2016). According to FAO statistics, between 1998 (with the introduction of GMOs) and 2019, the production of soybeans tripled in South America (from 57.3 to 184 million tonnes), while the harvest area for this crop doubled (from 24.2 to 58.5 million hectares). Maize (also destined for the production of biofuels) showed a similar trend (from 54.5 million tonnes produced in 1998 to 172.7 million tonnes in 2019; and 16.1 million to 28.1 million hectares cultivated) (see Figures 21.1 and 21.2). The aim to increase food and agricultural production brought with it important changes in the distribution of land, rural profits and agronomic practices calling attention to land grabbing, concentration and degradation (Borras et al., 2012; Brent, 2015; FAO, 2014; Giljum et al., 2016; Margulis et al., 2013; Martinez-Alier et al., 2014; Mollett, 2016; Mora, 2016; Puyana and Costantino, 2015), with direct implications for the achievement of SDG 10 (reduce inequality) and SDG 15 (life on land). In this, the current interpretation and application of bioeconomy to the largest agricultural sectors in South America plays a crucial role as it contributes to intensive agricultural and forest practices and thus puts additional pressures on soils (Juerges and Hansjürgens, 2018). While agro-chemical fertilizers and pesticides help to increase yields, studies affirm that their misuse can lead to soil (SDG 15), water (SDG 6), and air pollution causing serious problems for the environment and human health (Sellare et al., 2020). The impact of these practices on rural populations’ health has been widely denounced in South American countries, where the impacts of glyphosate were documented and criticized by many civil society organizations (Arancibia, 2013; Araújo and Oliveira, 2017).

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Source: Authors’ own elaboration based on FAOSTAT data.

Figure 21.2

South American harvest area of main crops (1998–2019)

Land acquisition and concentration for large-scale agricultural production destined to flex-crops also raised concerns (Costantino, 2016, 2019; De Melo Conti et al., 2019; FAO, 2014; Florit, 2011; Sauer and Leite, 2012; Vazquez and Sili, 2017; Wilkinson et al., 2012). In South America, the concentration and foreignization of land presented various dynamics. On the one hand, land acquisition by foreign companies and governments has increased significantly since the mid-1990s, mainly from the Gulf States, China and South Korea in Argentina and Brazil (FAO, 2012). On the other hand, land ownership by regional or neighbouring countries through ‘Translatinas’ – large Latin American international companies – became a growing trend such as the cases of Chilean forestry companies (CELCO and Mininco) in Uruguay and Argentina; or the expansion of Brazilian – and to a lesser extent Argentinian, Uruguayan and European – farm contractors to Paraguay and Bolivia for the establishment of large agricultural companies (FAO, 2014). In Argentina, the modernization and expansion of the agricultural sector led to the creation of a ‘sowing pools’ system, that combines land, capital and human resources through the leasing of land to apply a ‘technological package’. These companies have expanded by leasing land and, as they have grown, they have concentrated their capital and increased domestic acquisitions as well as expanding, either through leasing or purchasing arrangements, in neighbouring countries (FAO, 2014). This issue also brought to light the North–South divide in terms of externalization of social and environmental costs emerging from the bioeconomy. Bioeconomy political strategies developed by OECD countries and the EU tend to see themselves as technological leaders and understand other countries as feedstock suppliers on the one hand and markets for the produced bio-based products and the developed technologies on the other hand (Priefer et al., 2017). At the same time, the EU is significantly dependent on the land in other regions of the world to meet its demand for crops for the production of biodiesel but also soaps, detergents, paints and plastics (Giljum et al., 2016). This leads to concerns over the impacts

Bioeconomy governance and (sustainable) development  341 that this kind of demand has on suppliers and their environment and populations. Therefore, as Juerges and Hansjürgens (2018) state, soil governance is required in order to address the limitations of private property rights on soils in relation to public interest demands (Juerges and Hansjürgens, 2018, p. 1628). Overall, the introduction of the bioeconomy concept and development of strategies in South American countries has been marked by the prevalence of the agricultural sector over others. This raises a range of serious concerns regarding the sustainability of the proposed model, mainly because of the socio-environmental impacts of the implementation of new technologies over populations and land. Although bioeconomy can be applied and can promote the development of other sectors and activities involving biomass transformation such as food, waste, marine bioeconomy, ecosystem services and agroecology, with potentially different sustainability impacts, the case of agriculture in South America demonstrates its limitation in that aim. In this regard, state-led regulatory frameworks guaranteeing the sustainability of all the processes involved are essential to avoid the socio-environmental costs that a non-sustainable bioeconomy carries.

FINAL REMARKS This chapter introduced the bioeconomy concept to link it to sustainable development strategies and its implications for the pursuit of the SDGs in South America. An alternative development model based on more sustainable and inclusive strategies is crucial for South American countries. The great availability of biomass and big agricultural sectors make them promising locations for the development of the bioeconomy. However, the case of the agricultural sector shows that although the bioeconomy led to positive economic outcomes, sustainability has not been at the centre of bioeconomy strategies in the region. So far, the socio-environmental impacts regarding the health and life of rural populations, as well as the concentration and degradation of land have not been fully addressed through bioeconomic development in the agricultural sector. Promoters of the bioeconomy highlight its economic benefits, with the possibility of adding value to biomass and the industrialization of bioproducts and addressing external demands. On the other hand, as we have seen, environmental and social concerns related to intensive agriculture and the use of biotechnology are also strong. As a result, the bioeconomy faces the challenge of finding a balance between the environmental impact of the sustainable use, application and transformation of biomass and the policies needed for national and regional development. South America’s natural resource wealth will allow the region to continue playing a major role in agricultural-related bioeconomy sectors both in production and trade. The challenges for the future lie in promoting development in a context of slower demand growth and volatile international prices while ensuring that future bioeconomy-related activities are more sustainable and more inclusive than they have been in the past. In this regard, promoting the bioeconomy as a development model is not the same in all contexts. Path dependence, structural economic conditions and the capacity of the state to develop efficient regulatory frameworks need to be taken into account to promote a sustainable transition. This chapter opens the debate to future agendas of research on the adoption of bioeconomy as a development strategy in South America, engaging on the one hand, in the discussion over

342  Handbook on the politics of international development the insertion of South American economies in the global economy, the historical challenge of these countries to participate in global markets with more value adding and upgrading of production chains within the region, and the prospects for future growth based on the availability of natural resources; and, on the other hand, taking into account the socio-environmental impacts of this model that could open up new opportunities in terms of economic growth when regulations over the environmental and social impacts of productive models are applied. The need for more sustainable ways of production is a reality not just in the Global North but around the world due to the effects the fossil-based model has proven to have on the planet. In South America, the impacts of climate change might aggravate the pre-existent inequalities and increase its dependency on external supplies. More research on the opportunities and challenges that the bioeconomy has for the development of the region will contribute to a clearer understanding of its impacts and the options available in the pathway to economic growth.

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Bioeconomy governance and (sustainable) development  343 Bößner, S., F. X. Johnson, and Z. Shawoo (2021), ‘Governing the bioeconomy: What role for international institutions?’, Sustainability (Switzerland), 13 (1), 1–24. Brent, Z. W. (2015), ‘Territorial restructuring and resistance in Argentina’, Journal of Peasant Studies, 42 (3–4), 671–694. Bugge, M. M., T. Hansen, and A. Klitkou (2016), ‘What is the bioeconomy? A review of the literature’, Sustainability (Switzerland), 8 (7). https://​doi​.org/​10​.3390/​su8070691. Córdoba, D., M. Chiappe, J. Abrams, and T. Selfa (2018), ‘Fuelling social inclusion? Neo-extractivism, state–society relations and biofuel policies in Latin America’s Southern Cone’, Development and Change, 49 (1), 63–88. Costantino, A. (2016), ‘El capital extranjero y el acaparamiento de tierras: Conflictos sociales y acumulación por desposesión en Argentina’, Revista de Estudios Sociales. https://​journals​.openedition​.org/​ revestudsoc/​9726. Costantino, A. (2019), Fiebre por la Tierra Debates Sobre el Land Grabbing en Argentina y América Latina. Buenos Aires: El Colectivo. De Hodson Jaramillo, E. (2014), Hacia Una Bioeconomía en América Latina y el Caribe en Asociación con Europa. Bogotá: Pontífica Universidad Javeriana. De Hodson Jaramillo, E., G. Henry, and E. Trigo (2019), La bioeconomía. Nuevo marco para el crecimiento sostenible en América Latina. Bogotá: Pontífica Universidad Javeriana. De Melo Conti, D., A. J. De Hoyos Guevara, H. Heinrichs, L. F. Da Silva, C. C. Quaresma, and T. De Souza Beté (2019), ‘Collaborative governance towards cities sustainability transition’, Urbe, 11, 1–19. Delvenne, P. and K. Hendrickx (2013), ‘The multifaceted struggle for power in the bioeconomy: Introduction to the special issue’, Technology in Society, 35 (2), 75–78. Dietz, T., J. Börner, J. J. Förster, and J. von Braun (2018), ‘Governance of the bioeconomy: A global comparative study of national bioeconomy strategies’, Sustainability (Switzerland), 10 (9). https://​doi​ .org/​10​.3390/​su10093190. ECLAC (2019), International Trade Outlook for Latin America and the Caribbean 2019: Adverse Global Conditions Leave the Region Lagging Further Behind. Santiago de Chile. https://​repositorio​ .cepal​.org/​handle/​11362/​44919. El-Chichakli, B., J. von Braun, C. Lang, D. Barben, and J. Philip (2016), ‘Five cornerstones of a global bioeconomy’, Nature, 535, 221–223. EU (2005), New Perspectives on the Knowledge-Based Bio-Economy: Conference Report. Brussels, Belgium. https://​www​.etipbioenergy​.eu/​databases/​reports/​46​-new​-perspectives​-on​-the​-knowledge​ -based​-bio​-economy​-kbbe​-conference​-report. EU (2007), En Route to the Knowledge-Based Bio-Economy. Cologne. https://​dechema​.de/​dechema​ _media/​Downloads/​Positionspapiere/​Cologne​_Paper​.pdf. FAO (2012), Dinámicas Del Mercado de La Tierra en América Latina y el Caribe: Concentración y Extranjerización. Santiago de Chile: FAO. FAO (2014), Reflexiones Sobre La Concentración y Extranjerización de La Tierra En América Latina y El Caribe. Santiago de Chile: FAO. Florit, P. (2011), ‘Extranjerización de la tierra: una caracterización’, Ponencia Presentada en el XXVIII Congreso, M Piedracueva. http://​www​.academia​.edu/​download/​26129408/​Ponencia​_Extranjero​.pdf. Franchini, M., E. Viola, and A. F. Barros-Platiau (2017), ‘The challenges of the Anthropocene: From international environmental politics to global governance’, Ambiente e Sociedade, 20 (3), 177–202. Fukuda-Parr, S. and D. McNeill (2019), ‘Knowledge and politics in setting and measuring the SDGs: Introduction to the special issue’, Global Policy, 10 (1), 5–15. Gawel, E., N. Pannicke, and N. Hagemann (2019), ‘A path transition towards a bioeconomy: The crucial role of sustainability’, Sustainability (Switzerland), 11 (11), 3005. Giljum, S., M. Bruckner, B. Gözet, and L. de Schutter (2016), Land under Pressure: Global Impacts of the EU Bioeconomy. Friends of the Earth Europe. https://​friendsoftheearth​.eu/​publication/​land​-under​ -pressure​-global​-impacts​-of​-the​-eu​-bioeconomy/​. Giraldo, O. F. and N. McCune (2019), ‘Can the state take agroecology to scale? Public policy experiences in agroecological territorialization from Latin America’, Agroecology and Sustainable Food Systems, 43 (7–8), 785–809.

344  Handbook on the politics of international development Gordillo, G. and S. Hirsch (2008), ‘Indigenous struggles and contested identities in Argentina: Histories of invisibilization and reemergence’, Journal of Latin American Anthropology, 8 (3), 4–30. Gudynas, E. (2011), ‘Debates sobre el desarrollo y sus alternativas en América Latina’, in Más Allá Del Desarrollo. Grupo Permanente de Trabajo Sobre Alternativas Al Desarrollo, 21–54. Heimann, T. (2019), ‘Bioeconomy and SDGs: Does the bioeconomy support the achievement of the SDGs?’, Earth’s Future, 7 (1), 43–57. Hertel, T. W., J. Steinbuks, and U. Baldos (2013), ‘Competition for land in the global bioeconomy’, Agricultural Economics, 44 (Suppl. 1), 129–139. Horlings, I. I. and T. Marsden (2011), ‘Rumo ao desenvolvimento espacial sustentável? Explorando as implicações da nova bioeconomia no setor agroalimentar e na inovação regional’, Sociologias, 27, 142–178. International Advisory Council on Global Bioeconomy (2020), Designing Sustainability Governance for the Bioeconomy – a Global Expert Survey. Berlin. https://​bit​.ly/​37UFQBJ. Juerges, N. and B. Hansjürgens (2018), ‘Soil governance in the transition towards a sustainable bioeconomy: A review’, Journal of Cleaner Production, 170, 1628–1639. Lapegna, P. (2013), ‘The expansion of transgenic soybeans and the killing of indigenous peasants in Argentina’, Societies Without Borders, 8 (2), 291–308. Lapegna, P. (2015), ‘Popular demobilization, agribusiness mobilization, and the agrarian boom in post-neoliberal Argentina’, Journal of World-Systems Research, 21 (1), 69–87. Lokko, Y., M. Heijde, K. Schebesta, P. Scholtès, M. Van Montagu, and M. Giacca (2018), ‘Biotechnology and the bioeconomy: Towards inclusive and sustainable industrial development’, New Biotechnology, 40, 5–10. Margulis, M. E., N. McKeon, and S. Borras (2013), ‘Land grabbing and global governance: Critical perspectives’, Globalizations, 10 (1), 1–23. Martinez-Alier, J., L. Temper, S. Munguti, P. Matiku, H. Ferreira, W. Soares, M. F. Porto, V. Raharinirina, W. Haas, S. J. Singh, and A. Mayer (2014), ‘The many faces of land grabbing. Cases from Africa and Latin America’. https://​grain​.org/​e/​4908. Mayumi, K. (2009), ‘Nicholas Georgescu-Roegen: His bioeconomics approach to development and change’, Development and Change, 40 (6), 1235–1254. Mazzucato, M. (2013), ‘Financing innovation: Creative destruction vs. destructive creation’, Industrial and Corporate Change, 22 (4), 851–867. MGAP-DIEA (2017), Anuario Estadístico Agropecuario. Montevideo. https://​descargas​.mgap​.gub​.uy/​ DIEA/​Anuarios/​Anuario2017/​DIEA​-Anuario2017​.pdf. Mollett, S. (2016), ‘The power to plunder: Rethinking land grabbing in Latin America’, Antipode, 48 (2), 412–432. Mora, S. (2016), ‘Capitalismo, crisis y naturaleza. Un análisis del acaparamiento de tierras dentro y desde el Sur Global’, Relaciones Internacionales: Revista Académica Cuatrimestral de Publicación Electrónica, 33, 53–73. OECD (2009), The Bioeconomy to 2030: Designing a Policy Agenda. Main Findings and Policy Conclusions. Paris: OECD. OECD/FAO (2019), ‘Latin American agriculture: Prospects and challenges’, in OECD-FAO Agricultural Outlook 2019–2028. Paris and Rome: OECD/FAO, pp. 70–124. Oliveira, G. and S. Hecht (2016), ‘Sacred groves, sacrifice zones and soy production: Globalization, intensification and neo-nature in South America’, Journal of Peasant Studies, 43 (2), 251–285. Pfau, S. F., J. E. Hagens, B. Dankbaar, and A. J. M. Smits (2014), ‘Visions of sustainability in bioeconomy research’, Sustainability (Switzerland), 6 (3), 1222–1249. Porto, M. F. and B. Milanez (2009), ‘Economic development axis and socioenvironmental conflicts generation in Brazil: Challenges to sustainability and environmental justice’, Ciência & Saúde Coletiva, 14 (6), 1983–1994. Prebisch, R. (1950), The Economic Development of Latin America and Its Principal Problems. Santiago de Chile: CEPAL-UN. https://​doi​.org/​10​.34156/​9783791046006​-194. Priefer, C., J. Jörissen, and O. Frör (2017), ‘Pathways to shape the bioeconomy’, Resources, 6 (1), 1–23. Puyana, A. and A. Costantino (2015), ‘Chinese land grabbing in Argentina and Colombia’, Latin American Perspectives, 40 (1), 87–128.

Bioeconomy governance and (sustainable) development  345 Rodríguez, A. (2017), La bioeconomía: oportunidades y desafíos para el desarrollo rural, agrícola y agroindustrial en América Latina y el Caribe. Santiago de Chile: CEPAL. https://​www​.cepal​ .org/​e s/​p ublicaciones/​4 2724​- la​- bioeconomia​- oportunidades​- desafios​- desarrollo​- rural​- agricola​ -agroindustrial. Rodríguez, A., A. O. Mondaini, and M. A. Hitschfeld (2017), Bioeconomía en América Latina y el Caribe. Contexto global y regional y perspectivas. Santiago de Chile: CEPAL. https://​www​.cepal​ .org/​es/​suscripciones. Rosegrant, M. W., C. Ringler, T. Zhu, S. Tokgoz, and P. Bhandary (2013), ‘Water and food in the bioeconomy: Challenges and opportunities for development’, Agricultural Economics, 44 (Suppl. 1), 139–150. Sauer, S. and S. P. Leite (2012), ‘Expansão agrícola, preços e apropriação de terra por estrangeiros no Brasil’, Revista de Economia e Sociologia Rural, 50 (3), 503–524. Searchinger, T. and R. Heimlich (2015), ‘Avoiding bioenergy competition for food crops and land: Creating a sustainable food future’, World Resources Institute Working Paper, 9, 44. Sellare, J., E. M. Meemken, and M. Qaim (2020), ‘Fairtrade, agrochemical input use, and effects on human health and the environment’, Ecological Economics, 176, 1–10. Sheppard, A. W., I. Gillespie, M. Hirsch, and C. Begley (2011), ‘Biosecurity and sustainability within the growing global bioeconomy’, Current Opinion in Environmental Sustainability, 3 (1–2), 4–10. Smolker, R. (2008), ‘The new bioeconomy and the future of agriculture’, Development, 51 (4), 519–526. Stark, S., L. Biber-Freudenberger, T. Dietz, N. Escobara, J. J. Förster, J. Henderson, N. Laibach, and J. Börner (2022), ‘Sustainability implications of alternative transformation pathways for the bioeconomy: An interdisciplinary conceptual framework’, Sustainable Production and Consumption, 29, 215–227. Svampa, M. (2012), ‘Consenso de los commodities, giro ecoterritorial y pensamiento crítico en América Latina’, Observatório Social de América Latina. http://​maristellasvampa​.net/​archivos/​ensayo59​.pdf. Teubal, M. (2006), ‘Expansión del modelo sojero en la Argentina. De la produccion de alimentos a los commodities’, Revista Realidad Economica, 220, 71–96. Teubal, M. (2009), ‘Expansión de la soja transgénica en la argentina’, in M. Pérez, S. Schlesinger, and T. A. Wise (eds.), Promesas y Peligros de la Liberalización del Comercio Agrícola. Lecciones Desde América Latina. La Paz: Asociación de Instituciones de Promoción y Educación (AIPE), pp. 73–90. UN (2015), Transforming Our World: The 2030 Agenda for Sustainable Development. https://​sdgs​.un​ .org/​sites/​default/​files/​publications/​21252030 Agenda for Sustainable Development web.pdf. Vazquez, A. and M. Sili (2017), ‘Dinámica espacial del proceso de extranjerización de la tierra en la Patagonia’, Journal of Latin American Geography, 16 (2). http://​muse​.jhu​.edu/​article/​664390. Viola, E. and L. Basso (2016), ‘O sistema internacional no antropoceno’, Revista Brasileira de Ciencias Sociais, 31 (92). https://​doi​.org/​10​.17666/​319201/​2016. von Braun, J. (2014), ‘Bioeconomy and sustainable development: Dimensions’, Rural21, 6–9. Wilkinson, J., B. Reydon and A. Di Sabbato (2012), ‘Concentration and foreign ownership of land in Brazil in the context of global land grabbing’, Canadian Journal of Development Studies, 33 (4), 417–438.

22. Aid for Trade and development1 Juliana Peixoto Batista and Vanesa Knoop

1. INTRODUCTION Aid for Trade (AfT) is a concept directly linked to development. The idea is as old as the multilateral trading system itself. In fact, developing countries placed the issue of aid – then called Trade-Related Technical Assistance and Capacity Building (TRTA/CB) – on the agenda of the General Agreement on Tariffs and Trade (GATT) since its earliest days. Early provisions of TRTA/CB reflect the awareness of developing countries about inequities in the governance of trade. In fact, the underpinnings of global governance since the end of the Second World War have been imbued with the Western norms of order, and these have always been contested by developing countries (Deciancio and Tussie, 2019). Already during the 1970s, the developing world started to pay attention to factors such as poverty reduction, unemployment, and redistribution in the discussion about development. As development theories evolved (see Chapter 1 by Ocampo and Chapter 25 by Narlikar in this volume), discussions about inequalities in multilateral trade rules gained momentum. TRTA evolved closely related to this debate, particularly to the Special and Differential Treatment (S&DT) concept, at least until the mid-1980s. The Uruguay Round changed this scenario, and specific provisions on TRTA were added to help developing counties implement new obligations. Moreover, it was only in the 2000s when AfT emerged as an autonomous concept in the agenda of the World Trade Organization (WTO) and beyond. In fact, AfT was officially launched at the Hong Kong Ministerial Conference in December 2005. As from then, the AfT initiative has increased in the global agenda. As its autonomy from S&DT increased, its means became less clear. Discussions about development as a multidimensional process have brought in concepts such as sustainable development goals (see Chapter 20 by Currie-Alder in this volume) or the development compact (Chapter 13 by Chakrabarti in this volume) and solidarity (Chapter 7 by Lin in this volume) to light. Such disputes can be observed in the AfT agenda setting with the definition of the conceptual framework until monitoring and evaluation efforts. The politics of development can also be grasped, for instance, in discrepancies among international agencies about key motivations for providing aid and increasing trade. These discussions impair the effectiveness of the initiative itself. This chapter sheds light on this discussion, summarizing the main aspects of the AfT initiative. It comprises four sections, apart from this introduction and final remarks. Section 2 details the initial drivers and how it developed in the WTO. Section 3 identifies different perspectives under which the concept is implemented. Section 4 focuses on major challenges while Section 5 suggests some key points for the way ahead.

1 This chapter is a modified and updated version of Peixoto, J. ‘Aid for trade: An overview’, working paper prepared for the GLOBE research project, EU Horizons 2020.

346

Aid for Trade and development  347

2.

ORIGINS OF THE AID FOR TRADE CONCEPT AND ITS DEVELOPMENT IN THE WORLD TRADE ORGANIZATION

AfT is as old as the multilateral trading system itself. Developing countries placed the issue of aid, and TRTA/CB, on the agenda of the General Agreement on Tariffs and Trade (GATT) since its earliest days. The need for increased aid to assist developing countries to help boost their production and exports was early recognized by the Contracting Parties through the revised Article XVIII of GATT in 1955 and the 1961 Declaration of the Contracting Parties.2 In 1961 the GATT adopted the Declaration on the Promotion of Trade of Less Developed Countries, which called for preferences in market access for developing countries. In 1964, Part IV of the GATT – entitled ‘Trade and Development’ was adopted – providing a specific legal framework for developing countries. Part IV includes three new articles. Article XXXVI established that parties should provide “in the largest possible measure more favourable and acceptable market access conditions for products of export interest to developing countries” (particularly primary products and processed goods), while stipulating at the same time that developing countries should not be expected to make contributions inconsistent with their level of development. In addition, Articles XXXVII and XXXVIII called for improved market access for products of export interest to developing countries (Tussie and Quiliconi, 2013). As a concept, AfT is related to the broader discussion on trade and development and hence linked to S&DT. In fact, technical assistance was included in those early GATT revisions as part of the S&DT offers made by developed countries to facilitate the integration of developing countries into the multilateral trading system. Furthermore, between 1966 and 1971, the Generalized System of Preferences – GSP – and the protocol on trade-related negotiations among 16 developing countries were introduced in GATT, as waivers to Article I (MFN). In the Tokyo Round, which began in 1973, the efforts of developing countries to consolidate the special treatment in their favour resulted in the ‘Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries’, known as the ‘Enabling Clause’. The Enabling Clause comprises: (a) the Generalized System of Preferences; (b) non-tariff measures in GATT instruments; (c) global or regional arrangements among developing countries, and d) Special treatment to LDCs (Peixoto Batista, 2010, p. 169).3 However, at that time, developing countries started to perceive that the positive discrimination they received under S&DT was being overshadowed by increasing negative discrimination.4 Moreover, positive provisions in favour of developing countries included in the GATT

2 Whilst there is a more general reference to this need in the revised Article XVIII of GATT in 1955, the 1961 Declaration of the Contracting Parties makes specific reference to the need for technical assistance programmes to assist developing countries with production and marketing (Ismail, 2007, p. 85). 3 In 1971 the international community had recognized the category of Least Developed Countries (LDCs), those distinguished not only by widespread poverty, but also by the structural weakness of those countries’ economic, institutional and human resources, often compounded by geographical handicaps. The UN General Assembly convened the First United Nations Conference on the Least Developed Countries in Paris in 1981 to respond to the special needs of the LDCs. 4 Negative discrimination against developing countries was particularly apparent in relation to: voluntary restraint arrangements adopted directly against their most competitive exports; extension of free-trade agreements and customs unions among developed countries; increasing restrictions on textiles under the Multifiber Agreement; higher tariffs on products of exporting interest to developing countries

348  Handbook on the politics of international development Framework during the period 1955 to 1979, were accompanied by a steady increase in the protection and support for temperate zone agricultural products in industrialized countries (Ismail, 2007). In addition, positive measures in favour of developing countries were largely of a best endeavour nature in that they did not impose mandatory obligations on developed countries. Developing countries claim that provisions lacked practical value as there were no obligations for developed countries.5 The S&DT was then at the heart of the North–South conflict, and the dispute for mainstreaming development in the multilateral trading system. After that, the 1982 GATT Ministerial Conference again recognized the need to strengthen developed country technical assistance programmes, but it was only in the Uruguay Round, when developing countries were required to become part of all the multilateral agreements of the GATT through the concept of the single undertaking, that more specific provisions on TRTA were added to individual Uruguay Round agreements to assist developing counties to implement these new obligations. In fact, developing countries complained of the difficulties they experienced in their attempts to implement the Uruguay Round agreements (Ismail, 2007, p. 86). The costs of implementation were estimated to be very onerous and the impact on development strategies was not adequately measured (Finger, 2002; Finger and Schuler, 2000; Lengyel, 2005; Tussie and Quiliconi, 2013). The outcome of the Uruguay Round was markedly uneven in favour of developed countries. As a matter of fact, the single undertaking resulted in causing developing countries and developed countries to assume very similar undertakings (Fukasaku, 2000), based on rules commonly biased in favour of developed countries. As the asymmetry became patently evident and demands gained momentum, the Doha Development Round was launched in 2001 as a promise to mainstream development in the WTO. The Ministerial Declaration6 gives a very broad scope to TRTA/CB. In fact, in paragraph 41, the document states that there are firm commitments in various other paragraphs in the document, and also reaffirms the understanding in paragraph 2 on the importance of sustainably financed technical assistance and capacity-building programmes. It also welcomes and endorses the New Strategy for WTO Technical Cooperation for Capacity Building, Growth and Integration, to assist developing and least-developed countries and low-income countries in transition to adjust to WTO rules and disciplines, prioritizing small, vulnerable, and transition economies, as well as members and observers without representation in Geneva. It also underscores the urgent necessity for the effective coordinated delivery of technical assistance with bilateral donors, in the OECD Development Assistance Committee (DAC) and relevant international and regional intergovernmental institutions. In this path, the document recognizes the need for identifying ways of enhancing the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries and the Joint Integrated Technical Assistance Programme (JITAP). The goal was to arrive at the subsequent Cancun Ministerial in 2003 with specific recommendations, however, this goal was not achieved. Main disagreements leading up to l Cancun were manifold, including S&DT provisions and the mandatory or non-mandatory nature of technical assistance. After Cancun, work was resumed in order to reach minimum levels of in comparison with those of interest to developed countries; increasing application of anti-dumping and countervailing measures (UNCTAD, 2000, p. 27; Kessie, 2000, p. 9). 5 See https://​www​.wto​.org/​english/​tratop​_e/​devel​_e/​dev​_special​_differential​_provisions​_e​.htm. 6 Doc. WT/MIN(01)/DEC/1.

Aid for Trade and development  349 agreement, and the July 2004 package is the succeeding decision adopted by the General Council in this path. In addition, Annex D of this package expands information on Technical Assistance needs and provisions, particularly in the context of trade facilitation negotiations. Annex D lists the IMF, OECD, UNCTAD, WCO and the World Bank as agencies that, together with the WTO will undertake a collaborative effort This is the direct precedent of AfT. At the following Ministerial in Hong Kong in 2005 ‘Aid for Trade’ was included for the first time and a Task Force to operationalize the initiative. The Task Force recommended that AfT should focus on identifying the needs within recipient countries, responding to donors and acting as a bridge between donors and developing countries. It also recommended the establishment of a monitoring body in the WTO, which would undertake a periodic global review based on reports from a variety of stakeholders.7 Several reasons explain its emergency as an autonomous topic in trade negotiations agenda. First, WTO and donors had converging interests: the WTO needed to mobilize financial resources to alleviate developing countries’ concerns about the possible implications of a Doha Round agreement; donors needed to scale up aid to meet the Millennium Development Goals and were ready to supplement their traditional activities with projects promoting trade as an engine of growth and poverty reduction (Hallaert, 2013). Second, the implementation and adjustment costs of trade agreements (Ismail, 2007) require progress in the ‘trade facilitation’ which, in turn, implies improvements on infrastructure in order to simplify customs and transport procedures. Both need funds in the form of predictable grant-based assistance, distributed through a credible international mechanism (Phillips et al., 2005). As disagreements on how to mainstream development became more and more evident, the need for showing concrete incremental progress increased. In other words, the impulse for AfT is directly related to the failure in mainstreaming development in the WTO. Currently, progress is reviewed and presented in a joint flagship report.

3.

DIFFERENT PERSPECTIVES REGARDING THE IMPLEMENTATION OF AID FOR TRADE

AfT is led by the WTO, as a global initiative and carried out in coordination with several multilateral and regional agencies. Key players include the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, International Monetary Fund (IMF), Inter-American Development Bank, Islamic Development Bank, International Trade Centre (ITC), Organisation for Economic Co-operation and Development (OECD), United Nations Conference on Trade and Development (UNCTAD), United Nations Development Programme (UNDP), United Nations Economic Commission for Africa (UNECA), United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), United Nations Industrial Development Organization (UNIDO), World Bank, World Customs Organization, the Enhanced Integrated Framework, and the Standards and Trade Development Facility. Paradigmatic of this joint work is the Enhanced Integrated Framework created in 1997 at the High-level Meeting on LDCs, as a multidonor global partnership composed of six global



7

See https://​www​.wto​.org/​english/​tratop​_e/​devel​_e/​a4t​_e/​aid4trade​_e​.htm.

350  Handbook on the politics of international development agencies (WTO, IMF, ITC, UNCTAD, UNDP and the World Bank), with the objective of integrating LDCs into the international trade system. After presenting shortcomings – for example, recipient countries were confused about where to go to for training and technical assistance – the programme was relaunched in 2006 under the name of Enhanced Integrated Framework (EIF). The EIF is the only global programme dedicated to assisting LDCs in using trade as an engine of growth, sustainable development, and poverty reduction. It offers institutional help to LDCs to build capacity and the policy, regulatory, and strategic institutional structure. The EIF supports 51 countries, including all 33 LDCs in Africa (Adhikari and Edwin, 2017). While both the WTO and OECD consider their ultimate goal as to increase free trade as the key to development (see Chapter 27 by Clifton and Díaz-Fuentes in this volume), in contrast, for UNCTAD it is to achieve poverty reduction. UNCTAD and the United Nations system concentrate on the ‘development side’ of the AfT initiative (UNCTAD, 2008, 2013). The initiative for the Sustainable Development Goals (SDG) (see Chapter 20 by Currie-Alder in this volume) is one of the UN’s major initiatives. They too are linked to trade through SDG 8 – ‘Decent work and economic growth’ – that calls on governments to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. AfT is included in SDG 8, more precisely target 8.A, that calls for increasing “Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries”.8 Projects and programmes can have an impact on multiple SDGs, such as SDG 2. By building productive capacities in the agriculture sector, productivity can be doubled by 2030. It can also help achieve SDG 9, by building infrastructure, such as railways and roads, improving energy production as well as technology and innovation. In addition, it can also have a great impact on SDG 16. SDG target 16.8 aims to broaden and strengthen the participation of developing countries in the institutions of global governance. AfT includes support to ministries and agencies for trade policy, trade-related legislation and regulatory reforms, policy analysis and implementation of multilateral trade agreements. Finally, target 17.11 calls to: “significantly increase the exports of developing countries, in particular with a view to doubling the least developed countries share of global exports by 2020”. According to the WTO (2018) the share of exports of developing countries has increased, although the annual growth rate has remained stable. In the case of LDCs, their share in global exports has decreased. The objective of increasing LDCs’ exports specifically is also included in the Istanbul Programme of Action which UNCTAD has actively promoted. This Programme is meant to help LDCs graduate from this category by 2020. The Programme contains eight priority areas for action – among them trade – and each priority area includes commitments, specific goals and targets. For the trade priority area there are two key goals: to increase LDCs exports significantly and to make efforts to conclude the Doha Round with an outcome beneficial to LDCs. In short, LDCs should mainstream trade into their national development strategies, improve competitiveness and diversify their production base and exports. Development partners, on the other hand, should support LDCs through the AfT and technical assistance to help them engage more effectively in trade negotiations, improve their capacity to trade and implement their obligations in the areas of sanitary and phytosanitary measures (Ancharaz et al., 2014).



8

See https://​stats​.unctad​.org/​Dgff2016/​prosperity/​goal8/​target​_8​_a​.html.

Aid for Trade and development  351 The discrepancies we have reviewed in this section between the main agencies and programmes naturally have an impact on results. When each agency tries to carry out initiatives and projects according to their own perspective, this often results in a doubling of the efforts and waste of resources. In the next section we will analyse some of the challenges that such lack of coordination implies.

4.

CHALLENGES FOR THE AID FOR TRADE INITIATIVE

One of the major challenges underlying the initiative is the scope of the concept itself. Boundaries of what should and what should not be considered AfT are not clear. Some interpretations argue that AfT is necessarily linked to the development debate, and as a consequence, it is an essential element of the broad development discussion (Ismail, 2007; Cadot and Melo, 2014). On one hand, UNCTAD made that very clear in a speech of Secretary General, Supachai Panitchpadki in 2007, where he mentioned that the initiative needed to be ambitious; only this way could the AfT strengthen the transmission belt between trade, poverty alleviation and successful development On the other hand, there is a more technical view, mainly represented by the WTO, whereby AfT is linked with the idea of improving trade capacity and infrastructure in order to obtain more benefits from free trade. This is a narrower view and one focused solely on trade. Hallaert (2013) argues that in the Doha Round, a broad definition of AfT was needed to address all the various forms of financial and technical support expressed in the Doha agenda. It also had the advantage to make the initiative appealing to the largest possible number of donors (each with its own priorities and activities). A broad definition increased the chances of a large and rapid mobilization of financial resources. After the failure of the Doha Round, the broad definition helped include other topics to trade-related development, such as gender equality and green growth. This also helped the initiative to contribute to a broader set of SDGs, not only SDG 8. However, there is no consensus on this point of view. For instance, the OECD (2006) argues that the agenda includes TRTA/CB and infrastructure. In addition, the OECD holds that there is less agreement on whether support to address supply-side constraints should remain confined to reducing trading costs (e.g. trade facilitation), or, in addition, should include support to increase the productive and competitive capacity of the private sector. Finally, it argues that there is even less agreement on whether adjustment costs should be part of the agenda, given the fact that most of the activities necessary to address adjustment, such as support to export diversification or fiscal reform, are already included in other categories These discrepancies show how political visions have influenced the development of the initiative, since the inclusion of more topics to its definition did not grow organically from the initiative, but rather from the interests of donor countries. Another challenge the initiative must face, is related to the difficulty in measuring results. The contested definition of what AfT actually consists of, makes monitoring and evaluation efforts more complex. On the one hand evaluations to broad, development-related concepts, such as gender or poverty reduction, without clearly defining these terms, result in vague assessments. On the other hand, trade facilitation projects seem easier to measure and seem to have yielded positive results,9 however, it is also difficult to rule out attribution issues 9 See studies by Busse et al. (2012), Helble et al. (2011), Laurent and Razzaque (2011), and Calì and te Velde (2011).

352  Handbook on the politics of international development completely. In addition, there is also a challenge related to the timeframe. Evaluations often lack an adequate or realistic timeframe for measuring result of projects and programmes, while impacts can take years to be revealed. Most evaluations assessed whether project implementation deadlines were met, budgets were respected, and whether the overall operations were relevant, efficient and sustainable. However, medium- to long-term impacts were never properly measured. What this reveals is that AfT covers very diverse areas of interventions, making impossible a common evaluation framework or a single impact evaluation (Hallaert, 2013). The causality chain in AfT projects is usually longer than in many other development projects, since many other factors are involved in the success or failure, which further complicates measuring impact (Cadot and Melo, 2014). Moreover, if anything even remotely related to trade can be considered AfT, the distinction between broader Official Development Assistance (ODA) as measured by the OECD, and AfT gets blurred, opening a possibility for donors to jack up AfT figures (Adhikari, 2011) when convenient. On the recipients’ side, some countries may feel afraid of reporting shortcomings since this could lead to a reallocation of resources. Both donors and recipients have an interest in reporting positive results, in order to keep receiving funds; this does not help the initiative and can lead to misleading assessments. All of the above-mentioned issues regarding the monitoring and evaluation effort, make it difficult to show concrete results for the initiative. The only point where there is consensus is in the fact that the initiative helped increase the mobilization of funds. This is important, but not enough. Being able to obtain reliable and clear results is very important, since many agencies receive funds based on these results. In order to make the distribution of funds fairer and less dependent on politics, impacts and results are key. A further challenge seems to be the fact that most of AfT funds go to middle-income countries (close to two-thirds of ODA and more than 95 per cent of other official flows) (Alonso, 2016). In their study Hühne et al. (2014) found that AfT appears to promote exports of middle-income countries over LDCs, mostly in Asia, Africa and to a less extent, Latin America. An impact analysis of the initiative on Africa (Sommer et al., 2017), found that many key recipients of AfT are non-LDCs. Since 2010, Egypt, Ethiopia, Kenya, Morocco, and Tanzania have attracted the largest disbursement flows. Together, these five countries have on average accounted for over 35 per cent of the annual AfT disbursements to Africa. Both Morocco and Egypt alone have accounted for over 8 per cent annually. LDCs do not seem to have benefited much from the initiative. UNCTAD has pleaded time and again to focus on LDCs, the countries in most need of infrastructure improvements as well as technical knowledge. However it is actually more cost effective and in the interest of business in developed countries, to trade with middle-income countries. Finally, there is a twofold criticism related to asymmetries in the international system. On the one hand, it has been argued that AfT always faces the risk of self-interest. In fact, exporters in the donor countries may foster their self-interest and be among the main beneficiaries of increased trade with developing countries (Martinez-Zarzoso et al., 2010).10 On the other hand, several authors argue that AfT – or even S&DT – provisions are not sufficient to balance inequities. They are not enough either to compensate unbalanced multilateral trade rules, where the costs to developing countries of implementing these rules have been far higher than the 10 A study conducted by Martinez-Zarzoso et al (2010) found that the average return, in terms of an increase in the donor’s level of goods exports, is approximately US$2.15 for every aid dollar spent on bilateral aid.

Aid for Trade and development  353 benefits; or for the lack of capacity to participate in the trading system that is compounded by the lack of responsibility of developed countries for the negative impact of unfair trade rules (e.g. cotton or sugar subsidies) and the relatively high cost of adjustment experienced by many developing countries (Singh, 2005; Ismail, 2007).

5.

THE WAY AHEAD

AfT turned 16 years old in 2021. The Doha Round has been suspended indefinitely, while the WTO struggles from a loss of credibility and management challenges amid a global crisis. Many countries have sought trade benefits through bilateral cooperation alliances and regional agreements; however, the WTO remains the sole global institution that deals with international trade and despite heavy criticism, no country member has left the organization. At this point, politics is key for the future of the WTO and the initiative. So far, the institutions and agencies governing the AfT initiative have worked under the logic of traditional North–South cooperation, a dual logic of donors–receivers, where the developed countries provide aid and developing countries receive it. However, in the new millennium, South–South cooperation11 gained momentum with the growing presence of emerging powers, playing an important role in development cooperation. In South–South cooperation, the different actors call themselves partners instead of donors and seek to establish a relationship based on the principles of horizontality and mutual benefit (UNCTAD, 2019). In Latin America, where countries are mostly in the middle income category, access to AfT funds has been rather limited. This lack of large aid flows drove developing countries to seek political, technical and financial assistance in other developing countries instead of developed ones. Developing countries usually do not have additional funds to make large donations or investments in aid projects, so the way is to provide cooperation mainly through knowledge sharing. This form of cooperation offered an alternative to development projects to specific problems at a reasonable cost (SEGIB, 2018). Providers of South–South cooperation also share the general view that development assistance should not interfere in the internal affairs of partner countries, therefore imposing less conditionalities to the assistance provided. In the last few years efforts of South–South cooperation have gained some relevance. It is no longer an isolated mechanism of exchange with limited impacts but has become an important instrument for achieving the SDGs and promoting interdependence. Increased efforts mean additional financial resources and a wider choice for the developing countries to address their developmental needs. The 2019 conference in Buenos Aires on South–South cooperation showed keen interest in this mechanism. For example, participants reaffirmed interest in the Global System of Trade Preferences which aims at promoting trade among developing countries which has made slow progress. The third round of trade negotiations concluded in December 2010 but has not become fully effective The initiative includes 42 members, including 7 LDCs. It recognizes the special needs of LDCs and calls for concrete preferential measures in their favour. LDCs are not required to make reciprocal concessions. 11 The origins of South–South cooperation (SSC) date back to 1955 and the Bandung Conference, a meeting of Asian and African states, many of which had gained independence recently and the 1975 UN Conference on South–South cooperation in Buenos Aires. Since then SSC has suffered a series of starts and stops, advances and retreats.

354  Handbook on the politics of international development Despite the fact that South–South cooperation is based on the concept of solidarity, it could also offer windows of opportunities for trade. Trading between developing countries provides better opportunities to diversify trade and export growth. Developing countries, specially LDCs, mainly export few commodities, raw materials or low intensive manufactures to developed countries in the North. Exports to other developing countries offers an opportunity for higher labour-intensive exports. There is a latent potential there that can be exploited, especially on an interregional basis. In the last few years there has been a significant shift in production and manufacturing from the Global North to Global South (see Chapter 9 by Fernández and Trevignani in this volume). It is important to look at China at this point, because although it is considered one of the new world powers, China continues to classify itself as a developing country in many instances. China has attached great importance to AfT from its very inception. It was among the thirteen WTO members of the Task Force on Aid for Trade and also made several financial contributions to the WTO’s Doha Development Agenda Global Trust Fund to help other developing members, LDCs in particular, better integrate into the global economy and benefit from the multilateral trading system. China has also made a contribution of US$400,000 to the WTO to set up a new aid programme to help LDCs participate more effectively in the WTO meetings and assist those who are not yet members to negotiate membership. Since 2013, China has been growing into a major donor country, focusing more on the sharing of development ideas, experiences, and values rather than material aid. With the promotion of the Belt and Road Initiative, as well as the establishment of the Asian Infrastructure Investment Bank and New Development Bank, China’s foreign aid has got more institutional support (Haibing, 2017). In addition, recent moves to gradually internationalize the renminbi and use it in regional transactions, represent a further step in this direction. To finalize, it is worth mentioning that the expansion of China’s domestic market creates opportunities for the regional economies. Developmental regionalism is another phenomenon that must be paid close attention to when talking about AfT (see Chapter 5 by Nesadurai in this volume). Regional markets provide not only market access, but cost advantages through proximity, lower transport costs and the adequate knowledge to cater to local conditions. For governments, regional agreements provide an opportunity to reduce their exposure to globalizations constraint. It allows them to regain some of the economic margins for manoeuvre. Data from intraregional trade show that African countries are the ones that trade least among themselves. In 2013, only 14 per cent of trade of these countries was done with countries of the region. In the case of Latin America, this figure was 20 per cent. In contrast, developing Asian countries had around 55 per cent of intraregional trade (UNCTAD, 2015). These numbers show that there is much room for improvement in regional trade. In the case of LDCs, especially for landlocked countries, trade within the region can be even more important. For many landlocked countries, regional markets offer an outlet for their exports and a chance to connect to the rest of the world through proper regional infrastructure. It can also reduce member countries’ dependence on traditional trading partners, increase their global competitiveness and raise their resilience against external shocks. In addition, it can help maintain peace and security between neighbours (Ancharaz et al., 2014). According to one study by Cernat (2003) for UNCTAD, regional integration among developing countries is overall net trade-creating and can act as a practical instrument for the gradual integration of developing countries into the global economy. Furthermore, beyond

Aid for Trade and development  355 these economic effects, regional trade agreements are very much part of a larger framework for regional cooperation aimed at promoting regional stability, sound and coordinated economic policies and a better regional economic infrastructure. Although difficult to quantify, all these improvements may have a number of positive spillover effects that should be taken into account when assessing the overall impact of South–South trade. Both South–South cooperation and regional agreements offer alternatives for developing countries, usually with fewer conditionalities and obligations. For some, emerging donor aid programmes are celebrated for their departure from the neoliberal norms of the OECD’s Development Assistance Committee and as providing a mutually beneficial form of developmental assistance as an alternative to the dominant aid paradigm. Others have conversely criticized rising powers such as China as ‘rogue donors’ and as using aid to obtain rights for the extraction of resources (Gray and Gills, 2016). However, the main point is that new forms of cooperation have gained relevance in the past few years. Even though emerging donors remain themselves recipients of aid and struggle to effectively address domestic poverty, underdevelopment, inequalities and corruption, their aid is significant enough that it is no longer possible to understand the international aid architecture simply in terms of North–South dynamics. This impulse gained by regional agreements and other forms of cooperation is also partially explained by the weakening of the liberal order that governed the world since the Second World War and more recently, the crisis of the multilateral system as a whole. On a final note, the COVID-19 pandemic has further exposed the problems of the multilateral system with direct impacts on AfT. In fact, the OECD has outlined three possible scenarios on how ODA levels could evolve in 2020 and beyond: one scenario of global recovery and increased ODA flows, a second scenario where ODA levels are maintained at 2019 levels, and a third scenario where, because of budget pressures, levels of ODA could decline in 2020, by US$11 billion to US$14 billion. DAC members have also declared their ambition to “strive to protect ODA budgets” during the COVID-19 crisis.12 In addition, the WTO Committee on AfT Initiative held meetings during the second semester of 2020 to discuss the impact of the COVID crisis.13 However, ultimately, how official development finance will evolve in these years is a question of political will and global solidarity.

6.

FINAL REMARKS

The politics of international development is reflected in the AfT debate in several ways. Since the early years of the multilateral trading system, the topic was at the heart of the North–South divide and its dispute for mainstreaming development in the GATT. In the WTO, the AfT initiative was useful to show concrete results in the first signals of Doha Round deadlock. As from then, AfT emerged as an autonomous topic in the trade agenda, also closely linked to the Millennium Development/Sustainable Development Goals and the UN system. In this sense, disputes can be also grasped in divergences among international agencies about key motivations of the initiative. On one hand, it seems that for both the OECD

12 See http://​www​.oecd​.org/​coronavirus/​policy​-responses/​the​-impact​-of​-the​-coronavirus​-covid​-19​ -crisis​-on​-development​-finance​-9de00b3b/​. 13 See https://​www​.wto​.org/​english/​tratop​_e/​covid19​_e/​covid19​_e​.htm.

356  Handbook on the politics of international development and the WTO the main goal remains free trade, while the main motivation for the UN agencies seems to be achieving poverty reduction through development led by the AfT initiative. Discrepancies are also reflected in the definition of the concept and its scope. Should the definition remain broad or should additional resources be included to improve measuring capabilities? This challenge affects monitoring and evaluation efforts, as well as the effectiveness of the initiative itself. In this area, the results of the AfT initiative have been mixed. From a resource mobilization point of view, there is a general consensus that it has been a success. However, this mobilization faces some difficulties. First, empirical results of this scale-up of aid flows is difficult to prove. Some studies have been conducted, but none of them is conclusive and they suffer attribution problems. Second, most of the funds go towards middle-income countries (countries with which donors already trade more), leaving LDCs aside. LDCs are the countries in most need of this aid and where it could have a bigger impact. The EIF, which works in mainstreaming trade in national policies of the LDCs, has made some progress, but there are still many issues to tackle ahead. With the crisis of multilateralism, many traditional organizations have weakened, which has also led to the rise of regional arrangements and agreements, as well as the revitalization of South–South cooperation and trade. These forms of trade and aid will have a bigger impact in the near future and should be given close attention by the agencies leading the AfT initiative as well as by LDCs. The initiative has therefore a big role to play in this scenario to try to level the field and provide equal opportunities to all countries around the world. It is important that initiatives like AfT remain up to date and available for all developing countries. The main agencies behind AfT, but mainly the WTO and the OECD, have equally important roles and they will have to adapt to this new scenario where politics will be key. How they guide other institutions to the future will determine their success or failure. Finally, keeping in mind that trade alone does not create development, it is important to highlight that AfT has definitely helped give trade a bigger role in development, but underlying disputes between development-led trade and of trade-led development will remain in AfT debates.

REFERENCES Adhikari, R. (2011). Evaluating Aid for Trade Effectiveness on the Ground: A Methodological Framework. Aid for Trade Series 20. Geneva: ICTSD. Adhikari, R. and Edwin, J. (2017). How is the enhanced integrated framework supporting LDCs to unleash their trade potential? Bridges Africa 6 (8), ICTSD. https://​ictsd​.iisd​.org/​bridges​-news/​bridges​ -africa/​news/​how​-is​-the​-enhanced​-integrated​-framework​-supporting​-ldcs​-to​-unleash. Alonso, J. A. (2016). Aid for Trade: Building Productive and Trade Capacities in LDCs. CDP Policy Review Series 1. Ancharaz, V., Bellmann, C., Pfister, A., and Ghisu, P. (2014). Harnessing trade for structural transformation in LDCs. In Istanbul Programme of Action for the LDCs (2011–2020), LDC IV Monitor, Commonwealth Secretariat, London. Busse, M., Hoekstra, R., and Königer, J. (2012). The impact of aid for trade facilitation on the costs of trading. Kyklos 65 (2), 143–163. Cadot, O. and Melo, J. de (2014). Aid for trade: Looking ahead. In O. Cadot and J. de Melo (eds.), Aid for Trade: What Have We Learnt? Which Way Ahead? London: CEPR Press. Calì, M. and te Velde, D. W. (2011). Does aid for trade really improve trade performance? World Development 39 (5), 725–740. Cernat, L. (2003). Assessing South–South Regional Integration: Same Issues, Many Metrics. Policy Issues in International Trade and Commodities Study Series 21. New York: United Nations.

Aid for Trade and development  357 Deciancio, M. and Tussie, D. (2019). Globalizing global governance: Peripheral thoughts from Latin America. Fudan Journal of the Humanities and Social Sciences. https://​doi​.org/​10​.1007/​s40647​-019​ -00263​-5. Finger, J. M. (2002). The Doha Agenda and Development: A View from the Uruguay Round. ERD Working Paper Series 21. Finger, J. M. and Schuler, P. (2000). Implementation of Uruguay Round commitments: The development challenge. The World Economy 23 (4), 511–524. Fukusaku, K. (2000). Special and Differential Treatment for Developing Countries: Does It Help Those Who Help Themselves? Working Paper 197. World Institute for Development Economic Research, The United Nations University. Gray, K. and Gills, B. (2016). South–South cooperation and the rise of the Global South. Third World Quarterly 37 (4), 557–574. Haibing, Z. (2017). The development and transformation of China’s foreign aid. In CSIS Simon Chair in Political Economy, Shanghai Institutes for International Studies, Parallel Perspectives on the Global Economic Order: A US-China Essay Collection. Washington, DC: Center for Strategic and International Studies. Hallaert, J. J. (2013). The future of aid for trade: Challenges and options. World Trade Review 12 (4), 653–668. Helble, M., Mann, C., and Wilson, J. (2011). Aid-for-trade facilitation. Review of World Economics 148 (2), 357–376. Hühne, P., Meyer, B., and Nunnenkamp, P. (2014). Who benefits from aid for trade? Comparing the effects on recipient versus donor exports. Journal of Development Studies 50 (9), 1275–1288. Ismail, F. (2007). Mainstreaming Development in the WTO: Developing Countries in the Doha Round. Jaipur: FES, CUTS International. Kessie, E. (2000). Enforceability of the legal provisions relating to special and differential treatment under the WTO agreements. WTO Seminar on Special and Differential Treatment for Developing Countries, Geneva, 7 March. Laurent, E. and Razzaque, M. A.(2011). Assessing the effectiveness of aid for trade. Trade Hot Topics, No. 86. Lengyel, M. (2005). Implementación de los acuerdos de la Ronda Uruguay sobre cuestiones regulatorias. Lecciones desde América Latina, LATN Brief Series 27. http://​latn​.org​.ar/​wp​-content/​uploads/​ 2015/​01/​27​-brief​.pdf. Martinez-Zarzoso, I., Nowak-Lehman, F., and Klasen, S. (2010). The Economic Benefits of Giving Aid in Terms of Donors Exports. Discussion Paper 202. Göttingen: Ibero-America Institute for Economic Research. OECD (2006). Aid for Trade: Making it Effective – The Development Dimension. Paris: OECD Publishing. Peixoto Batista, J. (2010). Flexibilities for developing countries in the Doha Round as à la carte special and differential treatment: Retracing the Uruguay steps? Brazilian Journal of Latin American Studies 9 (16), 164–191. Phillips, L., Page, S., and te Velde, W. D. (2005). Aid for Trade: What Does It Mean? Why Should Aid Be Part of WTO Negotiations? And How Much Might It Cost? ODI Opinions 61. Overseas Development Institute. https://​www​.odi​.org/​sites/​odi​.org​.uk/​files/​odi​-assets/​publications​-opinion​-files/​742​.pdf. SEGIB (2018). Una década de cooperación Sur-Sur en Iberoamérica. Madrid: Secretaría General Iberoamericana. Singh, A. (2005). Special and differential treatment: The multilateral trading system and economic development in the twenty-first century. In K. P. Gallagher (ed.), Putting Development First: The Importance of Policy Space in the WTO and IFIs. London: Zed Books. Sommer, L., Suominen, H., and Luke, D. (2017). Aid for trade in Africa: What are the strategic priorities? Bridges Africa 6 (5). ICTSD. https://​www​.ictsd​.org/​bridges​-news/​bridges​-africa/​news/​aid​-for​ -trade​-in​-africa​-what​-are​-the​-strategic​-priorities. Tussie, D. and Quiliconi, C. (2013). The World Trade Organization and development. In B. Currie-Alder, R. Kanbur, D. M. Malone, and R. Medhora (eds.), International Development: Ideas, Experience, and Prospects. Oxford: Oxford University Press.

358  Handbook on the politics of international development UNCTAD (2000). Training Tools for Multilateral Trade Negotiations: Special & Differential Treatment. Commercial Diplomacy Programme, UNCTAD/DITC/Misc.35. Geneva. UNCTAD (2008). Aid for Trade and Development: Global and Regional Perspectives. New York and Geneva: United Nations. UNCTAD (2013). Shift from Traditional Approach to Integration to “Developmental Regionalism”. Press Release, UNCTAD, Geneva. UNCTAD (2015). Fortalecimiento del diálogo y la cooperación subregionales, regionales e interregionales y sus contribuciones a la integración y desarrollo económicos: lecciones de política para la integración regional orientada al desarrollo. Nota de la Secretaría de la UNCTAD, TD/B/C.I/ MEM.6/8 Naciones Unidas. UNCTAD (2019). Energizing South–South Trade: The Global System of Trade Preferences among Developing Countries. Policy Brief 74. Geneva: UNCTAD. WTO (2018). Mainstreaming Trade to Attain the Sustainable Development Goals. Geneva: WTO.

PART IV GLOBAL ACTORS IN THE POLITICS OF DEVELOPMENT

23. The World Bank and the politics of development João Márcio Mendes Pereira

With a complex, but ascendant, history of more than seven decades, the World Bank assumed a central place among other agencies created after the Second World War, becoming an influential actor in the design of development policies in sectors and activities much beyond its original mandate. This chapter analyzes its general characteristics, what it does, and how it relates to member states, as well as problematizing themes in discussions about the present and future of the institution.

WHAT IS THE WORLD BANK AND WHAT DOES IT DO? The origin of the World Bank goes back to the creation of the International Bank for Reconstruction and Development (IBRD), a product of the Bretton Woods conference in July 1944, when it was also decided to create the International Monetary Fund (IMF). In the following decades there emerged the Economic Development Institute in 1955 (renamed the World Bank Institute in 2000); the International Finance Corporation (IFC) in 1956; the International Development Association (IDA) in 1960; the International Centre for Settlement of Investment Disputes (ICSID) in 1966; and the Multilateral Investment Guarantee Agency (MIGA) in 1988. This set of institutions form the World Bank Group (WBG), which is based in Washington, DC. The so-called ‘World Bank’ corresponds to the IBRD and IDA. Its members are the countries which have joined it. Voting power in the Bank is unequal and proportional to the capital contributed by each member state. All clients have to be members, but not all members are clients. Rich countries, with high per capita income, are not clients, but have proportionally more votes than developing countries. In other words, the countries not (or least) affected by the Bank’s decisions and actions are those which have most influence on it. The unequal distribution of power is formally expressed in the composition of the Board. Directors from the most powerful countries directly respond to the governments which appoint them and can be removed at any time, but this does not happen with the others. Furthermore, the directors who represent groups of countries have to represent the vision of their members in a very diluted manner. Due to an informal agreement in force since 1944, the president of the Bank is always an American citizen appointed by the US, normally by the Treasury. The primary activity carried out by the institution is financial. IBRD grants loans to countries with medium and low per capita income, raising resources in capital markets through the sale of its bonds and making loans to clients in conditions close to the international financial market. The collateral of its operations is called general capital. It is contributed by member states in unequal proportions and can only be increased after negotiations between them. In turn, IDA concedes donations and long-term credit with low interest rates to poor countries. The principal source of its funds are donations periodically negotiated with rich countries. 360

The World Bank and the politics of development  361 While IBRD is solidly based on the financial market and makes a profit (which allows it to pay high salaries to World Bank staff), IDA depends on voluntary donations from the richest countries. The amount each donor pays is negotiated with the others every three years. In addition, the World Bank’s financial activity is vital for its reproduction and expansion. After all, it is through money that the Bank transmits and diffuses its policy prescriptions to governments in developing countries. The granting of funds opens doors, in the sense of providing incentives for the establishment of commitments with governments. Loans normally induce changes in the composition and use of public expenses, since governments have to disburse a financial counterpart, and afterwards pay the World Bank, seen as a preferential creditor, in a strong currency. Built into loans and credit are the conditionalities required by the World Bank, which can be specific (restricted to the project environment), or very broad (when linked to adjustment loans) and impact on the general configuration of public policies and the structure of the state. Compliance with these is monitored by the Bank, which can manipulate the flow of disbursements or even interrupt them depending on the government performance, which gives it bargaining power. On the other hand, the Bank suffers political pressure to continue making loans and is interested in doing so, in order to maintain a renewed portfolio of debt repayments. An important fact is that the Bank can make loans to subnational entities (states and municipalities), which in federative countries (such as Brazil, one of its principal clients), can lead to the capillarization of its operations throughout the national territory. Its second fundamental activity is to provide technical advice and assistance to governments of developing countries. Unlike money, these activities are not quantitatively measurable, but in general are as or even more influential over national policies as loans. Historically the Bank has always negotiated behind curtains with very select groups of national interlocutors (in general from the economic or planning area), at times trained and socialized in international circuits for the training of elites from the development aid industry. From the 1980s onwards this relationship began to change. Increasing pressure for transparency and accountability, coming principally from the US and other influential members, forced the Bank to open public consultation processes and allow the participation of various groups. To the extent that the policy agenda preached by the Bank expanded and diversified, it became impossible to implement it from the top down, for which reason the Bank had to also assume a growing advocacy role, in order to mobilize political support in favor of determined agendas. The third central activity performed by the World Bank is the production of authorized knowledge about development. Its engagement in this type of research was structured during the administration of Robert McNamara (1968–81), gaining a decisive impulse in the 1990s. Widely diffused, it involved: (a) the production of concepts, definitions, and norms, with the aim of delimiting the legitimate terms of the debate about development; (b) the preparation of indicators (metrics) and classifications, on which are based ever more wide-ranging international rankings about the “quality” of public policies and the “institutional environment”; (c) explanations about the causes of development problems and the defense of measures which governments should or should not adopt to overcome these problems. Finally, the World Bank’s fourth principal activity consists of mediating, distilling, and articulating interests and visions, and channeling them in initiatives and multilateral campaigns which involve governments, companies, NGOs, philanthropic foundations, academic sectors, and other international organizations in questions related to health, the environment, and education, amongst others. In fact, a considerable part of the influence of the World Bank

362  Handbook on the politics of international development is due to the capacity to establish material connections and agreements between public and private agents in relation to determined development agendas.

RELATIONS WITH MEMBER STATES In the field of political and economic forces in which the World Bank is inserted, relations with the most powerful states define the priorities, general parameters, and limits within which the institution works. This does not mean that the Bank is a mere puppet of the principal shareholders. Within this scenario, the Bank translates these coordinates into financial operations, advice, technical assistance, economic research, and multilateral initiatives, and does this as a complex organization which follows its own bureaucratic imperatives and seeks to remain influential in the increasingly competitive international aid field. Moreover, much of what the Bank does is routine administration and does not have a direct economic or political significance for its principal members. The result of this equation is not entirely controlled a priori by any shareholder (see Woods, 2006; Williams, 2008; Babb, 2009; Park and Vetterlein, 2010). The relationship with the United States is the most significant and has the greatest impact on the World Bank, since it is part of the global power infrastructure constructed by the US after the Second World War. From the political and financial point of view, the US has always been the largest shareholder, the most influential, and the only one with veto power over statutory changes. Relations with the US were decisive to support and raise the World Bank to the position of a significant organization, modeling its practices and policies. In exchange, the US widely benefited from the actions of the World Bank in economic, political, and ideological terms, more than any other shareholder (Gwin, 1997). Although the Bank has the means to reduce the pressure of its principal member, the US has historically used its formal voting power, its enormous informal influence, and its financial leverage to delimit the general coordinates of the institution’s trajectory. Competitive visions within the US about what its World Bank policy should be are important to understand this influence. Since the end of the 1960s, due to the Vietnam War and the accumulation of criticism of international development aid, Congress became increasingly involved in foreign policy questions. Until then US policy towards the World Bank had been defined by the Treasury and the State Department, far from public opinion and with Congress assuming a passive role. The increasing protagonism of Congress in this area created conditions and opportunities for political groups and non-governmental organizations (NGOs) to act within the legislature, with the aim of questioning the World Bank’s social and environmental actions (see Gwin, 1997; Wade, 1997; Woods, 2006; Babb, 2009). After this Congress became the target of pressure and agreements among various agents interested in influencing US policy towards the Bank. This led the institution to also open itself to negotiations and partnership with civil society organizations, principally those based in Washington, DC. On the other hand, the World Bank’s relationship with client countries involves coercion and persuasion, through which programmatic or pragmatic alliances are constructed with part of local ruling elites, entrenched in both the state and civil society. In this sense, to understand this relationship it is necessary to take into account at least three dimensions. First, the relationship of the Bank with client countries is not limited to government and state agencies, but also involves social organizations (such as business foundations, philanthropic entities, research institutes, consultancy companies, trade unions, part of academia, etc.). In second

The World Bank and the politics of development  363 place, countries have very asymmetric conditions of negotiating with the Bank, with the relations with the largest economies (China, India, Brazil, Russia), clients of IBRD, being very different from the poorest countries, clients of IDA. Third, the relationship of the Bank with a country can undergo significant variations over time, depending on the circumstances and priorities of local governments. Finally, in any case, a determined project or policy is always implemented by a government through public agencies and instruments, and not by the World Bank, no matter how significant its influence. In other words, there is always some level of negotiation, adaptation, filtering, and local translation of the norms and actions prescribed by the Bank. Considering client states as mere “victims” exempts local ruling elites and dominant classes from responsibility. Since the Bank does not exercise immediate control over national policies, it has to use indirect forms of influence to convince and commit governments to implement determined measures. In this dynamic, advice and technical assistance are activities that are so intertwined that they can become indistinguishable. After all the Bank usually clothes its political proposals in technical arguments. Technical proposals model public policies only where they connect with the set of conceptions, interests, and objectives, which guide the action of government. In other words, ideas and technical proposal do not prevail because they are superior in professional terms, but rather because they meet the practical necessities of the central actors (Woods, 2006). A well designed public policy will lack effectiveness if it does not have sufficient political support, while a reasonable public policy in technical terms can be successful if it has political support. The instrument most used to convince governments is the conditionality, which mixes political advice and technical assistance, through which the client state assumes a certain commitment in exchange for resources. Unlike the specialized agencies of the United Nations, the World Bank has resources to amplify its advice and make it attractive. In relation to the content, there are three basic types of conditionalities practiced by the Bretton Woods institutions (Babb and Carruthers, 2008). The first is financial, which says a lot about the terms of loans (such as interest rates and the pay schedule). If the borrower did not comply with the payment schedule, the loan was cancelled or rescheduled. The second type is the macroeconomic, according to which the borrower is required to administer economic variables (such as the level of public indebtment, exchange and interest rates, and inflation) in a determined manner. It is a more politically intrusive form than the financial type and assumes the vigilance of the creditor over the behavior of the debtor. The third type is structural and is concerned with changes in the general configuration of the economy, institutions, and public policies of the debtor country. In political terms it is the most intrusive of all and requires a high degree of monitoring of all the actions of the borrower. The principal instrument for this is the adjustment loan, based on policies, with more or less broad conditionalities and informal pressures which aim to modify the configuration of public policies, the legal framework, and the structure of public administration. The types of conditions can also be differentiated according to their moment of application. Ex ante conditionalities are those in which governments receive loans in exchange for promises of future actions. Disbursements are divided into periodical installments, the creditor monitors the behavior of borrowers, and can interrupt the release of resources in the case of non-fulfilment. Ex post conditionalities are those which have to be complied with before the release of any resource. Since the end of the 1990s, the World Bank has more frequently used this type of condition, principally in the form of donations to IDA clients.

364  Handbook on the politics of international development Countries usually turn to the Bank when they have little access to alternative sources of funding, or when there are groups sympathetic to the Bank’s agenda well positioned in the state interested in using the conditionalities in local political disputes. However, their power and influence should not be exaggerated. This is because historically the register of conditionalities partially or entirely unfulfilled reveals that borrowers rarely do what they say they will, for numerous reasons. In cases like this, reinforcing conditionalities by denying money is not a feasible possibility, due to the interest of the organization in renewing loans. In certain circumstances, the Bank itself is compelled to lighten its performance demands – for example, where economic interests or the security of powerful shareholders are in play, or when the Bank sees itself at risk of losing resources in IDA replenishments (see Woods, 2006; Babb, 2009; Sharma, 2017). Conditionalities are more effective when domestic interlocutors are committed to them and have power to implement them, using them as political imperatives against their local adversaries in order to approve unpopular reforms. In general, this occurs when specific – “first generation” – macroeconomic reforms are at stake. These reforms are usually rapid and drastic, relatively easy to implement, with high public visibility, immediate effects, and widely diluted among the population. In these cases, usually in contexts of crisis, decision making can be led by an insulated elite at the top of the Executive power. On the other hand, when decision making is open to a large number of interlocutors in the political system, the effectiveness of conditionalities tends to be much more difficult. This is the case of broad institutional (“second generation”) reforms which are slow and complex and affect specific social groups and tend to have a greater capacity for vocalization and resistance (see Naím, 1994). Processes can thus not be led in an accelerated manner from the top down, involve great political agreement, and require the Bank to exercise more openly advocacy for reforms. The programmatic evolution of first generation reforms into the second generation raised the discussion of ownership. In fact, the World Bank had begun to assess whether structural adjustments had been successful where there were well organized, committed, and large coalitions of power. The recognition of this situation led the Bank to valorize the appropriation of the adjustment agenda by government officials, bureaucracies, and specific social groups, and to construct strategies to produce this appropriation (Williams, 2008). It was intended to make the adjustment something administered “within” societies, perceived as an endogenous and consensual product.1

KNOWLEDGE BANK Another, more subtle and persuasive form of influence is intellectual, based on research. The knowledge produced by the Bank is generated by the interaction of various factors, such as: (a) the agendas and demands of the US and other Western powers; (b) the relationship with civil society organizations in the most influential countries; (c) the integration of the Bank in capital markets and the need to keep its bonds attractive to private investors; (d) the relationship with client countries and their national policies; (e) the predominance of Economics as 1 In 2005, under the sponsorship of the principal donors and the OECD, the Declaration of Paris on the Efficiency of Development Aid established as principles ownership, alignment, harmonization, and managing for results.

The World Bank and the politics of development  365 the master discipline and the evolution of conventions in the international economic debate; (f) specialized knowledge networks and political forums in which ideas about development aid are disputed; and (g) bureaucratic mechanisms to promote certain models, ideas, and approaches to the detriment of others. In addition to research carried out by its own staff or commissioned from external consultants, the Bank also acts as a sounding board and transmission belt of determined models, concepts, and ideas produced by other organizations (see Stern and Ferreira, 1997; Woods, 2006; Babb, 2009; Pereira, 2010). The intellectual legitimacy of the Bank is based on the premise of the neutrality of technical knowledge and the multilateral nature of the institution (perceived as less politicized and more neutral than bilateral organizations). In effect, this has been considered the principal “comparative advantage” of the World Bank. This theme emerged with strength at the beginning of the 1990s, when dominant sectors in the US began to discuss the “relevance” of the Bank in a world in which capitalism had defeated socialism and financial capital was globalizing rapidly (Pereira, 2010). The idea of a “knowledge bank” was launched by James Wolfensohn (1995–2005) and was based on the premise that the institution, more than any other, had unique conditions to analyze, distill, and disseminate knowledge about development, connecting economic research, policy assessment, training services, and technical assistance. The knowledge produced by the institution is thus seen as a “global public good.” Furthermore, the Bank could fulfill a central role in the production of metrics, indicators, and classifications related to the “institutional environment,” which serve to equip the concession of resources according to the performance of each country. Although the World Bank cultivates the appearance of technical neutrality, the research it does is essentially normative. The idea of the neutrality of knowledge disregards any consideration of the economic, social, political, and ideological context in which all knowledge is produced, the interests in dispute, and the functions which knowledge can or should fulfill. Indeed, Van Waeyenberge and Fine (2011) question whether the Bank’s research can be considered a “global public good,” due to the control it suffers from the principal members and the policy agenda which its research needs to support. Generally speaking, pressed by the need to make loans, the Bank makes investigations which legitimate its policy agenda and its financial priorities. Certain structural factors thus frame and shape the research activity it carries out. A loan oriented institution linked to policy prescriptions carries out research which is useful to these operations. On the other hand, the integration between research and operations is not always detectable, principally when we compare the more general documents (e.g., the World Development Reports), open to consultations and more politically negotiated among the various parts, and the documents which expressed the policy agenda prescribed to client countries. Another characteristic of World Bank research is that the majority of its publications tend to be based on the sources of the Bank itself, funded or promoted by it, configuring a case of acute narcissism, which serves “to proselytize on behalf of Bank policy, often without taking a balanced view of the evidence, and without expressing appropriate skepticism” (Deaton et al., 2006, p. 6). Furthermore, there exists a disciplinary bias in favor of Economics which molds all the Bank’s research. The overwhelming majority of the research team is composed of economists who principally come from economics departments in elite universities in the US and the United Kingdom (Stern and Ferreira, 1997), where there predominates a type of economics based on mathematization. In fact, there is an excessive Americanization of

366  Handbook on the politics of international development economic thought valorized with the Bank, disregarding other perspectives and schools of thought, principally from developing countries. There is also the problem of the excessive generalization of ideas and recommendations, to the detriment of national specificities. Even non-economists are forced to adapt their ideas to the theoretical and methodological language of neo-classical monoeconomics (Van Waeyenberge and Fine, 2011). The knowledge produced by the World Bank is related to the dominant economic debate, but it is not a merely academic product. First, because the Bank has to translate more or less generic ideas and theories into institutional practices and policy recommendations, which are molded by interests. Second, because the intellectual activity of the Bank is relatively insulated from external pressures, following a “timing” and logic of legitimation distinct from the scientific field. Third, because the Bank has its own powerful means of diffusion, which do not pass through academic scrutiny. Finally, the intellectual activity of the Bank does not have the aim of contributing to the construction of the capacity for independent research in client countries. Research is operationalized in various manners, with the principal being the Development Economics Vice Presidency (DEC). This unit carries out transversal research among countries and sectors, prepares comparable global indicators among countries, and assesses impacts. Various departments also carry out research, such as the Leadership, Learning, and Innovation Vice Presidency (which absorbed the World Bank Institute), as well as a broad set of knowledge networks sponsored by it, such as the Consultative Group on International Agricultural Research (CGIAR), the Consultative Group to Assist the Poor (CGAP), and the Global Development Network (GDN). Broad’s (2006) work shows the existence of an internal system of rewards and sanctions which mutually reinforced each other to ensure that the intellectual production of DEC follows the Bank’s political and ideological line and thus contributes to the maintenance of the neoliberal paradigm. This is a soft law which functions in accordance with smooth norms and when necessary against formal rules. A system whose dynamics undermine the internal debate and affect the research conclusions, confirming a priori hypotheses. Through contraction and promotion practices, the selective reinforcement of rules, the manipulation of data, and the form through which research results are externally projected, certain individuals and papers which “resonate” neoliberal ideology are privileged, while “dissonant discourse” may be tolerated but is neither encouraged nor promoted.

RELATIONS WITH CIVIL SOCIETY AND THE WORLD OF BUSINESS Another relevant aspect about the World Bank is related to its role as a civil society organization. Although its work is formally with governments, it engages with and consults a relatively broad number of interlocutors and interest groups, seeking to persuade and win the support not only of governments, but also business and financial sectors, social organizations, and other bilateral and multilateral agencies. Indeed, the Bank is influential because it acts in privileged conditions in the middle of an international development aid network which encompasses national agents and global publics, private, non-governmental, and philanthropic. Disputed in this field is what is meant by “development,” how to promote it, what is a priority and what is not, which interests and visions should predominate; in short, it is where the directions and the

The World Bank and the politics of development  367 shapes of transnational commitments and agendas are disputed (see Goldman, 2005; Woods, 2006; Williams, 2008). In this field, the agents, even if unequal, interact with the Bank in the sense of supporting, adapting, negotiating, and transmitting the institution’s ideas, prescriptions, and initiatives. In this relationship, the Bank’s discourse and practices frequently provide arguments and resources to accommodate tensions between domestic political actors, legitimating certain positions adopted. In other words, the effectiveness of the Bank’s actions depends on the construction, outside and inside national spaces, of world visions, alliances (programmatic or pragmatic), and mutually organized political and economic interests both in the state apparatus and civil society. It is necessary to distinguish the different levels of relationship between the World Bank and civil society. An initial level is related to the actions of NGOs established in the most influential countries, notably the US. During the 1980s, environmental and human rights NGOs increasingly acted to influence their growing activism regarding US policy towards the institution. The possibility of Congress retaining or reducing funds for the Bank functioned as an element of pressure and incremental reform, meaning that certain agendas were assumed by the institution. In general, demands related to projects had greater receptivity on the part of Congress and the Executive than those, for example, which affected the neoliberal reform agenda preached by the Treasury (see Gwin, 1997; Wade, 1997; Babb, 2009). One of the results of this process was the gradual participation of NGOs in the Bank’s projects. In the context of the neoliberal adjustment, an enormous space opened for NGOs to perform functions taken from states in the social and environmental areas. Submitted to competition for funds, NGOs specialized in the legislation area and project administration, seeking credentials to negotiate with political and business circles the raising of funds and the administration of “best practices.” In this new market, participation in World Bank funded projects came to be highly valued capital. The growing intertwining of NGOs – in particular, those based in Northern countries – in the Bank’s operations during the 1980s and 1990s was not a process lacking tension. The organizational culture of the Bank had closed it to any type of collaboration with NGOs for a long time. However, the recognition of NGOs as legitimate actors for development resulted not only from their capacity to adapt to the new economic and political context, but also due to the construction of knowledge, efficiency, and connections with academia and the aid industry, creating a type of capital valued by the Bank (Guilhot, 2005). Gradually the World Bank was becoming a more open organization, and this should not be read as a transformation with the sole aim of coopting its critics – although the strategy of collaborating with NGOs helped to limit the scope of criticism (Williams and Young, 1994; Dezalay and Garth, 2002). Notwithstanding the partnership between NGOs from North and South, it is the pressure concentrated in civil society in donor countries – above all the United States – to which the World Bank responds (Wade, 1997; Babb, 2009). In effect, NGOs established in Washington have regular access to the Treasury, Congress, and the World Bank, for which reason they are better connected and informed than NGOs in other countries, which paradoxically reinforces the gravitation of the United States in the institution. A second level of this discussion is concerned with the relationship of the World Bank with the business sector. Although the institution only loans to the public sector,2 the private sector



2

With the exception of IFC, a member of WBG which lends directly to the private sector.

368  Handbook on the politics of international development has entered the functioning of its operations through trust funds and public–private initiatives, principally through governments. This occurs because the funding granted by the Bank annually generates thousands of contracts which involve a large volume of purchase and sale of goods and services, part of which is through international tendering open to companies based in member states. Historically, companies established in the richest countries have received the overwhelming majority of contracts, thanks to well organized silent lobbies, which receive the active support of their respective governments (Woods, 2006). A third level in this debate is the World Bank’s relations with other multilateral organizations. Historically these relations have oscillated between competition and cooperation. In the case of the United Nations’ specialized agencies – more porous to the pressure from peripheral countries – the competition involves the capacity to formulate, diffuse, and legitimate ideas and proposals about development. Until the 1970s the World Bank was clearly behind the UN in political and intellectual leadership (Kapur et al., 1997; Alacevich, 2016; Sharma, 2017). With the debt crisis of peripheral countries in the 1980s and the structural adjustment loans, this situation changed. The World Bank, supported by the US government, assumed the intellectual vanguard of this adjustment, whose normative primacy oriented the debate about development in all areas. The expansion of the structural adjustment agenda was mobilized by the World Bank as a strategy to expand its mandate and consolidate it as a leader, even in areas of competence of various specialized UN agencies. In the case of financial institutions (such as the IMF and regional development banks), there was a growing alignment of intersected practices and conditionalities, blurring the frontiers between them. Furthermore, as the Meltzer Commission showed in 2001, there was an overlapping of loans from these institutions to the same countries, not necessarily the poorest ones (Pereira, 2010).

CENTRAL POINTS OF THE HISTORY OF THE WORLD BANK Because it contributed the largest part of the Bank’s capital and controlled the largest quota of votes within the institution, the US imposed two fundamental decisions in 1945–46. The first was the location of the head office of IBRD. Great Britain and other members wanted the Bank to be located outside the US, to distance it from American policy. Due to the refusal of the US, they proposed New York, the financial heart, rather than Washington, the political capital of the country. However, the US government chose Washington. The second decision defined what role the executive directors of the Bank would play (Kapur et al., 1997, p. 10). Great Britain wanted to minimize the influence of the US and foreign embassies in Washington (the majority from US debtor countries), arguing that directors should reside in their countries and visit the Bank at regular intervals to deal with important matters, while the US insisted that the directors serve as full time international staff and have more initiative and control over the institution’s operations and policy. The US vision prevailed. Following this, under the presidency of John McCloy (1947–49), it was sought to give more autonomy to the bureaucracy, establishing that all proposals for loans and other operational initiatives had to come from the administration. The Bank’s statutes and operational orientations institutionalized US visions of how to reorganize the global economy, what were the priorities, and how to allocate resources (Gwin, 1997, p. 198). Its primordial mission consisted of providing guarantees and loans for the “reconstruction” of member states affected by war, as well as long-term loans for

The World Bank and the politics of development  369 “development.” It was not to compete with private commercial banks, but to fund projects for “productive” purposes related to public works not of direct interest to private banks. It was also to create opportunities for foreign capital through guarantees or loans, once related to reconstruction or development. With the beginning of the Cold War in 1947, the question of economic aid for Europe became a question of national security for the US. The magnitude of the Marshall Plan ended up reducing the Bank’s role in reconstruction, imposing on it a precocious turn towards development. The USSR, which had the third largest voting power in the Bank (after the US and the United Kingdom), did not ratify the Bretton Woods Accords and began to denounce IBRD as an instrument of the foreign policy of the US and its Western allies (Mason and Asher, 1973, p. 29). There was enormous suspicion on the part of the potential purchasers of the Bank’s bonds because it was an absolutely new multilateral institution. Support from the Treasury was crucial to overcome this situation. First, it appointed names from Wall Street to the Bank’s board, signaling that it would be operated according to financial criteria, and not as a political institution for economic aid. Actually IBRD was conceived by New Dealers, but operated by bankers from Wall Street, the principal adversaries of the New Deal. Next, the Treasury acted for the Bank and the IMF to be part of the United Nations as specialized institutions, but in practice they functioned in an independent manner. At the same time, it made positive propaganda for the Bank’s bonds, forging the long-lasting interconnection between the institution and American high finance. Finally, the Bank’s own credit policy showed that the organization would result in significant profits for US capitalists, since its loans resulted in the purchase of goods and services of companies located in the richest countries – notably the US – which in turn contributed to maintain the level of employment in the North (see Mason and Asher, 1973, pp. 50–59; Kapur et al., 1997, pp. 76–90). By adopting a conservative credit policy, the administration of Eugene Black (1949–62) was fundamental in consolidating the Bank’s reputation with Wall Street. In this way loans for programs – with a greater volume and aimed at financing imports and alleviating imbalances in the balance of payments – were in general authorized for more solvent clients, the principal allies of the US, while loans for projects were authorized for developing countries. The emulation of productivism gave the tone of US foreign policy in the post-war period. The idea was to stimulate productivity through capital, technical resources, and education, in order to create growth and improvements in standards of living, undermining distributive conflicts (Maier, 1977). Nevertheless, within this larger framework, it was possible for distinct perspectives of development to emerge, a diversity which configured the Development Economics born in the 1950s. However, the Bank adopted a unidimensional vision of development, centered on three premises: (a) growth is something necessary and sufficient for development; (b) growth benefits the poorest when at some moment the income concentrated at the top runs down to the poorest strata (the trickle-down effect); (c) economic benefits create social benefits for everyone, but not the inverse, for which reason distributive policies harm growth (see Kapur et al., 1997, p. 135; Alacevich, 2016). The Bank choose to adopt a very narrow focus on the “productive” project. This is because, to attract interested parties to purchase its bonds, it adopted a credit policy based on commercial profitability. Bank loans had to be profitable and the way seen as most suitable for this was to fund infrastructure projects which demonstrated where the money went. This vision conformed to an orthodoxy, in relation to which other visions of development were dispar-

370  Handbook on the politics of international development aged. On the other hand, when political questions were at play, this obligation did not prevent the Bank from camouflaging credit to fund imports and alleviate crises in balances of payment as if they were loans from specific projects; nor did it prevent the denial of loans to countries whose governments were considered hostile, or to inundate with credit countries where the loyalty of the government was vital to the economic or security interests of the US. However, the rule prescribed loans for productive projects. Until the end of Black’s administration, the large majority of loans went to the areas of electricity generation, transport routes, and telecommunications. Until 1962, the Bank did not authorize any loans to the “social” area, such as health, education, or housing (see Kapur et al., 1997, pp. 119–136; Gwin, 1997; Pereira, 2010). The Bank always stimulated some economic policies to the detriment of others, with the aim of increasing the profitability of capital and the productivity of the economy. The “good behavior” seal given by the Bank (and also by the IMF) accompanied the construction of the relations of these entities with client states, based on the visions and priorities established by the US (see Kedar, 2018; Kofas, 2002, 2005). Moreover, the emphasis on projects was considered not only as a vehicle for the dissemination of world visions and economic prescriptions with the ruling elites in client countries, but also for lucrative business for the central bourgeoisie and to a lesser extent, peripheral ones. Another form of induction was carried out by the Economic Development Institute (EDI), through funding and political support from the Ford and Rockefeller foundations. EDI’s mission was to train high ranking officials in the bureaucracy of client countries, with the aim of modeling a pro-market and pro-foreign capital vision of development. Moreover, EDI sought to propel the creation of domestic agencies which could demand projects from the Bank. The case of EDI illustrates one of the most important effects of the administrative reorganization through which the Bank passed in 1952 (Kapur et al., 1997, p. 129; Alacevich, 2016). At that moment research and operations were radically separated, privileging the latter. Analysis and investigation were thus converted into support services for operations, assuming a pragmatic profile, without any conceptual innovation. Those who proposed more wide-ranging and heterodox research were dismissed, which drastically reduced the role of economists in the institution, giving instead greater value to the importance of engineers, specialized in large capital intensive projects. While research was marginalized in the institution, the nascent Development Economics prospered in academia and the UN organizations. The role of the World Bank as an intellectual actor would only change with the McNamara administration, which led the institution from being a bank to a development agency. Moved by the connection between development and security (of the US and the “free world”), McNamara pushed the slogan of the “fight against extreme poverty,” advocating that it was urgent and necessary to directly reduce misery through projects which increased the productivity of the poorest and their insertion in the market. The enormous financial expansion of the Bank was accompanied by the diversification of its areas of activity, principally to agriculture – in order to diffuse the business model of the Green Revolution – and in “social” areas such as education, housing, water supply, and health. All of this led in turn to the significant expansion of funds for economic research, again giving the protagonist role to economists. During the 1970s, while Development Economics lost academic prestige to the detriment of neoclassical economics and monetarism, the Bank absorbed experts in development, investing in technical knowledge and statistical measurement to overcome the institution’s backwardness in relation to the evolution of the discipline (Alacevich, 2016; Sharma, 2017).

The World Bank and the politics of development  371 As a response to a series of events which drastically transformed global political economics between 1973 and 1979 – the end of the Bretton Woods monetary regime, two oil shocks, the recycling of petrodollars by private American banks, the liberalization of capital flows in the US, the increase in US interest rates, etc. – the McNamara administration created the structural adjustment loan. Rapidly disbursed and aimed at policies, not projects, it would be applied from the 1980s onwards in exchange for macroeconomic and, afterwards, institutional reforms, aimed not only at the liberalization and privatization of economies, but also states and societies. In the following decades the synergy between intellectual production, technical assistance, and adjustment loans gave the tone of the increasingly more comprehensive, politicized, and intrusive action of the Bank (Pereira, 2010).

CURRENT DEBATES In the second decade of the twenty-first century, the World Bank finds itself facing enormous questioning and challenges. One of the themes being raised is related to its “functionality.” Various authors (see Pincus and Winters, 2002; Wade, 2010) have argued that the World Bank has expanded and diversified its operations excessively, widening its mandate much beyond its original competence. This has involved the need to negotiate with very diverse actors and to do things which others could do better. A consequence of this dynamic is the growing “dysfunctionality” of the institution. This type of diagnosis tends to feed reform proposals aimed at reducing the Bank’s mandate, giving it a more precise focus and greater effectiveness. On the other hand, a general aspect not taken into account in this debate is the fact that the Bank systematically adopts “loose coupling” (Babb, 2009), a strategy according to which the institution creates subunits and programs to placate external critics, at the same time that it reduces rules, operational conditions, and instruments to their effectiveness. This allows the administration to adopt a posture of “ceremonial conformity” to external pressure, in which the distance between rhetoric and reality can be enormous. Another important debate is related to the relevance of the Bank as a financial actor for development. On the one hand, emergent countries expanded their participation in the global economy at the beginning of the twenty-first century, which strengthened their capacity to avoid the conditionalities of the World Bank. At the same time some of them (such as China) became donors, competing directly with the Bank. The so-called South–South cooperation tends to focus on the funding of lucrative projects and avoid political conditionalities. On the other hand, the demands of these countries for greater representation within the World Bank and the IMF has resulted in reforms much below their expectations, since it maintains the dominance of the US and the richest Western countries (Wade, 2013). Dissatisfaction with this process led to the creation of the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB), both based in China. An open question is to what extent the financial competition of these new organizations will weaken the political and intellectual influence of the Bretton Woods institutions. A third theme is related to neoliberalism. Has the Bank abandoned the neoliberal agenda? With the cycle of financial crises which shook emerging markets in the second half of the 1990s, an exchange of accusations began within the official and private establishment of the US and other central countries, and various proposals about global economic governance emerged (see Pereira, 2016; Babb, 2013). The criticism was principally aimed at the

372  Handbook on the politics of international development IMF’s “market fundamentalism,” but it hit the World Bank very widely. In response, the Bretton Woods institutions adopted various organizational and discursive changes. In the case of the Bank, consultation and participation mechanisms, access to information, and the discursive emphasis on the “reduction of poverty” were expanded. The word “adjustment” practically disappeared from the Bank’s public discourse and loans of this type were renamed Development Policy Loans. At the same time, the academic debate became more plural and the basic mantra of neoliberal economic reform – deregulation, privatization, and liberalization – came under greater scrutiny. Cliched and pretentiously universal recipes became the object of greater skepticism, and this had reverberation within the Bank. On the other hand, numerous pieces of evidence showed that the institution has continued to promote neoliberal policies. One is that loans based on policy continue to represent on average around 30 percent of the total, which reveals the continuity of old practices. Other evidence is the creation in 2006 of the Country Policy and Institutional Assessment (CPIA), an assessment system which hierarchizes IDA eligible countries in accordance with compliance with various policies and attributes considerable weight to market liberalization. Third, is the change from funding in exchange for the promise of reforms (as in the 1980s and 1990s) to funding in exchange for measurable results (performance). Furthermore, the most recent World Development Reports (World Bank, 2018, 2019, 2020) show that the neoliberal agenda continues, since they preach commercial liberalization, the weak regulation of labor markets (with less protection for workers), strong protection for property rights, the privatization of services via public–private partnerships, light regulation of the financial sector, and a new generation of pro-poor policies (via conditional cash transfers) which do not touch the concentration of property and social wealth. Above all, the maintenance of the neoliberal agenda can be identified when policy documents for specific countries are analyzed (e.g. World Bank, 2017), with the principal being the Country Partnership Framework (formerly the Country Assistance Strategy). The way the World Bank initially positioned itself in relation to the COVID-19 pandemic also revealed the continuity of its commitment to neoliberal policies. In April 2020 the World Bank president insisted on emphasizing that funding would depend on the liberalization of trade and deregulation policies (which promoted, for example, private health markets).3 Historically, economic crises have created opportunities for the strengthening of the political and economic action of the World Bank, as well as pressure for reforms.

CONCLUSION Understanding the actions of a multilateral financial institution such as the World Bank is not only an empirical challenge, but also an analytical one. Facing demands from the top by the principal member states, from below by the governments of client countries, and transversally by the forces of capital, and civil society, the Bank is located at a unique position in the international power structure. No single theory can take into account the complexity of this, for at least three reasons: in first place, it is not reducible to the economic, to the political, 3 ‘Remarks by World Bank Group President David Malpass on G20 Finance Ministers Conference Call on COVID-19.’ March 23, 2020. https://​www​.worldbank​.org/​en/​news/​speech/​2020/​03/​23/​remarks​ -by​-world​-bank​-group​-president​-david​-malpass​-on​-g20​-finance​-ministers​-conference​-call​-on​-covid​-19.

The World Bank and the politics of development  373 or to the intellectual, even though it is a political, intellectual, and financial organization; in second place, it is at the service of the main shareholders, but at the same time, like all complex bureaucracies, it has corporate interests of self-preservation and expansion, in the middle of competition with other organizations; in third place, the action of this entity involves a dynamic and contradictory interrelationship between elements that are internal and external to member states (whether clients or not), difficult to capture in conventional knowledge. Six forces mold what the World Bank does and how it does this: the demands and injunctions of the most powerful states, relations with client states, pressures of civil society (principally in central countries), the conventions of the dominant economic debate, competition with other multilateral organizations and, finally, the predominant interests and visions within the bureaucracy. As an organization with more than 12,000 staff and more than 180 member states, the World Bank responds to its own internal dynamics and to forces outside its own environment. In order to act in the economic, political, and intellectual fields, the Bank gradually turned itself into a lender of funds, councilor to governmental technical advisers, an agent of civil society, and producer of research specialized in development. The functions and activities which it performed were immensely expanded and strengthened from the 1980s onwards, in the wake of the public debt crisis of peripheral countries and the neoliberalization of global capitalism. Since then the actions of the Bank have become increasingly more wide-ranging, politicized, and intrusive, focusing on a very diverse set of aspects of social and economic life, national and subnational public policies, and international development aid. The relations of the World Bank with client states combine coercion and persuasion, dosed according to a set of factors, amongst which are the country in question, its economic situation, the interests and priorities of the main shareholders, the more general international economic context, the history of relations with technocrats and political elites, the scenario of internal political dispute, and the priorities of the governments of the day. Since the Bank is not a colonial power, it cannot exercise immediate control about national policies. For this reason, it has to use indirect forms of influence, in order to convince and commit governments to carry out determined measures. In this dynamic, technical assistance and advice are intertwined with money, to such an extent that they became indistinguishable. The central point is that client states are not passive entities, since there are always processes of negotiation, adaptation, filtering, and translation of local norms, and actions prescribed by the Bank. In other words, the effectiveness of the Bank’s actions depends on the construction inside and external to national spaces, visions of the world, (programmatic or pragmatic) agreements, and mutual interests with social organizations and political and economic elites embedded both in the state apparatus and in civil society.

REFERENCES Alacevich, M. (2016), ‘Not a knowledge bank: The divided history of development economics and development organizations,’ Social Science History 40 (4), 627–656. Babb, S. (2009), Behind the Development Banks. Chicago, IL: University of Chicago Press. Babb, S. (2013), ‘The Washington Consensus as transnational policy paradigm: Its origins, trajectory and likely successor,’ Review of International Political Economy 20 (2), 268–297. Babb, S. and B. Carruthers (2008), ‘Conditionality: Forms, function, and history,’ Annual Review of Law and Social Science, 4, 13–29.

374  Handbook on the politics of international development Broad, R. (2006), ‘Research, knowledge, and the art of “paradigm maintenance”: The World Bank’s Development Economics Vice-Presidency (DEC),’ Review of International Political Economy 13 (3), 387–419. Deaton, A. et al. (2006), ‘An evaluation of World Bank research, 1998–2005,’ https://​openknowledge​ .worldbank​.org/​handle/​10986/​17896. Dezalay, Y. and B. Garth (2002), The Internationalization of Palace Wars. Chicago, IL: University of Chicago Press. Goldman, M. (2005), Imperial Nature: The World Bank and Struggles for Social Justice in the Age of Globalization. New Haven, CT: Yale University Press. Guilhot, N. (2005), The Democracy Makers: Human Rights and the Politics of Global Order. New York: Columbia University Press. Gwin, C. (1997), ‘U.S. relations with the World Bank, 1945–1992,’ in D. Kapur, J. Lewis, and R. Webb (eds.), The World Bank: Its First Half Century, Vol. 2: Perspectives. Washington, DC: Brookings Institution, pp. 195–274. Kapur, D., J. Lewis, and R. Webb (eds.) (1997), The World Bank: Its First Half Century, Vol. 1: History. Washington, DC: Brookings Institution. Kedar, C. (2018), ‘Human rights and multilateral lending: The World Bank, Argentina, and the United States, 1976–1978,’ The International History Review 41 (6), 1256–1275. Kofas, J. (2002), The Sword of Damocles: U.S. Financial Hegemony in Colombia and Chile, 1950–1970. Westport, CT: Praeger. Kofas, J. (2005), Independence from America: Global Integration and Inequality. Burlington, VT: Ashgate. Maier, C. (1977), ‘The politics of productivity: Foundations of American international economic policy after World War II,’ International Organization 31 (4), 607–633. Mason, E. and R. Asher (1973), The World Bank since Bretton Woods. Washington, DC: Brookings Institution. Naím, M. (1994), ‘Latin America: The second stage of reform,’ Journal of Democracy 5 (4), 32–48. Park, S. and A. Vetterlein (2010), Owning Development: Creating Policy Norms in the IMF and the World Bank. Cambridge: Cambridge University Press. Pereira, J. M. M. (2010), O Banco Mundial como Ator Político, Intelectual e Financeiro (1944–2008). Rio de Janeiro: Civilização Brasileira. Pereira, J. M. M. (2016), ‘Recycling and expansion: An analysis of the World Bank agenda (1989–2014),’ Third World Quarterly 37 (5), 818–839. Pincus, J. and J. Winters (eds.) (2002), Reinventing the World Bank. Ithaca, NY: Cornell University Press. Sharma, P. (2017), Robert McNamara’s Other War: The World Bank and International Development. Philadelphia: University of Pennsylvania Press. Stern, N. and F. Ferreira (1997), ‘The World Bank as “intellectual actor”,’ in D. Kapur, J. Lewis, and R. Webb (eds.), The World Bank: Its First Half Century, Vol. 2: Perspectives. Washington, DC: Brookings Institution, pp. 523–610. Van Waeyenberge, E. and B. Fine (2011), ‘A knowledge bank?,’ in K. Bayliss, B. Fine, and ‎E. Van Waeyenberge (eds.), The Political Economy of Development: The World Bank, Neoliberalism and Development Research. London: Pluto Press, pp. 26–48. Wade, R. (1997), ‘Greening the Bank: The struggle over the environment, 1970–1995,’ in D. Kapur, J. Lewis, and R. Webb (eds.), The World Bank: Its First Half Century, Vol. 2: Perspectives. Washington, DC: Brookings Institution, pp. 611–634. Wade, R. (2010), ‘How are we doing? The state of the World Bank,’ Challenge 43 (4), 43–67. Wade, R. (2013), ‘The art of power maintenance: How Western states keep the lead in global organizations,’ Challenge 56 (1), 5–39. Williams, D. (2008), The World Bank and Social Transformation in International Politics. London: Routledge. Williams, D. and T. Young (1994), ‘The World Bank and the liberal project,’, Political Studies 42 (1), 84–100. Woods, N. (2006), The Globalizers: The IMF, the World Bank and their Borrowers. Ithaca, NY: Cornell University Press.

The World Bank and the politics of development  375 World Bank (2017), A Fair Adjustment: Efficiency and Equity of Public Spending in Brazil. Brasília. World Bank (2018), World Development Report. Washington, DC. World Bank (2019), World Development Report. Washington, DC. World Bank (2020), World Development Report. Washington, DC.

24. The politics of the International Monetary Fund Timon Forster, Thomas H. Stubbs and Alexander E. Kentikelenis

1. INTRODUCTION International organizations are often portrayed as opaque institutions where important decisions are made behind closed doors. The International Monetary Fund (IMF) – arguably the most important intergovernmental organization in global economic governance (Babb and Kentikelenis, 2018) – is no exception. Even so, observers can occasionally glimpse the vigorous politics underpinning its governance and operations. In July 2019, IMF Managing Director Christine Lagarde resigned to become President of the European Central Bank, sparking a flurry of negotiations over who would succeed her. Since the establishment of the Fund in 1944, a “gentleman’s agreement” ensured that the IMF has been led by a European (and the World Bank by a US citizen). In August that year, over 100 civil society organizations, trade unions, and academics signed an open letter urging the IMF to abolish this arrangement and instead pursue “a genuinely open, democratic, merit-based, transparent process” (Bretton Woods Project, 2019) – a call echoed by former IMF staff (Allen et al., 2019). In fact, the Independent Evaluation Office of the IMF had already suggested reform of the selection process more than a decade earlier (IEO, 2008, 2018). But the Fund was insusceptible to such criticism. Two weeks after Lagarde’s resignation, prospective candidates hitherto were all from advanced European economies, including the former Dutch finance minister Jeroen Dijsselbloem and Finnish central banker Olli Rehn. Acknowledging a lackluster enthusiasm for these individuals in the US and other member states (who would still need to vote), the IMF Executive Board – akin to a board of directors – reformed its selection process by lifting the age restriction to facilitate the selection of a more credible candidate: Kristalina Georgieva, a Bulgarian national and chief executive of the World Bank, who ultimately became the sole nominee for the position and Lagarde’s successor (Shalal and Tsolova, 2019). In stark contrast to the “open, merit-based, and transparent process for the selection of the next Managing Director” advertised by the IMF in July (IMF, 2019), European shareholders (with tacit backing from the US) ensured that the gentleman’s agreement lived on. This anecdote demonstrates how powerful states achieve their preferences despite widespread criticism from staff, academics, and the public. To what extent is this case representative of IMF governance and decision-making more broadly? And what are the consequences for international development? In this chapter, we set out to answer these questions by reviewing relevant scholarship and policy output. In section 2, we discuss the evolution of IMF operations since its establishment. Then, we introduce a framework to examine how states and non-state actors from politics, private finance, and civil society influence the IMF. In section 4, we investigate the practice of decision-making, considering the role of management and bureaucrats, as well as their internal 376

The politics of the International Monetary Fund  377 and external pressures. We review the consequences of the Fund’s policy advice with regard to their expressed goal of growth, the wider economic impact, and social consequences in section 5. In section 6, we discuss the implications for the politics of international development. In the concluding section, we contextualize the findings and discuss avenues for future research. Rather than living up to its promises of a-political, technocratic decision-making, this chapter demonstrates how the IMF is very much subject to political influence. Powerful states, particularly the US and advanced European countries, shape its policy priorities and – by extension – the structure of global economic governance.

2.

A BRIEF HISTORY OF THE IMF

The IMF was established at the Bretton Woods Conference in 1944 – alongside the International Bank for Reconstruction and Development (later simply known as the World Bank) – to regulate the international financial system. Over the course of its 75-year history, the IMF has reinvented itself to adapt to new global circumstances on several occasions (Babb and Kentikelenis, 2018; Fioretos and Heldt, 2019; Reinhart and Trebesch, 2016). The IMF founding members tasked the organization with overseeing the Bretton Woods system of pegged exchange rates and addressing balance-of-payments crises. The need for international cooperation in this arena arose because in the pre-war period countries were devaluing their currencies so that their goods were relatively cheaper to foreign buyers. But this practice also raised the costs of imports and debt denominated in foreign currencies, causing an imbalance of the pegged exchange rates. This could yield a balance-of-payments crisis if central banks did not have sufficient foreign exchange reserves to service their obligations and maintain the fixed exchange rate. To encourage abstention from these policies, the IMF would make its financial resources “temporarily available to them [members] under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity” (IMF, 2016, p. 2). However, countries began moving towards floating exchange rates following the US suspension of dollar convertibility into gold in 1971, effectively terminating the system of pegged exchange rates. As a result, the first component of the IMF’s operations became redundant. The IMF continues to support its member states in preventing and addressing balance-of-payments crises. Initially, the Fund provided financial support without any conditions attached – consistent with the view of John Maynard Keynes, representing the British government at Bretton Woods. By contrast, the other chief architect of the Fund, Harry Dexter White of the US Treasury Department, pushed – ultimately successfully – to mandate the implementation of policy reforms in return for financial assistance, a practice known as conditionality (Babb and Carruthers, 2008). Although the original mandate did not mention conditionality, within two decades of its existence, the IMF began to lend money to Latin American economies conditional on implementation of policy reforms (Babb and Carruthers, 2008). The purpose of these conditions is to avert moral hazard – the risk that countries adopt unsustainable policies in anticipation of the IMF acting as lender of last resort. Particularly since the 1980s, the Fund’s activities – and the scope of conditionality – have expanded in manifold ways. The US Administration has been the leading force behind the diffusion of the so-called Washington Consensus – reforms targeting the liberalization, deregulation, and privatization of the economy (Kentikelenis and Babb, 2019). The policy reforms

378  Handbook on the politics of international development prescribed in lending programs now range from quantitative criteria on foreign debt to wage and employment limits, and from external sector measures to conditions pertaining to social and health spending (Kentikelenis et al., 2016). While it continues to be associated with the Washington Consensus, the IMF has – in official communication and policy advice spread through surveillance programs – taken a sharp turn recently. For example, the organization began focusing on the negative economic consequences of excessive inequality (e.g., IMF, 2017a; Mariotti et al., 2017; Ortiz and Cummins, 2019), although this rhetorical shift has not been accompanied by a substantive reorientation of its policy advice (Forster et al., 2019; Mariotti et al., 2017; Nunn and White, 2016; Ortiz and Cummins, 2019). Additionally, the IMF has acknowledged the benefits of capital controls to manage the risks of capital flows under certain circumstances (Ghosh and Qureshi, 2016; IMF, 2012b), and was indeed more supportive of capital flow management measures in the aftermath of the recent financial crisis (Gallagher and Tian, 2017).

3.

WHO GOVERNS THE IMF?

To examine the politics of the IMF, we draw on two distinct literatures in international political economy – delegation theories and sociological organization studies. Each emphasizes different actors, aspects of governance (i.e., the formal process of making legitimate decisions), and decision-making. Delegation theories employ the principal-agent framework to conceptualize international organizations (Hawkins et al., 2006). Accordingly, states act as principals that delegate authority to an organization’s management and staff to fulfill their mandate. Under conditions favorable to the principal – e.g., effective control mechanisms and small information asymmetries – organizations develop norms and policies consistent with the interests of the most powerful member states. By contrast, organization studies emphasize organizational culture and the multiple identities of individuals in explaining decision-making of international organizations (e.g., Barnett and Finnemore, 2004; Kentikelenis and Seabrooke, 2017; Momani, 2005). Our framework – presented in Figure 24.1 – distinguishes between these two aspects. In this section, we discuss how governments of member states and their representatives, as well as non-state actors, govern the IMF. In section 4, we examine the inner workings of the organization, focusing on IMF staff and their influence on decision-making. 3.1

The Influence of States

In setting up intergovernmental organizations, the governments of states – as shareholders and principals – formally delegate authority to these institutions to enforce the commitments of states (Hawkins et al., 2006). As explained above, the IMF is an organization established to enforce commitments to international monetary cooperation and – as the agent – reports to the principals. When governments of member states do not directly supervise the activities of the organization (but send representatives to governing bodies instead) – as is common in many intergovernmental organizations – the chain of delegation includes both distal and proximal principals. In the IMF, the highest decision-making authority is the Board of Governors, composed of Ministers of Finance or Central Bank Governors from all member states. However, the Governors only meet once or twice a year and delegate extensive decision-making authorities

The politics of the International Monetary Fund  379

Source: Authors.

Figure 24.1

The politics of the IMF

over day-to-day operations to the Executive Board. The governments of member states are therefore distal principals (i.e., relatively further removed from the agent), and their delegates in the Executive Board are proximal principals. The Executive Board meets two to three times per week, and is composed of 24 Directors representing the member states, the Managing Director who chairs meetings, and key representatives from IMF staff and other international organizations. The eight largest shareholders – the US (16.51 percent of the votes in 2020), Japan (6.15 percent), China (6.08 percent), Germany (5.32 percent), France (4.03 percent), the UK (4.03 percent), Russia (2.59 percent), and Saudi Arabia (2.01 percent) – elect their own representative, whereas the other countries form constituencies. The most important decisions, such as changes to the mandate, require a super-majority of 85 percent, thus giving the US veto power. The “unrepresentativeness” of the IMF and its resistance to reforms that would grant more voice to developing countries is regularly the subject of debate (Stiglitz, 2002; Vestergaard and Wade, 2015). Country voting shares (as well as financial commitments to the Fund and access limits to its financial support) are calculated using a range of weighted economic indicators,

380  Handbook on the politics of international development including GDP at market exchange rates and purchasing power parity, the level of official reserves, economic openness, and vulnerability to balance-of-payments shocks (IMF, 2012a). Nonetheless, the distribution of voting shares and power among the Fund’s principals is also a deeply political issue. For instance, Switzerland (Vreeland, 2011) and Australia (Lawrimore and Vreeland, 2018) rewarded countries that elected them to the Executive Boards of the IMF (and World Bank) with considerably higher aid than other developing countries. The case of Russia is also informative. After the demise of the Soviet Union, Russia applied to join the IMF. Acknowledging Russia’s status in world politics and recognizing an opportunity to “universalize the institution” in terms of its membership, powerful Western states secured special treatment – despite resistance from smaller constituencies. In fact, IMF staff was tasked with finding a quota share that would justify Russian prestige – overrepresented in economic terms and able to elect its own Director – at the Executive Board (Momani, 2007). Consistent with the view that voting shares are indicative of bargaining power, the most powerful member states tend to achieve their preferences in the Fund. As discussed in section 2, the expansion of the scope of conditionality to include measures of deregulation, liberalization, and privatization in the 1980s is inconsistent with the founding treaty. Yet, at no point did shareholders formally renegotiate the Fund’s mandate. Instead, this reform originated in the US Treasury’s 1985 announcement of the Baker Plan (Kentikelenis and Babb, 2019, pp. 1735–1738). The plan gave the IMF a central role in overseeing structural adjustment policies to unleash the market forces in the name of economic growth. Over subsequent years, US representatives – on behalf of their government – strategically employed different tools to legitimize this decision both in the IMF and other international venues. Further, allies of the US, Germany, Japan, France, and the UK receive favorable treatment in terms of lending programs – e.g., higher loan amounts and less stringent conditionality when they borrow from the Fund (e.g., Copelovitch, 2010; Dreher and Jensen, 2007; Lipscy and Lee, 2019; Vreeland, 2019). Countries politically aligned with the Fund’s major shareholders are also more likely to receive improved ratings in debt sustainability analyses (Lang and Presbitero, 2018) or favorable inflation forecasts (Dreher et al., 2008). Many of the Fund’s important policy changes – e.g., concerning debt relief or reforms to its lending facilities – were initiated by a coalition of powerful states (Hibben, 2015). Beyond the formal governance structure of the IMF, powerful shareholders can also secure deals behind the scenes, using informal channels of influence. The US can credibly achieve its preferences in global economic governance outside the arena of the IMF, and can leverage this opportunity to affect the Fund’s operations (Stone, 2011). For instance, Russia was of critical importance to the American regional security strategy under President Clinton after the end of the Cold War. As a result, the US pushed the IMF to continue lending to Russia in the mid-1990s, even though the former Soviet Union repeatedly failed to implement the policy reforms mandated in their lending programs (which would normally interrupt disbursement of loan tranches) (Stone, 2011, pp. 197–200). In addition, the French and British Directors tend to disproportionately intervene on behalf of their former colonies (Stone, 2008). At the same time, the influence of powerful shareholders is constrained by other proximal principals alongside IMF management and staff. Shareholders from low-income countries can block institutional change (or propose their own reforms) by building coalitions (Hibben, 2015). For example, the Fund’s Articles of Agreement explicitly permit controls that restrict capital flows between countries. Starting in the mid-1980s, however, IMF staff initiated discussions to extend the Fund’s mandate in matters of capital accounts, including the removal

The politics of the International Monetary Fund  381 of capital controls as a means to regulate financial flows. In 1990, for example, a staff report put forward an unequivocal view: “[C]apital controls were ineffectual, counterproductive, and props for misguided economic policies. Their removal would only spur benefits” (Kentikelenis and Seabrooke, 2017, p. 1079). At the time, many high-income countries sided with staff. By contrast, representatives from the developing world remained unconvinced. They questioned the economic rationale of removing capital controls, citing a lack of applicability of the staff’s research to the developing world. Ultimately, these Directors successfully opposed the emergence of this policy norm despite their inferior material resources (Kentikelenis and Seabrooke, 2017), thereby illustrating how smaller constituencies can effect change through skillful argumentation (IEO, 2018, pp. 18–19) and by undermining the legitimacy of proposed reforms (Park and Vetterlein, 2010). 3.2

The Influence of Non-State Actors

As a state-centric approach, most applications of the principal-agent framework take state preferences as given. However, the governments of member states and their delegates face external pressures from political actors, private interests, and civil society – all of which shape the preferences they pursue in intergovernmental organizations. First, governments of member states respond to their electorate, which shapes their interaction with international organizations, including the IMF. For example, throughout the Fund’s history, US Congress has taken votes on any proposed modification of IMF financing (Broz, 2011); by blocking proposed reforms, it can influence the actions of their proximal principal. From the perspective of member states that participate in lending arrangements, domestic political institutions affect program design. IMF staff recognize that democratic and newly-elected governments face additional policymaking constraints. Thus, democracies (Stone, 2008) and borrowing countries with upcoming elections (Rickard and Caraway, 2014) tend to receive fewer conditions. Second, the governments of member states are sensitive to private finance. For example, in 1989, the US Administration launched the Brady Plan to provide debt restructuring in Latin America, which served US interests because its banks were highly exposed in the region (Evans, 1999, p. 272). In addition, proximal principals attend to private financial interests in debates over lending programs (e.g., Broz and Hawes, 2006; Gould, 2003). Bilateral funds, multilateral institutions, and private finance institutions have leverage over the Fund because they supplement funding to address balance-of-payments crises. Conversely, they rely on IMF-mandated reforms and monitoring to secure repayment of their loans. Consistent with this relationship, private finance interests – approximated by private debt restructuring in borrowing countries before the incidence of an IMF program – are positively correlated with bank-related conditions (Gould, 2003). In addition, the degree of US money-center bank exposure in a borrowing country predicts the size of IMF loans (Broz and Hawes, 2006). Third, debates on the debt relief initiative for Heavily Indebted Poor Countries (HIPCs) illustrate the cognitive power employed by NGOs. While the establishment of the HIPC debt relief initiative in 1996 was originally pushed by British officials, various groups from civil society – most prominently, the European Network on Debt and Development (Eurodad) and Oxfam International – pressured Fund staff and management (Evans, 1999; Hibben, 2015). In 1999, the initiative was enhanced to deliver “broader, faster, and deeper debt relief to a larger number of countries” (Gilman and Mitchell, 2004, p. 73). Along with increased default risk,

382  Handbook on the politics of international development the impetus for this modification of the initiative came again from NGOs (Michaelowa, 2003). The Jubilee 2000 campaign – a network uniting all major development NGOs and several big churches – held discussions with IMF management and staff, and successfully committed politicians of creditor governments to accept deeper debt relief (Busby, 2007; Michaelowa, 2003). Although the ability of NGOs to effect direct change has abated (Hibben, 2015), civil society actors, such as Eurodad or the Bretton Woods Project, continue to monitor the Fund’s actions closely.

4.

HOW DO STAFF MAKE DECISIONS?

To understand the politics of the IMF, focusing exclusively on the governance structures and external influences on principals is inadequate because it under-emphasizes actual decision-making practices within the organization. For instance, already in 1946 the Executive Board had decided that the chair (the Managing Director or a deputy) would identify the “sense of the meeting” as the basis for decision-making (IMF, 2017b). The Fund thus rarely votes and relies on consensus instead – like many other organizations (Martinez-Diaz, 2009) – although most Directors acknowledge that deliberations take place in the “shadow of voting power” (IEO, 2018). Conducive to studying the practice of decision-making, there has been a recent turn in International Relations to study the behavior of individuals (Krcmaric et al., 2020). Our framework reflects this; we draw on insights by organizational sociology and constructivism which emphasize organizational culture and intra-organizational processes (e.g., Barnett and Finnemore, 2004; Halliday and Carruthers, 2007; Kentikelenis and Seabrooke, 2017). First, the chair of meetings in governing boards can effect change due to their considerable agenda-setting power (Hall and Woods, 2018). In the IMF, every Director has the right to table an item for discussion in the Executive Board. However, as chair of the meetings, the Managing Director determines the agenda. In a review by the Independent Evaluation Office of the IMF, some Directors suggested that high-income countries receive favorable treatment from management (IEO, 2018, p. 17). And, indeed, the Managing Director frequently exchanges information with US delegates informally (Stone, 2011). Managing directors, in their capacity as chair, also have considerable power to steer the Fund’s operations according to their own preferences (Martin, 2006). In 2010, for example, the Poverty Reduction Growth Facility – a lending facility established in 1999 – was replaced by a lending framework offering increased concessional resources and greater flexibility of IMF financing. This reform was championed by the Managing Director of the time, Dominique Strauss-Khan, despite resistance from a divided Executive Board (Hibben, 2015). Second, the bureaucracy has considerable power due to their expert authority (e.g., Barnett and Finnemore, 2004) which they can use to overcome bureaucratic struggles. IMF staff negotiate lending programs with borrowing governments and evaluate the implementation of policy reforms (which determines the disbursement of IMF loan tranches). As a result, these bureaucrats enjoy better access to information than their principals – one of the key sources of staff agency throughout IMF history (Martin, 2006). In meetings of the Executive Board, IMF staff provide background papers that form the basis of deliberation. In doing so, the bureaucrats influence norm-making, e.g., by defining what constitutes “unsustainable debt” and the eligibility of member states for multilateral debt relief (Momani, 2010). Further, the preferences of principals also determine the discretion of bureaucrats. When state representatives

The politics of the International Monetary Fund  383 hold heterogeneous positions, staff has room to further their own interests. By contrast, when the Executive Directors pursue homogenous preferences, e.g., during a crisis, IMF bureaucrats need to pay closer attention to the demands of their principals (Martin, 2006). In short, IMF staff are subject to the principal-agent relationship, but they are not hostage to it (Seabrooke, 2012, 488). Besides bureaucratic struggles and professional priorities, the decisions made by staff are also a function of ideological commitments. Educational background and professional experience socialize individuals and change the way they identify, frame, and solve problems (Seabrooke, 2014; Seabrooke and Nilsson, 2015). The role of education – in particular, training in economics – has received most scholarly attention. Almost all of the Fund’s staff are trained in economics, with little disagreement about the IMF’s call for monetary and fiscal conservatism and the prescribed economic policies (Momani, 2005, p. 183). Debates on the recruitment policies and objectives of the Economist Program – which recruited approximately half of Fund staff between the early 1980s and late 1990s – reveal tensions between the Executive Board and Management. Management interpreted the need for diversity as widening the range of staff nationality, and treated the financial quotas of countries as the respective benchmark. This is consistent with the mandate, which emphasizes recruiting personnel widely in geographical terms. By contrast, the Executive Board interpreted diversification with regard to the staff’s educational background (Momani, 2005, pp. 178–181). Empirically, studies corroborate the idea that training in economics is consequential for the Fund’s operations. Economists with neoclassical training are widely thought to favor unrestricted flows of capital, goods, and labor as a means to organize market economies. Building on this, Chwieroth (2007) investigates the diffusion of capital account liberalization under the auspices of the IMF in the developing world between 1977 and 1997. Following the socialization literature, one would expect a common organizational background of key individuals in the IMF to foster the emergence and spread of capital account liberalization. Indeed, a higher share of economists in senior IMF positions with degrees from selected US universities translates into higher financial openness in borrowing countries (Chwieroth, 2007). The impact of the alma mater extends beyond the staff of international organizations. Countries where policymakers share the IMF’s (neoliberal) economic beliefs – based on leveraging biographical details of more than 2,000 policy makers in 90 developing countries – get better deals, e.g., in terms of loan size or conditionality (Nelson, 2014).

5.

WHAT ARE THE CONSEQUENCES OF THE IMF’S ACTIONS?

Having covered the governance and operations of the IMF, we turn to the consequences of their policy advice. We discuss the effects of lending programs and conditionality with respect to the Fund’s stated objective of economic growth and debt management, their broader economic impact, and social consequences. In doing so, we focus on a subset of studies that control for selection into IMF programs: Countries that ask the IMF for financial assistance are unlike countries that do not participate in structural adjustment programs (for a methodological discussion, see Stubbs et al., 2020). First, the evidence on the impact of IMF programs on economic growth is inconclusive, and results depend on the methodology, period, and sample of countries analyzed (see also

384  Handbook on the politics of international development Steinwand and Stone, 2008). While some studies show that IMF programs reduce growth rates (e.g., Dreher, 2006), others find that the lending arrangements are associated with higher growth rates under certain conditions, such as a relatively low level of IMF financing (Bird and Rowlands, 2017). Further, the countries that are most interested in participating in IMF programs are the least likely to have favorable growth outcomes (Bas and Stone, 2014). In addition, IMF interventions should enable borrowing countries to achieve debt sustainability. According to research by IMF economists, the likelihood of sovereign defaults in developing countries following IMF-supported programs is significantly lower (Balima and Sy, 2019). IMF arrangements also diminish the probability of currency crises (Dreher and Walter, 2010). Yet, the high number of countries repeatedly asking for IMF support – recidivists – demonstrates that challenges in borrowing countries remain after the termination of an IMF program (Bas and Stone, 2014; Bird and Rowlands, 2017; Steinwand and Stone, 2008). Second, lending programs of the IMF have broader economic consequences. For instance, participation in IMF programs demonstrates a country’s willingness to reform its economy, thereby offering a seal of approval to foreign investors (e.g., Chapman et al., 2017; Krahnke, 2020; Vadlamannati, 2020). In practice, the market reaction to IMF programs depends not only on the loan size (Krahnke, 2020) and reforms (Vadlamannati, 2020), but also the political interests of lenders (Chapman et al., 2017). Programs with prior actions – reforms to be implemented before any loan disbursement – and quantitative performance criteria may be particularly suited to restore investor confidence (Vadlamannati, 2020). In addition, the catalytic effect of IMF programs on capital flows varies by economic sector (Breen and Egan, 2019). Such catalytic effect is also observed in selected policy areas for bilateral aid from the most powerful shareholders in the Fund, such as the US or Japan (Stubbs et al., 2016). Third, reforms mandated by IMF lending programs are associated with a range of social consequences. These programs are harmful for social policies. For instance, conditionality reduces spending in developing countries (Kentikelenis et al., 2015), particularly in West African states (Stubbs et al., 2017a, 2017b), due to reforms that limit the fiscal space for investment in health, public wage caps, and health system decentralization. IMF staff dispute such findings (e.g., Gupta, 2015, 2017) and point to work promoting social safety nets for people in vulnerable situations (IMF, 2017c). However, targeted social assistance is contrary to the objective of universal social protection endorsed by the international community (e.g., see the Sustainable Development Goals) (Stubbs and Kentikelenis, 2018). Second, IMF lending programs deteriorate social outcomes. They widen health inequities, as manifested in lower access to health services and higher neonatal mortality in developing countries (Forster et al., 2020). IMF programs also increase income inequality (Forster et al., 2019; Lang, 2021; Oberdabernig, 2013), especially in democracies (Lang, 2021). The adverse distributional consequences stem primarily from fiscal reforms, debt ceilings, financial sector measures, and external sector liberalization (Forster et al., 2019). In addition, IMF programs affect domestic politics and may fuel social unrest. For example, IMF programs increase the likelihood of coup d’états by reducing the ability of leaders to compensate those individuals who bear the brunt of structural adjustment (Casper, 2017). Further, participation in IMF programs is associated with more protests (Bejar and Moraes, 2016; Moosa and Moosa, 2019, pp. 89–110), although studies on Latin America show that IMF interventions do not give rise to protests in countries where citizens can channel their discontent through a legitimate institutionalized party system (Bejar and Moraes, 2016).

The politics of the International Monetary Fund  385

6.

THE IMF AND INTERNATIONAL DEVELOPMENT

What do the politics of IMF operations imply for international development? The political imbalances in IMF governance matter for the legitimacy of the institution itself. The Fund ultimately derives its power in international development from its bureaucracy (Barnett and Finnemore, 2004). That is, powerful shareholders are only able to pursue their own preferences through the IMF as long as they are perceived to intervene in exceptional circumstances rather than on a continuous basis (Stone, 2011). Thus, there are openings for developing countries to become more important in setting the direction of the IMF and of international development more broadly. As the debates on debt relief or capital controls illustrate, weaker political actors possess the means to tilt the bargaining table in their favor. Key to successful interventions in the past were coalition-building and skillful argumentation that secures the support of IMF staff (Hibben, 2015; Kentikelenis and Seabrooke, 2017). However, if actors with inferior formal power achieve their preferences only in selected cases, they will explore alternative strategies that endanger the future of the IMF. For example, many Asian countries have built up their own reserves to avoid IMF interventions in response to the Fund’s handling of the 1997–1998 crisis (Lipscy and Lee, 2019). Similarly, the rising powers – China, Brazil, India, Russia, and South Africa – have responded to frustrated negotiations over a reallocation of IMF voting shares by creating new institutions. Both the New Development Bank (also known as BRICS Bank) and the China-led Asian Infrastructure Investment Bank (AIIB) signal a shift in the global balance of economic power (Babb and Kentikelenis, 2018). The Fund’s relationship with one rising power in particular – China – is likely to change the face of international development in years to come. Since the 2000s, China has increased its foreign aid exponentially and now offers borrowers in developing countries a viable alternative to the Bretton Woods institutions or powerful Western states (Bunte, 2019). Following the 2010 reforms at the IMF, described by then-Managing Director Dominique Strauss-Kahn as “the biggest ever shift of influence in favor of emerging market and developing countries” (IMF, 2010), China is now the Fund’s third-largest shareholder. Although these changes only became effective in 2016 (once the US Congress ratified the amendment) China thus enjoys enhanced status in the IMF’s governing body. Yet the US and a coalition of Western member states continue to hold veto power for the most important decisions, and Chinese staff remain underrepresented (Ferdinand and Wang, 2013). In practice, the success of China–IMF collaboration depends on the extent to which the interests of the two actors are aligned. For instance, China successfully pushed for the inclusion of the Renminbi in the IMF’s Special Drawing Rights (SDR) basket, thereby shifting the focus away from the US dollar and strengthening the Renminbi’s position in the international monetary system (Wang, 2018). By contrast, China is more skeptical regarding the structural reforms mandated by the IMF and would prefer for the Fund to promote alternative views of development (Ferdinand and Wang, 2013). A glance at the evolution of conditionality since 1980 points to continued Chinese frustration on this front. In Figure 24.2, we depict the average number of structural conditions – e.g., pertaining to privatization of state-owned enterprises or labor market reforms – between 1980 and 2019. Structural reforms are more comprehensive than quantitative conditions (e.g., limits on government debt) because they define not only a target but also how countries should reform their economies to meet the specified goals. While the average number of structural reforms mandated in lending programs decreased

386  Handbook on the politics of international development slightly after 2000, their level is relatively constant since renewed demand for the IMF after the global financial crisis in 2008. This does not bode well for China’s preferences towards a more “heterodox” IMF. In such cases, China pursues alternative strategies (Ferdinand and Wang, 2013; Wang, 2018), as the founding of the BRICS bank and AIIB demonstrates. Further, Fund persistence in prescribing structural reforms stands in stark contrast to the organization’s new rhetoric (Kentikelenis et al., 2016). The IMF prides itself on its commitment to the Sustainable Development Goals – yet its policies fall short on multiple goals, including gender and income inequality (Bretton Woods Project, 2017; Mariotti et al., 2017).

Source: Authors’ database.

Figure 24.2

Structural conditions, 1980–2019

The Coronavirus-19 (COVID-19) pandemic provides the latest illustration of the IMF’s reluctance to change its ways fundamentally. The IMF’s response to the pandemic has been sluggish at best (Kentikelenis et al., 2020; Stubbs et al., 2021). Not only has the Fund made relatively trivial amounts of new financing available, it has also been slow to disburse the financing at its disposal – less than 15 percent in the first five months of the pandemic – thereby endangering the health and development of people in developing countries (Stubbs et al., 2021).

The politics of the International Monetary Fund  387

7. CONCLUSION More than 75 years since its establishment, the IMF continues to be one of the most important actors in global economic governance. While it has shown remarkable longevity and successfully maneuvered challenges in the international monetary system in the past, it has yet to adequately respond to the latest shift in world politics. As discussed in this chapter, the disproportionate influence of Western member states continues to distort the IMF’s effectiveness. Allies of the most powerful shareholders receive better treatment by the Fund (Lipscy and Lee, 2019). In turn, the Fund may need to spend more resources on those countries than their economic situation would warrant. More broadly, where the IMF’s policy advice contributes to unintended social consequences, it has long-lasting consequences for the development trajectory of borrowing countries, as well as their relationship with the IMF. The review of IMF governance and decision-making also points towards areas for future research. In particular, the research on bargaining in the IMF remains state-centric (for an exception, see Kentikelenis and Seabrooke, 2017). What exactly is the role of individuals? Whose interests do state delegates represent in deliberations? How do states pursue and achieve preferences in the absence of voting? To what extent are the consequences of IMF policy advice mediated by domestic leaders and institutions of borrowing countries? International cooperation remains paramount today – particularly in light of transnational issues such as climate change or the COVID-19 pandemic. A better understanding of the governance and decision-making of the IMF and other intergovernmental organizations promises to advance knowledge on how to best address these issues. Global economic governance has been dominated by powerful states for decades. However, this chapter has also shown that states underrepresented in formal decision-making of international organizations can build coalitions to overcome opposition or seek alternative venues to achieve their preferences. This represents potential for fundamental change to the international financial and development architecture.

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388  Handbook on the politics of international development Breen, Michael, and Patrick J. W. Egan. 2019. “The catalytic effect of IMF lending: Evidence from sectoral FDI data.” International Interactions 45(3): 447–473. Bretton Woods Project. 2017. The IMF and Gender Equality: A Compendium of Feminist Macroeconomic Critiques. Bretton Woods Project. https://​www​.brettonwoodsproject​.org/​wp​-content/​uploads/​2017/​ 10/​The​-IMF​-and​-Gender​-Equality​-A​-Compendium​-of​-Feminist​-Macroeconomic​-Critiques​.pdf. Bretton Woods Project. 2019. “‘It’s time to end the gentleman’s agreement’: An open letter to the IMF.” openDemocracy. https://​www​.opendemocracy​.net/​en/​oureconomy/​its​-time​-to​-end​-the​-gentlemans​ -agreement​-an​-open​-letter​-to​-the​-imf/​. Broz, J. Lawrence. 2011. “The United States Congress and IMF financing, 1944–2009.” The Review of International Organizations 6(3–4): 341–368. Broz, J. Lawrence, and Michael Brewster Hawes. 2006. “US domestic politics and International Monetary Fund policy.” In Delegation and Agency in International Organizations, ed. Darren G. Hawkins, David A. Lake, Daniel L. Nielson, and Michael J. Tierney. Cambridge: Cambridge University Press, 41–76. Bunte, Jonas B. 2019. Raise the Debt: How Developing Countries Choose Their Creditors. Oxford: Oxford University Press. Busby, Joshua William. 2007. “Bono made Jesse Helms cry: Jubilee 2000, debt relief, and moral action in international politics.” International Studies Quarterly 51(2): 247–275. Casper, Brett A. 2017. “IMF programs and the risk of a coup d’état.” Journal of Conflict Resolution 61(5): 964–996. Chapman, Terrence, Songying Fang, Xin Li, and Randall W. Stone. 2017. “Mixed signals: IMF lending and capital markets.” British Journal of Political Science 47(2): 329–349. Chwieroth, Jeffrey M. 2007. “Testing and measuring the role of ideas: The case of neoliberalism in the International Monetary Fund.” International Studies Quarterly 51(1): 5–30. Copelovitch, Mark S. 2010. The International Monetary Fund in the Global Economy: Banks, Bonds, and Bailouts. Cambridge: Cambridge University Press. Dreher, Axel. 2006. “IMF and economic growth: The effects of programs, loans, and compliance with conditionality.” World Development 34(5): 769–788. Dreher, Axel, and Nathan M. Jensen. 2007. “Independent actor or agent? An empirical analysis of the impact of US interests on International Monetary Fund conditions.” The Journal of Law and Economics 50(1): 105–124. Dreher, Axel, Silvia Marchesi, and James Raymond Vreeland. 2008. “The political economy of IMF forecasts.” Public Choice 137(1–2): 145–171. Dreher, Axel, and Stefanie Walter. 2010. “Does the IMF help or hurt? The effect of IMF programs on the likelihood and outcome of currency crises.” World Development 38(1): 1–18. Evans, Huw. 1999. “Debt relief for the poorest countries: Why did it take so long?” Development Policy Review 17(3): 267–279. Ferdinand, Peter, and Jue Wang. 2013. “China and the IMF: From mimicry towards pragmatic international institutional pluralism.” International Affairs 89(4): 895–910. Fioretos, Orfeo, and Eugénia C. Heldt. 2019. “Legacies and innovations in global economic governance since Bretton Woods.” Review of International Political Economy 26(6): 1089–1111. Forster, Timon, Alexander E. Kentikelenis, Bernhard Reinsberg, et al. 2019. “How structural adjustment programs affect inequality: A disaggregated analysis of IMF conditionality, 1980–2014.” Social Science Research 80: 83–111. Forster, Timon, Alexander E. Kentikelenis, Thomas H. Stubbs, and Lawrence P. King. 2020. “Globalization and health equity: The impact of structural adjustment programs on developing countries.” Social Science & Medicine 267. Gallagher, Kevin P., and Yuan Tian. 2017. “Regulating capital flows in emerging markets: The IMF and the global financial crisis.” Review of Development Finance 7(2): 95–106. Ghosh, Atish R., and Mahvash S. Qureshi. 2016. What’s In a Name? That Which We Call Capital Controls. 16/25 IMF Working Paper. Washington, DC: International Monetary Fund. Gilman, Martin, and Wayne Mitchell. 2004. “Achievements to date and challenges ahead: A view from the IMF.” In HIPC Debt Relief: Myths and Realities, ed. Jan Joost Teunissen and Age Akkerman. The Hague: Forum on Debt and Development (Fondad), 72–96.

The politics of the International Monetary Fund  389 Gould, Erica R. 2003. “Money talks: Supplementary financiers and International Monetary Fund conditionality.” International Organization 57(3): 551–586. Gupta, Sanjeev. 2015. “Response to ‘The International Monetary Fund and the Ebola outbreak.’” The Lancet Global Health 3(2): e78. Gupta, Sanjeev. 2017. “Can a causal link be drawn? A commentary on ‘The impact of IMF conditionality on government health expenditure: A cross-national analysis of 16 West African nations.’” Social Science & Medicine 100(181): 199–201. Hall, Nina, and Ngaire Woods. 2018. “Theorizing the role of executive heads in international organizations.” European Journal of International Relations 24(4): 865–886. Halliday, Terence C., and Bruce G. Carruthers. 2007. “The recursivity of law: Global norm making and national lawmaking in the globalization of corporate insolvency regimes.” American Journal of Sociology 112(4): 1135–1202. Hawkins, Darren G., David A. Lake, Daniel L. Nielson, and Michael J. Tierney. 2006. Delegation and Agency in International Organizations. Cambridge: Cambridge University Press. Hibben, Mark. 2015. “Coalitions of change: Explaining IMF low-income country reform in the post-Washington Consensus.” Journal of international Relations and Development 18(2): 202–226. IEO. 2008. Governance of the IMF: An Evaluation. Washington, DC: International Monetary Fund. IEO. 2018. Governance of the IMF: Evaluation Update. Washington, DC: International Monetary Fund. IMF. 2010. “IMF Executive Board approves major overhaul of quotas and governance.” Press release No. 10/418. https://​www​.imf​.org/​en/​News/​Articles/​2015/​09/​14/​01/​49/​pr10418. IMF. 2012a. 2011 Review of Conditionality – Background Paper 3: Outcomes of Fund-Supported Programs. Washington, DC: International Monetary Fund. IMF. 2012b. The Liberalization and Management of Capital Flows: An Institutional View. Washington, DC: International Monetary Fund. IMF. 2016. Articles of Agreement. Washington, DC: International Monetary Fund. IMF. 2017a. Fiscal Monitor: Tackling Inequality. Washington, DC: International Monetary Fund. IMF. 2017b. “Qualifiers used in summings up of Executive Board meetings.” https://​www​.imf​.org/​ external/​np/​sec/​misc/​qualifiers​.htm. IMF. 2017c. “Social safeguards and program design in PRGT and PSI-supported programs.” http://​ www​.imf​.org/​en/​Publications/​Policy​-Papers/​Issues/​2017/​06/​01/​pp042117social​-safeguards​-and​ -programdesign​-in​-prgt​-and​-psi. IMF. 2019. “IMF Executive Board initiates selection process for the next managing director.” https://​ www​.imf​.org/​en/​News/​Articles/​2019/​07/​26/​pr19302​-imf​-executive​-board​-initiates​-selection​-process​ -for​-the​-next​-managing​-director. Kentikelenis, Alexander E. et al. 2020. “Softening the blow of the pandemic: Will the International Monetary Fund and World Bank make things worse?” The Lancet Global Health 8(6): E758–E759. Kentikelenis, Alexander E., and Sarah L. Babb. 2019. “The making of neoliberal globalization: Norm substitution and the politics of clandestine institutional change.” American Journal of Sociology 124(6): 1720–1762. Kentikelenis, Alexander E., and Leonard Seabrooke. 2017. “The politics of world polity: Script-writing in international organizations.” American Sociological Review 82(5): 1065–1092. Kentikelenis, Alexander E., Thomas H. Stubbs, and Lawrence P. King. 2015. “Structural adjustment and public spending on health: Evidence from IMF programs in low-income countries.” Social Science & Medicine 126: 169–176. Kentikelenis, Alexander E., Thomas H. Stubbs, and Lawrence P. King. 2016. “IMF conditionality and development policy space, 1985–2014.” Review of International Political Economy 23(4): 543–582. Krahnke, Tobias. 2020. “Doing more with less: The catalytic function of IMF lending and the role of program size.” Discussion Paper, Deutsche Bundesbank, No. 18/2020. Krcmaric, Daniel, Stephen C. Nelson, and Andrew Roberts. 2020. “Studying leaders and elites: The personal biography approach.” Annual Review of Political Science 23: 8.1–8.19. Lang, Valentin F. 2021. “The economics of the democratic deficit: The effect of IMF programs on inequality.” The Review of International Organizations 16: 599–623. Lang, Valentin F., and Andrea F. Presbitero. 2018. “Room for discretion? Biased decision-making in international financial institutions.” Journal of Development Economics 130: 1–16.

390  Handbook on the politics of international development Lawrimore, Trellace Marie, and James Raymond Vreeland. 2018. “Aid as a building bloc: Australia and the Bretton Woods institutions.” Australian Journal of Political Science 53(4): 463–479. Lipscy, Phillip Y., and Haillie Na-Kyung Lee. 2019. “The IMF as a biased global insurance mechanism: Asymmetrical moral hazard, reserve accumulation, and financial crises.” International Organization 73(1): 35–64. Mariotti, Chiara, Nick Galasso, and Nadia Daar. 2017. Great Expectations: Is the IMF Turning Words into Action on Inequality? Oxfam. Martin, Lisa L. 2006. “Distribution, information, and delegation to international organizations: The case of IMF conditionality.” In Delegation and Agency in International Organizations, ed. Darren G. Hawkins, David A. Lake, Daniel L. Nielson, and Michael J. Tierney. Cambridge: Cambridge University Press, 140–164. Martinez-Diaz, Leonardo. 2009. “Boards of directors in international organizations: A framework for understanding the dilemmas of institutional design.” The Review of International Organizations 4(4): 383–406. Michaelowa, Katharina. 2003. “The political economy of the enhanced HIPC-initiative.” Public Choice 114(3–4): 461–476. Momani, Bessma. 2005. “Recruiting and diversifying IMF technocrats.” Global Society 19(2): 167–187. Momani, Bessma. 2007. “Another seat at the board: Russia’s IMF executive director.” International Journal 62(4): 916–939. Momani, Bessma. 2010. “Internal or external norm champions: The IMF and multilateral debt relief.” In Owning Development: Creating Policy Norms in the IMF and the World Bank, ed. Susan Park and Antje Vetterlein. Cambridge: Cambridge University Press, 29–47. Moosa, Imad A., and Nisreen Moosa. 2019. Eliminating the IMF: An Analysis of the Debate to Keep, Reform or Abolish the Fund. Cham: Palgrave Macmillan. Nelson, Stephen C. 2014. “Playing favorites: How shared beliefs shape the IMF’s lending decisions.” International Organization 68(2): 297–328. Nunn, Alex, and Paul White. 2016. “The IMF and a new global politics of inequality?” The Journal of Australian Political Economy 78: 186–231. Oberdabernig, Doris A. 2013. “Revisiting the effects of IMF programs on poverty and inequality.” World Development 46: 113–142. Ortiz, Isabel, and Matthew Cummins. 2019. Austerity: The New Normal – A Renewed Washington Consensus 2010–24. http://​dx​.doi​.org/​10​.2139/​ssrn​.3523562. Park, Susan, and Antje Vetterlein. 2010. Owning Development: Creating Policy Norms in the IMF and the World Bank. Cambridge: Cambridge University Press. Reinhart, Carmen M., and Christoph Trebesch. 2016. “The International Monetary Fund: 70 years of reinvention.” Journal of Economic Perspectives 30(1): 3–28. Rickard, Stephanie J., and Teri L. Caraway. 2014. “International negotiations in the shadow of national elections.” International Organization 68(3): 701–720. Seabrooke, Leonard. 2012. “Pragmatic numbers: The IMF, financial reform, and policy learning in least likely environments.” Journal of International Relations and Development 15(4): 486–505. Seabrooke, Leonard. 2014. “Epistemic arbitrage: Transnational professional knowledge in action.” Journal of Professions and Organization 1(1): 49–64. Seabrooke, Leonard, and Emelie Rebecca Nilsson. 2015. “Professional skills in international financial surveillance: Assessing change in IMF policy teams.” Governance 28(2): 237–254. Shalal, Andrea, and Tsvetelia Tsolova. 2019. “World Bank’s Georgieva becomes first IMF chief from emerging economy.” Reuters. https://​www​.reuters​.com/​article/​us​-imf​-georgieva/​world​-banks​ -georgieva​-to​-be​-first​-imf​-chief​-from​-emerging​-economy​-idUSKBN1WA0B3. Steinwand, Martin C., and Randall W. Stone. 2008. “The International Monetary Fund: A review of the recent evidence.” The Review of International Organizations 3(2): 123–149. Stiglitz, Joseph E. 2002. Globalization and Its Discontents. New York: W. W. Norton. Stone, Randall W. 2008. “The scope of IMF conditionality.” International Organization 62(04): 589–620. Stone, Randall W. 2011. Controlling Institutions: International Organizations and the Global Economy. Cambridge: Cambridge University Press.

The politics of the International Monetary Fund  391 Stubbs, Thomas H. et al. 2017a. “The IMF and government health expenditure: A response to Sanjeev Gupta.” Social Science & Medicine 181: 202–204. Stubbs, Thomas H. et al. 2017b. “The impact of IMF conditionality on government health expenditure: A cross-national analysis of 16 West African nations.” Social Science & Medicine 174: 220–227. Stubbs, Thomas H. et al. 2021. “Whatever it takes? The global financial safety net, Covid-19, and developing countries.” World Development 137. Stubbs, Thomas H., and Alexander E. Kentikelenis. 2018. “Targeted social safeguards in the age of universal social protection: The IMF and health systems of low-income countries.” Critical Public Health 28(2): 132–139. Stubbs, Thomas H., Alexander E. Kentikelenis, and Lawrence P. King. 2016. “Catalyzing aid? The IMF and donor behavior in aid allocation.” World Development 78: 511–528. Stubbs, Thomas H., Alexander E. Kentikelenis, Bernhard Reinsberg, and Lawrence P. King. 2020. “How to evaluate the effects of IMF conditionality: An extension of quantitative approaches and an empirical application to public education spending.” The Review of International Organizations 15(1): 29–73. Vadlamannati, Krishna Chaitanya. 2020. “Can IMF program design resurrect investor sentiment? An empirical investigation.” Business and Politics 22(2), 339–382. Vestergaard, Jakob, and Robert H. Wade. 2015. “Still in the woods: Gridlock in the IMF and the World Bank puts multilateralism at risk.” Global Policy 6(1): 1–12. Vreeland, James Raymond. 2011. “Foreign aid and global governance: Buying Bretton Woods – the Swiss-bloc case.” The Review of International Organizations 6(3–4): 369–391. Vreeland, James Raymond. 2019. “Corrupting international organizations.” Annual Review of Political Science 22: 205–222. Wang, Jue. 2018. “China–IMF collaboration: Toward the leadership in global monetary governance.” Chinese Political Science Review 3(1): 62–80.

25. The politics of development in the WTO, or there and back again … Amrita Narlikar

The battle for securing development as a priority in the multilateral trade regime was a long and difficult one. The General Agreement on Tariffs and Trade (GATT) was a worthy institution in many ways but not one whose strong point was development. When the World Trade Organization was formed in 1995, it inherited many features of the GATT, and in some ways looked even less development-friendly than its predecessor. In this chapter, I show how, despite severe odds, development finally began to get mainstreamed into the WTO at the turn of the millennium. I argue that developing countries themselves deserve the greatest credit for this success, and show the mechanisms by which they were able to advance a winning narrative that worked in favour of their cause. In this sense, this is a story of David winning against Goliath. But the victories of the Global South have proven to be short-lived, and the WTO has come an unhappy full circle.1 The fourth section offers some conclusions.

WHEN TRADE WAS TRADE, AND DEVELOPMENT WAS DEVELOPMENT Had the creation of the International Trade Organization gone to plan, it is possible that development would have been woven into the heart of the multilateral trade regime from the very beginning. Unlike the negotiations to establish the International Bank for Reconstruction and Development and the International Monetary Fund, which had been conducted primarily between “one and a half countries” (i.e. the US and a much weaker UK, see Daunton, 2010), and then presented for approval to the 44 countries present at the Bretton Woods conference, the ITO negotiations were more inclusive. A preparatory committee was established with eighteen countries, which met in London, New York, and Geneva for the drafting process, and included countries at different levels of development from different regions. At the Havana conference (November 1947 – March 1948), of the 58 countries that met to sign the Final Act, 41 were developing countries (GATT, 1950; Breda dos Santos, 2016). The role that developing countries had played throughout the process was reflected in the Havana Charter: the goal of economic development featured prominently not only in Chapter I (which spelt out the objectives of the agreement), but also through Chapter III that was devoted exclusively to this issue; the structure and voting processes of the ITO would also have ensured voice and votes for developing countries. Richard Toye (2003, p. 283) has thus argued that had the ITO come to fruition, it would have produced a “more inclusive, productive, orderly and just world economy than that which emerged” (see also Toye, 2012).



1

This chapter draws on arguments presented in Narlikar (2020).

392

The politics of development in the WTO  393 There were several reasons for the failure of the ITO to come into existence (for further reading on this topic, see Clayton, 1949; Diebold, 1952; Gardner, 1956; Daunton, 2012). For the purposes of this chapter, suffice it to note that the GATT2 – which had been intended only as a provisional arrangement to facilitate tariff reductions until the ITO was established – ended up becoming the de facto pillar of multilateral trade governance for almost 50 years. And in comparison to the ITO, the GATT was less well suited to address the concerns of developing countries for at least two reasons. First, the GATT was not an organization; it was simply a trade agreement between contracting parties. As such, it lacked important institutional features, such as a Secretariat able to assist with capacity-building, or even a permanent forum that could have provided a space for collective bargaining from the Global South (Krasner, 1985; Narlikar, 2003). Second, the limited scope of GATT (mainly the commercial policy chapter of the Havana Charter) meant that it contained no chapter on economic development. This missing dimension was evident even in the preamble of the GATT (which made no mention of development as a goal or an aspiration for contracting parties to pursue), and stood in contrast to the Charter’s preamble from the outset. Add to this the fact that although Article XXV promised one member one vote, developing countries found themselves disadvantaged by the actual practice of decision-making, which worked on the basis of consensus. Consensus would be forged through informal ‘Green Room’ meetings, at the invitation of the Director General, and via prior consultations among the ‘Quad’ (European Commission, US, Canada, and Japan); to break such a consensus through an open show of hands in plenary meetings was not an easy task for small and poor countries. Just how difficult a setting this was for developing countries is illustrated by the fact that some of them came to call it a “rich man’s club”.3 Despite these institutional limitations, developing countries fought hard to have their concerns factored into the negotiations. Within the GATT, they argued the case for development-friendly provisions through detailed country proposals, and sometimes coordinated their positions via coalitions, such as the Informal Group of Developing Countries (Narlikar, 2003, 2020). They took on similar efforts in parallel institutions (e.g. the naming of the 1960s as the UN Decade for Development), and also pushed for the establishment of new institutions that could be better aligned with their priorities (e.g. the setting up of the United Nations Conference for Trade and Development, UNCTAD, in 1964). These efforts generated some successes. Modifications to Article XVIII in 1955 offered “a new and more positive approach to the problem of economic development and to the ways 2 The GATT was signed by 23 contracting parties (Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, UK, and US) in 1947, and came into effect from 1 January 1948 (GATT, 1947). 3 E.g. in 1963, the Minister of Commerce and Industry of Tanganyika, explaining his country’s decision to join the GATT, stated: “We were not deterred by the criticism which is usually levelled at the GATT that it is the ‘rich man’s club’” (GATT, 1963). In 1967, the ambassador of Ceylon made another similar reference: “As I remember hearing the distinguished Minister of Economic Affairs for the Netherlands indicating yesterday that GATT was not intended to be a rich man’s club. It was primarily intended to bring order out of chaos in international trade. Still the accidents of history have tended to make GATT a policy forum from which the major industrialized nations have derived greater benefit than countries primarily dependent on agricultural products and the developing countries” (GATT, 1967). For a rich account of the difficulties of negotiating within the GATT framework even for a large developing country like Brazil, see Ricupero (1998).

394  Handbook on the politics of international development and means of reconciling the requirements of economic development with the obligations undertaken under the General Agreement regarding the conduct of commercial policy” (GATT, 1994; also see Whalley, 1990). The Haberler Report was published in 1958, which made the case that special consideration needed to be given to “underdeveloped primary producer countries” (Paragraph 345, Haberler Report, Haberler et al., 1958) in being allowed to use more trade controls, and also more access to markets of developed countries. In 1965, Part IV was added on to the GATT. This new chapter on ‘Trade and Development’ reflected an acknowledgement among contracting parties “that there was need for an adequate legal and institutional framework to enable the CONTRACTING PARTIES to discharge their responsibilities in connection with the work of expanding the trade of less-developed countries” (Ambassador Julio Lacarte, Chairperson, General Council, GATT, 1965). Part IV offered the first official recognition of the principle of non-reciprocity.4 In 1968, at the second session of the UNCTAD in New Delhi, the US agreed to participate in a global system of preferences. The “novelty” of this system was that it tried to “generalize” in a non-discriminatory way, the “patchwork of preferences” that had traditionally been granted only to former colonies by a few rich countries (Tobin and Busch, 2019). The Generalized System of Preferences (GSP) was a deviation from a core principle of the GATT – Most Favoured Nation status – which disallowed discrimination among the contracting parties; nonetheless, a 10-year waiver was granted in 1971 to make GSP for developing countries compatible with the GATT’s rules. In 1979, this exception was institutionalized on a permanent basis via the Enabling Clause. The Framework Agreement on “Differential and More Favourable Treatment, Reciprocity, and Fuller Participation of Developing Countries”, stated in Paragraph 1: “Notwithstanding the provisions of Article I of the General Agreement, contracting parties may accord differential and more favourable treatment to developing countries, without according such treatment to other contracting parties” (GATT, 1979). And while none of these successes on securing the principle of special and differential treatment (SDT) for developing countries should be belittled, we must also recognize the limitations that they came with. The most serious limitation was that these development-friendly provisions were not a right that developing countries could demand. Under the Enabling Clause, for instance, preferences could be offered unilaterally by developed countries to developing countries/least developed countries (LDCs), and could also be withdrawn unilaterally. SDT for poor countries, moreover, came with an expectation of ‘graduation’: that the less-developed contracting parties would participate more fully in the GATT as their economies developed and their trade situations improved. Part IV had come as an important but belated afterthought on development; as such, it tried to create more room for manoeuvre for developing countries. But the approach was founded on exceptions to the rule; the rule remained that development and poverty were fundamentally not systemic but domestic concerns. These limitations were perhaps not surprising. The GATT – taken as the commercial policy chapter of the Havana Charter in isolation – ended up with a narrative that was also quite limited. In some ways, this narrative complemented the narrative that underpinned the Bretton Woods institutions. The bargain that emerged across the three institutions now allowed a package of free trade, but also monetary policy autonomy, fixed exchange rates, capital con4 Part IV, Art. XXXVI, paragraph 8 stated, “The developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less-developed contracting parties”.

The politics of development in the WTO  395 trols in the interests of domestic stability that was especially important for the war-torn economies of Europe (Daunton, 2010). The issues of global poverty alleviation and development in the Third World were not central concerns in this narrative. As John Ruggie (1982, p. 413, note 1) has argued, “The compromise of embedded liberalism has never been fully extended to the developing countries … the liberalization produced by the GATT has benefited relatively few among them”. This dominant narrative stood at odds with an alternative narrative – as espoused by many developing countries, as well as epistemic communities (such as dependency theorists) – that emphasized collective responsibility for poverty alleviation and called for measures to secure development at the global level. When the World Trade Organization came into force in January 1995, it inherited many of the features of the GATT. Although trade multilateralism was now governed by an organization, which had an established secretariat and a legal personality, its GATT-derived roots were evident in its ‘member-driven’ character; the onus of negotiation lay with the members themselves, with all the power asymmetries that this entailed. Consensus was recognized as the accepted practice of decision-making in the agreement establishing the WTO (Article IX:1), in spite of the problems that it posed for developing countries. Green Room meetings persisted behind closed doors, and the great majority of the WTO’s membership remained on the margins. The new organization was less sympathetic to SDT; instead, it emphasized the importance of reciprocity (Tussie and Quiliconi, 2014). The Uruguay Round negotiations (that had led up to the creation of the WTO) – despite the best efforts of developing countries – had ended up reinforcing the narrative that domestic policies were at least as responsible for declining shares of trade in LDCs and Africa: “these different trends could not be attributed to the international environment alone”. It expected developing countries to welcome the fact that the Uruguay Round had dealt with internal policies and “not just border measures”, and also to take on greater commitments in the future (GATT, 1994). These expectations were especially galling to developing countries as they had resisted the inclusion of TRIPS, TRIMS and services into the Uruguay Round; these issues had been included in the mandate of the newly established organization nonetheless. This new organization not only demanded higher levels of legally enforceable commitments from them, regulated by “the strongest dispute settlement mechanism in the history of international law”. What was meant to be a “grand bargain” – a deal that was expected to produce win-win across member countries – had turned out to be a “bum deal” for a good part of the Global South (Ostry, 2004). And yet, in spite of the difficult conditions that developing countries faced in the WTO, around the turn of the millennium something important began to change.

THE POWER OF POVERTY Business had been trudging along as usual at the WTO. In December 1999, a new round of trade negotiations was supposed to be a launched at a ministerial conference in Seattle; most expected this to be a slam dunk. What actually transpired was quite different. Demonstrations and riots on the streets dominated press coverage. But within the organization too, an internal revolt was taking place. Developing countries objected to their exclusion from key decision-making processes. The African trade ministers, for instance, issued a statement:

396  Handbook on the politics of international development There is no transparency in the proceedings and African countries are being marginalised and generally excluded on issues of vital importance for our peoples and their future. We are particularly concerned over the stated intentions to produce a ministerial text at any cost, including at the cost of procedures designed to secure participation and consensus. We reject the approach that is being employed and we must point out that under the present circumstances, we will not be able to join the consensus required to meet the objectives of this Ministerial Conference. (Third World Network, 1999)

In an unprecedented move, developing countries were able to bring the negotiations to a grinding halt. Not only had they managed to stop the launch of a new negotiation round, but their actions finally prompted a much-needed reflection process on the workings of the WTO. In 1999, developing countries had exercised their newfound veto power at Seattle; at the Doha ministerial conference in 2001, they played a remarkable role in agenda-setting. This conference marked the launch of a new round of trade negotiations called the Doha Development Agenda (DDA), and thereby placed the cause of development at the heart of the WTO. For a multilateral regime that had skirted around the issue of development for over 50 years, this was a historic advance. Paragraph 2 of the ministerial declaration stated: The majority of WTO members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration … (WTO, 2001)

The declaration reflected many of the concerns of developing countries, including the importance of SDT and the principle of less than full reciprocity. In the years that followed, it became apparent that developing countries intended to hold the developed world to account; the new round had to deliver on the promises that had been made at Doha. At the Cancun ministerial conference in September 2003, the Malaysian Trade and Industry Secretary Rafidah Aziz was quoted as saying: “No more are we sitting outside in the corridors being given sweeteners. No more” (Mathiason, 2003). When fundamental disagreements arose on the inclusion of the Singapore issues (which many developing countries had resisted since 1996) and agriculture, the Global South took collective action and blocked consensus. In doing so, they defied the predictions of developed countries, which had miscalculated that the discontent expressed by the Global South was just ‘cheap talk’ (Narlikar and Tussie, 2004; Narlikar, 2010). The collapse of the Cancun ministerial demonstrated that Seattle had been no accident; developing countries were serious about getting redress. These wins were not restricted to the rising powers; the concerns of LDCs were also given priority. The Doha Declaration had already recognized the “particular vulnerability” and “special structural difficulties they face in the global economy”. The Hong Kong ministerial conference in 2005 took the important step of delinking the concessions made for LDCs from Single Undertaking; this meant that the interests of the LDCs could not be held hostage to the success of the negotiation package as a whole. Annex F stated that developed countries “shall” and developing countries “should” provide duty-free quota-free (DFQF) market access to all products from LDCs; countries that were facing difficulties in meeting this obligation would provide DFQF market access for at least 97 per cent of all products originating from LDCs. The Hong Kong ministerial conference also established the Aid for Trade initiative to assist developing countries, particularly LDCs, “to build supply-side capacity and trade-related infrastructure”.

The politics of development in the WTO  397 In terms of the functioning of the WTO too, significant changes got underway. In response to the repeated and resounding criticisms by developing countries that its decision-making processes lacked transparency and inclusiveness, the WTO updated its working practices. Transparency of consensus-building processes was improved. Capacity building and technical assistance programmes expanded. The old Quad, which had dominated decision-making in the ‘rich man’s club’ was now replaced by a variety of new permutations (the New Quad, the Five Interested Parties, G6, G7). Besides the EU and the US, India and Brazil served almost as constants at such high table consultations. Including Brazil and India was important not only for these rising powers themselves, but also other developing countries with which they cooperated closely in coalitions; having a Global South presence in small group meetings thus offered at least indirect access to a larger group of countries from the developing world. The world’s poor were no longer at the margins of the WTO, nor was the cause of development. How did this come about? In large measure, this turnaround was a result of a successful deployment of a narrative of powerlessness by the Global South. The narrative itself was not new per se. Recall the contestation of narratives, alluded to in the previous section. In contrast to the dominant narrative that had explained development deficits in terms of domestic causes (and thereby proposed ‘embedded liberalism’ as the solution), this narrative attributed gaps in development at least as much to external causes (including histories of colonial exploitation) as domestic ones. At the end of the 1990s/early 2000s, the latter narrative began to gain greater traction. The reason why it finally emerged as a winning narrative was the result of four strategies employed by developing countries. First, developing countries made effective use of their Best Alternative to Negotiated Agreement (BATNA). The strong BATNA itself was a result of changing structural conditions. The rising powers – e.g. the so-called BRICS (Brazil, Russia, India, China – and later, South Africa) – had gained more prominence as business interests came to recognize their importance as emerging markets (O’Neill, 2001). For smaller, lower-income developing countries too, this was a helpful development: the BRICS offered new sources of aid and investment, and made them less dependent on rich countries. Both the rising powers and smaller developing countries (including LDCs) harnessed this improved BATNA, and got more attention for a cause they had advocated for decades. Second, the narrative came to be framed in new ways. Frames differ from narratives, but bear an important relationship to them (Narlikar, 2020). Narratives are causal explanations that are adopted as a result of a variety of inputs, ranging from scientific knowledge and cultural tradition to personal experience (Shiller, 2017; Collier, 2016). Tversky and Kahneman (1981), in contrast, describe frames as “alternative perspectives on a visual scene”. The same narrative can be framed in different ways. In the days of the GATT, developing countries had posited a clear opposition to the dominant narrative through alternative epistemic frames and alternative institutional designs. This was epitomized in the attempt to create a New International Economic Order. Such fundamental challenges to the system did not result in much success, nor did they further the chances of success within the GATT. In contrast, framing the narrative in terms of changes within the system helped build greater support and assisted feasibility (e.g. the case of launch of a new development round, under the umbrella of the WTO). Additionally, framing a demand by pointing to the harm that specific policies were

398  Handbook on the politics of international development causing powerless individuals further assisted with success in the negotiation (e.g. in the case of TRIPS and public health, see Odell and Sell, 2006).5 Third, developing countries were able to significantly expand their influence in the WTO by forming strong bargaining coalitions. Again, such coalitions were not new in the WTO; developing countries had attempted to negotiate collectively in the GATT as well (Narlikar, 2003; Narlikar and Tussie, 2004; Narlikar and Odell, 2006; Narlikar and van Houten, 2010). In the past, however, coalitions of developing countries were difficult to sustain in the endgame. As players were bought off by outside parties through a variety of carrots and sticks, the coalitions would collapse, leaving any remaining members still adhering to the coalition’s agenda isolated and with a ‘sucker’s payoff’. Cancun, however, demonstrated the emergence of strong coalitions, such as the G20 and G33 on agriculture, the Cotton-4. Coalition agendas, in these cases, were constructed such that the collective gains would outweigh smaller side-deals that members were offered. These coalitions, moreover, formed ‘alliances of sympathy’ with others, including the LDC, ACP and Africa groupings (these latter three also coordinated action among themselves and came to be referred to as the G90 at the time). The head of Oxfam International was quoted as saying, “A group of countries representing over half the world is now talking about social justice within the WTO. It’s just unprecedented” (Mathiason, 2003). Fourth, developing countries began to replace their traditional suspicion of non-state actors, and instead harnessed synergies with diverse members of civil society in the Global North and Global South. NGOs were also increasing their activism in parallel forums, and were joined in their efforts by celebrity ambassadors (Cooper, 2009). Under the auspices of the Catholic Church, the Jubilee 2000 movement demanded that Third World debt be written off. Celebrities like Bono and Bob Geldof joined in the effort to raise public awareness. In 2001, the first World Social Forum was held at Porto Alegre, and continued with meetings in other developing countries. From the UN establishing the Millennium Development Goals to thousands of people marching together with the call of ‘Make Poverty History’, a new awareness was emerging towards long-standing concerns. Developing countries were able to ally with these supportive forces, and build further momentum to their cause, for instance by forming a coalition with concerned NGOs on TRIPS and public health (Odell and Sell, 2006). Digital communication and social media platforms gave further opportunities for developing countries to harness the power of multi-stakeholder networks. The narrative had not changed. It was still a narrative that highlighted external factors as a main cause for poverty and lack of development in the Global South, and demanded more opportunities and voice for the global poor. But the strategies that developing countries used to advance this narrative did change. They harnessed new BATNAs to their advantage; they framed the narrative in new ways; they built stronger coalitions; and they tapped into expanded networks to mobilize support. Take a few snapshots in time – developing countries arguing against the launch of a Millennium Round at Seattle in 1999 and scuppering the meeting, the launch of a development-focused trade round at Doha in 2001, the coalitions at Cancun resisting pressure from the Global North in 2003 – and one might well believe that the war against marginalization and poverty had been won by the Global South in the WTO. Look just a little bit further though, and the picture looks less sanguine. 5 In Narlikar (2020), however, I also highlight the conditions under which some narratives have been successfully framed against dominant norms.

The politics of development in the WTO  399

MISAPPROPRIATION OF DEVELOPMENT NARRATIVES Writing in 2021, and the WTO itself is in crisis. All three of its core functions – negotiation, dispute settlement, and transparency – are in different degrees of paralysis. There are several reasons why the organization finds itself in this decrepit state, which have deeper roots than ‘just’ the open disregard that President Trump showed towards the organization. A major challenge stems from great power rivalry between the US and China, heightened by the phenomenon of ‘weaponized interdependence’ (Farrell and Newman, 2019; Narlikar, 2021). But even before geoeconomics concerns came to the fore, the newfound commitment of the WTO to the cause of development was on the wane. The most obvious reflection of this can be found in the sorry state of the DDA. This development-oriented agenda had been scheduled for completion in 2005. Recurrent delays and deadlocks however afflicted the negotiations since 2003, and the DDA now lies in its unmarked grave. Why did this well-intended and ambitious trade round run into so much trouble? The answer lies in the overuse and misuse of the same narrative that had helped shine a spotlight on the concerns of developing countries in the first place. This is because it is not only the poorest and the weakest who have learnt to use poverty narratives effectively; so have the rich and the strong, while there is also a temptation on the part of developing countries to overuse their successful narrative. The end result is narrative capture; through both misuse and overuse, this powerful weapon gets blunted, often to the greatest detriment of those who need it most. Two examples follow below: the first of misuse by developed countries, and the second of overuse by the Global South. First, take the case of the United States, which by most indicators is a rich and powerful country. But the last years have seen the US appropriate a poverty narrative for its own ends. President Trump and his team tapped into, and perhaps even fanned, narratives of poverty and marginalization within the US, and then set the international trade and development agenda accordingly. Note that the Trump administration was not the first to show protectionist proclivities to address domestic problems, nor will it be the last.6 But under the previous presidency, the US did go a long way in reclaiming the poverty narrative from being one about the Global South to a story of marginalization and victimhood within the Global North, via three claims that were evident even in Trump’s inaugural address: ● America’s “forgotten men and women” were being systematically shortchanged; ● a major cause for this condition is external: America was being taken an unfair advantage of by its trading partners, and the multilateral trading system had allowed this to happen; ● the time has come to finally put “America First”; for Trump, this translates into a policy of unilateral protectionist measures and holding the system hostage until American terms are met. Trump had thus stated:

6 For example, Barack Obama, as senator in 2007, was one of the co-sponsors of the Patriot Employer Act, which received strong criticism from some economists (Buiter and Sibert, 2008, described it as “reactionary, populist, xenophobic and just plain silly”). The Obama administration had also imposed a fivefold increase on steel import duties from China in 2016 based on claims of job losses in the steel industry due to unfair competition (https://​www​.bbc​.com/​news/​business​-36319141).

400  Handbook on the politics of international development We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength … We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams. We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation. We will get our people off of welfare and back to work – rebuilding our country with American hands and American labor. We will follow two simple rules: Buy American and Hire American. (Trump, 2017).

This was not just bombastic rhetoric by the US President; it translated into different aspects of US trade policy. When addressing the issue of economic statecraft by competitors, the USTR justified its actions by appealing to the victimization of the American people: “The goal is to address unfair Chinese economic practices and create a level playing field that will give all Americans a better chance to succeed” (USTR, 2018). At its 14th Trade Policy Review in 2018, the US government’s report reinforced the message that American people had been ill-served by the WTO – e.g. “For too long, the rules of global trade have been tilted against U.S. workers and businesses. The United States has demonstrated that it will alter—or terminate—old trade deals that are not in the U.S. national interest” (WTO, 2018). Follow-up actions by the US included unilaterally imposed tariffs, and the blocking of appointment/ reappointment of members of the Appellate Body. Such an explicit narrative of victimhood from a country with the world’s highest GDP was a remarkable misuse of a powerlessness narrative of the Global South. The damage that it caused was threefold: it undermined the narrative itself, further dented the credibility of an already troubled organization, and the strategies that came from it did not have the intended effect of putting America First. Developing countries, however, did not help their own case either. If the US had distorted and misused a narrative that should have been a prerogative of the poorest countries, developing countries also ended up with too much of a good thing through an overuse of the same development narrative. As mentioned in the previous section, developing countries had finally acquired seats at the high table of WTO negotiations. But the practice of reaching consensus, which had worked in the ‘rich man’s club’ amidst a small group of like-minded actors, was far less effective with a large number of diverse countries exercising their voice. Having the rising powers in the New Quad helped with increasing inclusiveness and transparency, but their leadership of coalitions of the Global South proved to be a double-edged sword. On the one hand, this meant outreach to countries not present in the Green Room, and also greater legitimacy for decisions arrived at through (informal) consultations with multiple weaker members of the WTO. But on the other hand, these strong coalitions made it difficult for the rising powers to make concessions. A willingness by a coalition member to compromise over any issue risked being seen as a potential fragmentation of the coalition. And while this problem affects any bargaining coalition, it was an even bigger problem when the coalition comprised members of the Global South (with low resistance points, and greater vulnerability to side-deals). The alternative that the Doha coalitions pursued – to stand firm – ended up exacerbating the risk of deadlock. That deadlocks have dotted the history of the Doha negotiations is at least partly to be explained by the activism of strong coalitions involving developing countries (Narlikar, 2012). The refusal to make concessions derived also from the fact the winning narrative came to frame development as a first-order issue. First-order issues tend to be difficult to negotiate over (Gamble, 2010). For instance, India had, consistently through the Doha negotiations, refused to open its agricultural

The politics of development in the WTO  401 markets on the grounds of protecting not just livelihoods but actual lives of millions of poor farmers. A pragmatic climbdown from this moral high horse became very difficult for India. Even as developing countries showed greater willingness to exercise their voice – and to say no – the developed world became increasingly disengaged from the negotiations, and indeed the organization. While Trump’s invective against the WTO was especially vitriolic, dissatisfaction with the workings of the organization had been growing for years. USTR Susan Schwab, for instance, had offered the following critique a few years ago: From almost the start of the negotiations, the rapidly evolving nature of the global economy had rendered Doha’s dichotomy between developed and developing countries outdated and its negotiating structure obsolete. And even as it became obvious over the decade that emerging economies had become a dominant force in global economic growth and trade, those nations’ perceptions of their consequent needs and responsibilities had failed to keep pace … Multilateral trade talks have traditionally called for the United States and fellow developed countries to take the lead in offering concessions to jump-start flagging negotiations – the idea being that a significant unilateral initiative by a large economy will encourage others to reciprocate, thus paying dividends to all. Yet during the Doha Round, such efforts by the United States – even those explicitly conditioned on a meaningful response – have not been met in kind. And as time has passed, US and EU compromises have effectively been pocketed, forming the base line for the next set of demands. (Schwab, 2011)

Increasing empowerment of the Global South in the WTO, and the increasing prioritization of their development-related concerns, thus did not prove to be long-lasting. North–South polarization has increased. Even amidst the global pandemic of COVID-19, populations worldwide find themselves short on life-saving vaccines, while developing countries (like India, which have the infrastructure capacity to increase vaccine production) find themselves shackled by TRIPS and thus unable to offer necessary supplies to their own populations or to other countries. India and South Africa have tabled a proposal at the WTO for a temporary waiver on four aspects of TRIPS that would boost manufacturing of vaccines and other pharmaceutical materials (Usher, 2020). India has reminded the WTO that the organization “has responsibility to ensure that any of its agreement including TRIPS do not become a barrier to accessing vaccines, treatments, or technologies in the global response to COVID-19” (India, 2020). The proposal is supported by NGOs like Médecins Sans Frontières, and also many developing countries. But at the time of writing, the proposal had continued to meet with resistance from pharmaceutical companies and also several developed countries. The DDA may have made a tantalizing promise of development to developing countries. But now, the WTO seems unable to help even on an existential matter of life-saving vaccines for the world’s poorest countries (and this, despite the fact that capacity to do this is available).

CONCLUSIONS The WTO seems to have come a full circle on the issue of development. What should our main takeaways be? I highlight four below. First, the story of bringing development into the heart of the WTO was – and remains – a story of optimism and empowerment. By developing a winning narrative, developing countries were able to bring about some important changes in the processes and mandate of the organization. They did so against structural odds, and in the face of the long history of

402  Handbook on the politics of international development a regime that had – for decades – steered clear of development-related matters. This chapter has highlighted the strategies that developing countries used to achieve this. Second, countries learn from each other. In the case of the poverty narrative, developed countries learnt from the Global South. They appropriated, distorted, and misused the same narrative that developing countries had used, and regained their bargaining edge. With increasing misuse, the effectiveness of the narrative began to decline, with costs to all parties. Third, this misappropriation and misuse of southern narratives by the Global North, however, could have been countered. Had developing countries been updating their own narrative, and stayed ahead of the curve in the narrative’s life-cycle, development concerns need not have been sidelined. Instead, their own overuse of the winning narrative – framed almost as a non-negotiable norm – accelerated the decline in its effectiveness. Finally, for all the ups and downs that developing countries have endured in the multilateral trade regime, there is one important lesson for them, for those who seek to negotiate with them, and for anyone interested in rebuilding trade multilateralism: even for a technocratic regime like the WTO, stories matter. Narratives are a pliable tool with which even weak players can gain an advantage over the strong in international trade negotiations. If the Global South wants to bring back development as a priority in a reformed WTO, building a winning and sustainable narrative would be a good place to start.

REFERENCES Breda dos Santos, Norma. 2016. Latin American countries and the establishment of the multilateral trading system: the Havana Conference (1947–48). Brazilian Journal of Political Economy, April/ June. Buiter, Willem and Anne Sibert. 2008. The dangerous protectionism of Barack Obama. https://​voxeu​ .org/​article/​dangerous​-protectionism​-barack​-obama 26 February. Clayton, William. 1949. Foreword to Clair Wilcox, A Charter for World Trade. New York: Macmillan. Collier, Paul. 2016. The cultural foundations of economic failure: A conceptual toolkit. Journal of Economic Behavior and Organization, 126(B), 5–24. Cooper, Andrew. 2009. Celebrity Diplomacy. London: Routledge. Daunton, Martin. 2010. From Bretton Woods to Havana: Multilateral deadlocks in historical perspective. In Amrita Narlikar (ed.), Deadlocks in Multilateral Negotiations: Causes and Solutions. Cambridge: Cambridge University Press. Daunton, Martin. 2012. The inconsistent quartet: Free trade versus competing goals. In Amrita Narlikar, Martin Daunton, and Robert M. Stern (eds.), The Oxford Handbook on the World Trade Organization. Oxford: Oxford University Press. Diebold, William Jr. 1952. The End of the ITO. Essays in International Finance 16. Princeton University. Farrell, Henry and Abraham Newman. 2019. Weaponized interdependence: How global economic networks shape state coercion. International Security, 44(1), 42–79. Gamble, Andrew. 2010. The politics of deadlocks. In Amrita Narlikar (ed.), Deadlocks in Multilateral Negotiations: Causes and Solutions. Cambridge: Cambridge University Press. Gardner, Richard. 1956. Sterling-Dollar Diplomacy: Anglo-American Collaboration in the Reconstruction of Multilateral Trade. Oxford: Clarendon Press. GATT. 1947. The General Agreement on Tariffs and Trade: Final Act, 30 October. https://​www​.loc​.gov/​ law/​help/​us​-treaties/​bevans/​m​-ust000004​-0639​.pdf. GATT. 1950. The Havana Charter for an International Trade Organization. SEC/41/53. https://​docs​ .wto​.org/​gattdocs/​q/​GG/​SEC/​53​-41​.PDF. GATT. 1963. Statement made by the Honourable Mr C.G. Kahaha Minister for Commerce and Industry, Tanganyika. Meeting of Ministers, 17 May. GATT Press Release. GATT/772. https://​docs​.wto​.org/​ gattdocs/​q/​GG/​GATT/​772​.PDF.

The politics of development in the WTO  403 GATT. 1965. Second Special Session: Summary record of the fifth meeting, held at the Palais des Nations, 8 February. 2SS/SR.5. https://​www​.wto​.org/​gatt​_docs/​English/​SULPDF/​90280219​.pdf. GATT. 1967. Statement of H.E. Major-General H.W.G. Wijeyekoon. Ambassador of Ceylon. At the Review of the Work of the Contracting Parties and Future Programme, W.24/60, 30 November GATT. 1979. Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries. LT/TR/D/1, 28 November. https://​www​.wto​.org/​english/​docs​ _e/​legal​_e/​tokyo​_enabling​_e​.pdf. GATT. 1994. Part IV: Trade and Development. GATT Analytic Index. https://​www​.wto​.org/​english/​res​ _e/​booksp​_e/​gatt​_ai​_e/​part4​_e​.pdf. Haberler, Gottfried, Roberto da Oliveira Campos, James Meade, and Jan Tinbergen. 1958. Trends in International Trade: Report by a Panel of Experts. Geneva: GATT. October. https://​www​.wto​.org/​ english/​res​_e/​booksp​_e/​gatt​_trends​_in​_international​_trade​.pdf. India, Statement (2020). India’s Statement delivered by Ambassador & PR to the WTO at the General Council Meeting held on 18 December, 2020 on Agenda Item No. 13B – Status Report on the Consideration by the TRIPS Council of the ‘Proposal for Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19 – Statement by the Chair of the Council for TRIPS.’ General Council Meeting. 16–18 December. Krasner, Stephen, D. 1985. Structural Conflict: The Third World Against Global Liberalism. Berkley: University of California Press. Mathiason, Nick. 2003. Poor rattle doors of WTO Club. The Guardian, 14 September. https://​www​ .theguardian​.com/​business/​2003/​sep/​14/​wto​.politics. Narlikar, Amrita. 2003. International Trade and Developing Countries: Bargaining Coalitions in the GATT & WTO. London: Routledge. Narlikar, Amrita, ed. 2010. Deadlocks in Multilateral Negotiations: Causes and Solutions. Cambridge: Cambridge University Press. Narlikar, Amrita. 2012. Coalition diplomacy. In Amrita Narlikar, Martin Daunton, and Robert Stern (eds.), The Oxford Handbook on the World Trade Organization. Oxford: Oxford University Press. Narlikar, Amrita. 2020. Poverty Narratives and Power Paradoxes in International Trade Negotiations and Beyond. New York: Cambridge University Press. Narlikar, Amrita. 2021. Must the weak suffer what they must? The Global South in a world of weaponized interdependence. In Daniel Drezner, Henry Farrell, and Abraham Newman (eds.), The Uses and Abuses of Weaponized Interdependence. Washington, DC: Brookings Institution. Narlikar, Amrita and John Odell. 2006. The strict distributive strategy for a bargaining coalition: The like minded group in the World Trade Organization. In John Odell (ed.), Negotiating Trade: Developing Countries in the WTO and NAFTA. Cambridge: Cambridge University Press. Narlikar, Amrita and Diana Tussie. 2004. The G20 at the Cancun Ministerial: Developing countries and their evolving coalitions in the WTO. World Economy, 27(7), 947–966. Narlikar, Amrita and Peter van Houten. 2010. Know the enemy: Uncertainty and deadlock in the WTO. In Amrita Narlikar (ed.), Deadlocks in Multilateral Negotiations: Causes and Solutions. Cambridge: Cambridge University Press. Odell, John and Susan Sell. 2006. Reframing the issue: The WTO Coalition on Intellectual Property and Public Health, 2001. In John Odell (ed.), Negotiating Trade: Developing Countries in the WTO and NAFTA. Cambridge: Cambridge University Press. O’Neill, Jim. 2001. Building Better Global Economic BRICs. Goldman Sachs: Global Economics, Paper No. 66. https://​www​.goldmansachs​.com/​insights/​archive/​archive​-pdfs/​build​-better​-brics​.pdf, 30 November. Ostry, Sylvia. 2004. The future of the world trading system: Beyond Doha. In John Kirton and Michael Trebilock (eds.), Hard Choices, Soft Law: Voluntary Standards in Global Trade. Farnham: Ashgate (republished 2016, London: Routledge). Ricupero, Rubens. 1998. Integration of developing countries into the multilateral trading system. In Jagdish Bhagwati and Mathias Hirsch (eds.), The Uruguay Round and Beyond: Essays in Honour of Arthur Dunkel. Ann Arbor: University of Michigan Press. Ruggie, John. 1982. International regimes, transactions and change: Embedded liberalism in the postwar economic order. International Organization, 36(2), 379–415.

404  Handbook on the politics of international development Schwab, Susan. 2011. After Doha: Why the negotiations are doomed and what we should do about it. Foreign Affairs, 90(3), May–June. Shiller, Robert. 2017. Narrative economics. American Economic Review, 107(4), 967–1004. Third World Network (1999). Africa, Caribbean, Latin America protest no democracy at WTO. African Trade Ministers’ statement, Caribbean Community (CARICOM) communique, Latin American and Caribbean countries’ joint communique, 2 December. http://​twn​.my/​title/​deb5​-cn​.htm. Tobin, Jennifer and Marc Busch. 2019. The disadvantage of membership: How joining the GATT/WTO undermines GSP. World Trade Review, 18(1), 133–160. Toye, Richard. 2003. Developing multilateralism: The Havana charter and the fight for the International Trade Organization, 1947–1948. International Historical Review, 25(2), 282–305. Toye, Richard. 2012. The International Trade Organisation. In Amrita Narlikar, Martin Daunton, and Robert M. Stern (eds.), The Oxford Handbook on the World Trade Organization. Oxford: Oxford University Press. Trump, Donald J. 2017. Presidential Inaugural Address. https://​www​.whitehouse​.gov/​briefings​ -statements/​the​-inaugural​-address/​, 20 January. Tussie, Diana and Cintia Quiliconi. 2014. The World Trade Organization and development. In Bruce Currie-Alder, Ravi Kanbur David Malone, and Rohinton Medhora (eds.), International Development: Ideas, Experiences, Prospects. Oxford: Oxford University Press. Tversky, Amos and Daniel Kahneman. 1981. The framing of decisions and the psychology of choice. Science, 211, 30 January. Usher, A. (2020). South Africa and India push for Covid-19 patents ban. The Lancet, 396(10265), 1790–1791. https://​www​.thelancet​.com/​journals/​lancet/​article/​PIIS0140​-6736(20)32581​-2/​fulltext​ #coronavirus​-linkback​-header. USTR. 2018. Section 301 Fact Sheet. https://​ustr​.gov/​about​-us/​policy​-offices/​press​-office/​fact​-sheets/​ 2018/​march/​section​-301​-fact​-sheet. Whalley, John. 1990. Non-discriminatory discrimination: Special and differential treatment under the GATT for developing countries. The Economic Journal, 100(403), 1318–1328. WTO. 2001. Doha Ministerial Declaration. Adopted on 14 November. WT/MIN(01)/DEC/1, 20 November. WTO. 2018. Trade Policy Review. https://​www​.wto​.org/​english/​tratop​_e/​tpr​_e/​g382​_e​.pdf.

26. The United Nations and the politics of development Andrés Rivarola Puntigliano

INTRODUCTION The focus of this chapter is to offer insight into how development discourses are formulated, identifying power drivers as well as agents promoting ideas. A particular issue is to analyse the emergence of divergent paths between mainstream and heterodox positions in the elaboration of development oriented policies. The area of analysis here is the intertwining of the politics of international development and geopolitics, defined as the territorial (geographic) power dimension of policy making and thinking. The chapter will flesh out how UN agencies address development agendas, sometimes showing contradictory and conflictive features due to the ‘dual nature’ of these organizations. That is, on the one hand, we find the geopolitical driving forces of strong actors representing interests of great powers and developed countries in general. On the other, the interest and ideas coming from smaller states, idealist bureaucrats and experts, that in this study are called ‘defiant bureaucrats’. A key theme is the room to manoeuvre that exists in international organizations (IOs) to formulate agendas of peripheral states and influential individuals. In the case of the UN, it can be seen through the advancing of global ideals regarding equality and social rights. As addressed below, ‘peripheral’ states and representatives were inspired and took advantage of the venues opened by an unprecedented universalist liberal ethos and strong anti-colonial positions. The study is limited to some of the most emblematic international organizations. Along this line, the study analyses the role of a broad range of development-oriented agencies. That is the case of the United Nations (UN) regional economic commissions, among which the most relevant were that of Latin America the UN Economic Commission for Latin America and the Caribbean (ECLAC) and its forebear the UN Economic Commission for Europe (ECE). At a global level we draw a counterpoint with the United Nations Conference on Trade and Development (UNCTAD). The chapter is structured as follow. It starts with an overview of key concepts and main conceptual debates, trying to outline what is meant with ‘development’ and different vantage points around this. Secondly, it turns to the different international institutions involved around this, analysed from a chronological and geographical perspective. Third, it also studies policy agendas promoting development oriented issues, analysing contradictions and synergies among these. Finally, the study sorts out the different agendas and addresses differences between ‘traditional’ and new theoretical debates and topics.

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THE UPTAKE OF ‘DEVELOPMENT’ IN THE UNITED NATIONS The modern understanding of the concept of ‘development’ is highly linked to the emergence of new types of international organizations during the twentieth century. Concepts such as ‘progress’ or ‘growth’, or ‘development’ became established and leading ideas during the second half of the twentieth century In this sense there was a new acknowledgement of a difference between those that were ‘developed’ and those that were ‘under-developed’. Implicit here was an idea of progression, towards a kind of ideal of something ‘developed’. The adoption of the concept was a substitute to the more cultural oriented concept of ‘civilized’ and ‘civilization’, that after the Second World War became increasingly associated with outdated nineteenth-century imperialism. This went hand in hand with the emergence of new forms of rationalized expertise where social scientists gained a central position in national and, particularly, international organizations. Along this line, ‘development’ came to be seen as a mark of modernity. It was rational, linked to ‘planning’, ‘social engineering’ and ‘industrialization’. But development oriented ideas also pointed out difference and inequality, that depending on vantage point, were regarded as signs of structural injustice (see Chapter 1 by Ocampo in this volume). By the late nineteenth century the dominant role of Western European countries and their deployment of national-imperialist policies had become (in many cases) a painful reality for many countries in the periphery. China was one of these, after the defeat against Great Britain in the Opium Wars (1839–1860). It is then not surprising that some find early development thinking in pundits such as the Chinese economist and political leader, Sun Yat-Sen. He is considered a pioneer of modern development economics1 due to his studies of the role of industrialization, infant-industry, agriculture, and the importance of nationalism for national growth.2 However, these ideas were not originally from China. By the early nineteenth century they appeared in peripheral regions such as the German states, where Friedrich List advocated for a customs union to protect infant industries from the competition of the more developed British industry. During the second part of the nineteenth century, the British industrial revolution increased the peripheralization of the rest of the world towards a new global economic industrial nation state. By the early twentieth century, new countries began to catch up with Great Britain and even go beyond. An outcome of this were the rising global structural asymmetries between industrialized and non-industrialized countries, which became visible through new global statistical studies made at new international organizations. The most relevant was the League of Nations (LN), created in 1920. As explained by John Toye and Richard Toye, the UN organization created in 1945, largely carried on with work on economic analysis along the line of the LN’s tradition and using its methods. Along this line, the scope and importance of economic and social tasks grew during the lifetime of the LN, setting a remarkable precedent and practical experience of promoting economic and social research and cooperation that was used by the later UN (Toye and Toye, 2004, p. 87). It was around this period of time, and within the umbrella of these organizations, that the concept of ‘development’ found a platform for consolidation and global diffusion.



1 2

See Arndt (1989, p. 17). See also Perälä (2001, p. 98).

The United Nations and the politics of development  407 However, the ‘development’ concept has a complex origin, drawing insights from different venues. An institutionalization of the concepts was its appearance in the name of one of the key agencies of the post-war period, the International Bank for Reconstruction and Development (IBRD) in 1944, (see Chapter 23 by Mendes Pereira in this volume). In addition to the production in international organizations (more of this below), there was a geopolitical struggle. That is the case, for example, of the ‘Marshall Plan’, to support the reconstruction of the allied countries in Western Europe. The innovative plan to assist development must be understood in the geopolitical context of the Cold War. An example of the emergence of the concept can be found in the inaugural speech of the US President, Harry S. Truman (1945–1953), of 20 January 1949. He proclaimed a new programme that would make the US’s scientific and industrial progress available for the improvement and growth of underdeveloped areas. As Arndt holds, what became known as ‘Point Four’ in Truman’s speech, marked a peak of optimism about what development assistance could do; it launched a new US programme for technical assistance and induced the UN as well as specialized agencies to coordinate and widen operations (Arndt, 1989, pp. 63–64). In this framework of ‘thinking and action’, development was linked to aid and assistance, as well as the modernizing outlook linked to ‘technical assistance’. At the same time, the ‘development’ concept was also increasingly highlighted from the perspective of existing asymmetries, with different diagnoses on how these were produced as well as how they would be overcome. Behind this, there were a group of development economists and experts, supported by peripheral states with a critical view on the global system. These people were idealists that saw in the UN the possibility of constructing a more just world, after the disaster of two world wars. Many of them came from peripheral countries, in some cases with direct experience of the consequences of authoritarianism. With roots in the LN, the UN offered a global platform for remedying such injustices. The UN became a kind of institutional home to diverging views, from the assistance-oriented focus promoted by the US (such as the Marshall Plan), to alternative positions looking at ‘development’ from the lenses of structural perspectives. The experts and pundits from the latter group are known as the ‘defiant bureaucrats’ (Toye and Toye, 2004, p. 8). There was though a common element among these divergent views about ‘development’. They were framed around a new ‘world culture’ that gained particular strength during the second half of the twentieth century. It provided new social identities along which individuals and states organized to pursue their interests (Boli and Thomas, 1999, p. 17). According to Boli and Thomas, the ‘world culture’ concept refers to definitions, principles, and purposes as cognitively constructed in similar ways throughout the world. ‘Development’ could be seen as part of this construction. It was part of the world-cultural institutions that influenced organizations by diffusing universalistic and rational models of economic organization, justice or human rights (Meyer et al., 1997, p. 148). Among the variety of agents spreading these models are states, international organisations, international non-governmental organisations (INGOs) or transnational companies (TNCs). With the creation of the UN and the Bretton Woods institutions, a new kind of IO was established. Myriad organizations emerged to advance new forms of global standardization models, educational forms, collective identities, labels, procedures, organizational forms or values (Baylis et al., 2011). As will be further outlined in the next section, even if this is a common framework for ‘development’ thinking and action, there was a dual nature in many of these organizations which was related to distinct national or regional institutional environments, and geopolitical interests.

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THE INSTITUTIONAL PRODUCTION OF ‘DEVELOPMENT’ The LN was an early platform in producing inputs towards what was to become the ‘development’ concept. A particularly important agency was the LN’s Economic Intelligence Service (EIS) that was in charge of the publication of the ‘World Economic Report’. The UN continued and expanded this pioneering work, both in relation to the kind of data produced as well as in its global outlook. The work made possible to visualize differences among countries and regions in a new way. It also meant the visualization of new countries incorporated in the UN system due to the fast decolonization process since the late 1940s. At the UN, one of the most relevant units in the production of ideas around what we today know as ‘development thinking’ was the Department of Economic Affairs (DEA), a successor of the EIS. Influenced by the League’s experience, the DEA officers believed that it was imperative for nations to coordinate their economic policies (Toye and Toye, 2004, p. 66) and to carry out regional economic surveys. Besides the DEA, one of the most influential entities in this sense was the UN Economic and Social Council (ECOSOC), which was the entity formally in charge of regional economic commissions. An important difference with the LN was the UN’s commitment to post-Second World War issues, which were deeply marked by the haunting experience of two world wars. This could be seen, for example, in the UN Charter and the Declaration on Human Rights, advancing global ideals of equality, progress and social rights within and among nations. The whole UN system was, in fact, marked by an unprecedented universalist liberal ethos. This contained strong anti-colonial positions institutionalized in 1961 with the creation of the Special Committee on the Situation with Regard to the Implementation of the Declaration on the Granting of Independence to Colonial Countries and Peoples, also known as the Special Committee on Decolonization. There was though a limitation in the universalist dimension, since the UN institutions cannot be detached from the influence of its members and owners, the states. Like many international bureaucracies, the UN had a ‘double nature’ (Toye and Toye, 2004, p. 13). It expressed the ideals and goals of its main sponsors (big powers) at the same time that it also showed the interests of idealists, experts and underdeveloped countries. There was a tension resulting from the fact that the main sponsors often had diverging goals with in-house bureaucracy and experts, the ‘defiant bureaucrats’ (Toye and Toye, 2004, p. 8). Underlying this tension was an expression of the universalist ideals and the day-to-day dealings of an organization embedded in geopolitical realities. A good example of this ‘double nature’ were the UNs regional economic commissions. Due to their embedded local ownership these became platforms from which ‘defiant bureaucrats’ could challenge dominating influence and paradigms upheld by hegemonic Cold War powers such as the United States and the Soviet Union. As a result of the geopolitical competition there was the emergence of different vantage points on ‘development’. A new international order was constructed after the Second World War through the Bretton Woods institutions. The World Bank and the International Monetary Fund (IMF) aimed to stabilize international relations promoting free trade in goods and encouraging a system of fixed exchange rates anchored by the US dollar’s convertibility into gold (see Chapter 23 by Mendes Pereira and Chapter 24 by Forster et al. in this volume). The flows of capital and dollars were to a large extent controlled by the US that transformed its currency into a global reserve currency, a system that “existed under the umbrella protection of US military power” (Harvey, 2005, p. 10). This umbrella also covered the actions of the World Bank, whose activity was

The United Nations and the politics of development  409 directed towards development projects that were unable to attract private funds directly. The priority was set on technical assistance and aid to developing countries as a way of lessening poverty in the world. In general terms, the core idea was to contribute to structural transformation that would transform sustained growth into economic development. The demand on receiving governments was the uptake of ‘sound’ overall economic policies, favouring market orientation and laissez-faire (Pollard, 1997, p. 81) (for a contrasting view see Chapter 7 by Xi Lin in this volume). From the side of the Soviet Union, as explained by Alvin Z. Rubinstein (1989, p. 321), it “did not contribute ‘one Red rouble’ to UN programs designed to promote the development of the new nations”. Soviet delegates opposed direct investment arguing that it would lead to political interference and refused to assist in the creation of a fund to disburse loans. Their line of action was of “nonparticipation in any of the UN economic and technical assistance programs” (Rubinstein, 1989, p. 321). There was though room for manoeuvre in the UN system for other interests and positions. That was the case of the establishment of the UN’s Economic Commission for Europe (ECE). Created in 1947 and led by the Swedish economist Gunnar Myrdal, in the middle of one of the, at that moment, most crucial Cold War hotspots, namely Europe. The establishment of the ECE occurred at a time when East–West tensions were fast growing and ultimately led to the Berlin blockade in 1948. Myrdal had to confront two conflicting models regarding the role of an international bureaucracy, that is, the relation to its officers as representatives of the member countries and as independent civil servants loyal to the UN Charter. Myrdal tried to make ECE the coordinating body of the large post-war recovery aid until it was sidestepped by the geopolitical interests of the US, UK and France. Led by the US they created the Conference of European Economic Cooperation (CEEC) in order to bypass the UN (Rivarola Puntigliano and Appelqvist, 2011). In spite of this, the network of trade representatives established by the ECE managed to play an important role in promoting intra-European trade and provided quarterly surveys reviewing the economic problems of Europe. One of the most important things concerning the ‘development’ issue was perhaps to give continuity of the LN’s surveys, by publishing the first Economic Survey in early 1948. This report constituted a scholarly critique of the bases of American economic policy in Europe (Rivarola Puntigliano and Appelqvist, 2011). Yet, one of the main differences between CEEC and ECE was probably geopolitical. While the former embraced US allies, the ECE sought a pan-European integration. This goal went also against the aim of the Soviet Union that was constructing its own (European) regional organization, the Council for Mutual Economic Assistance (COMECON). But the scope of the UN was global, and much of the goals and ideas of the ECE spread to other regions. The second commission was the UN’s Economic Commission for Latin America and the Caribbean (CEPAL).3 After a brief period of CEPAL’s first Executive Secretary, Gustavo Martínez Cabañas, it was led by the influential Argentinian economist, Raúl Prebisch. Under Prebisch’s leadership, the Commission’s key policy proposal was that there was a need for government intervention to promote industrialization, advancing import substitution policies (so-called ‘import substitution industry’, ISI). The call for industrialization was not new 3 The English acronym is ECLAC (Economic Commission for Latin America and the Caribbean), but we prefer to use the better known Spanish acronym, CEPAL (Comisión Económica para América Latina).

410  Handbook on the politics of international development for Latin Americans that had found inspiration not only in the ideas of the German political economist Friedrich List, the Romanian Mihail Manoilescu, or the Argentinian Alejandro Bunge, but also in the policies and experience of Latin American governments during the war. The experience enabled new visions of progress, or what by the mid-twentieth century became known as ‘development’. A reason for the enthusiasm among Latin American governments for the contributions from Prebisch and CEPAL was that they presented a diagnosis of their problems by pointing out the negative impact of deterioration in the terms of trade. Prebisch’s analysis around this issue had grown out of his own observations, of other Latin American scholars (Toye and Toye, 2004, p. 116) and research at the UN system – for example, the work of the economist Hans Singer.4 Along this line, CEPAL also offered a rational explanation regarding Latin America’s position in the global system, through the centre/periphery dichotomy. It provided a systemic perspective in the form of conceptualizing the interaction between core and periphery, and highlighted the systemic constraints on the periphery to develop. The issue confronted outright the thesis of comparative advantage sustained by classical economists. According to CEPAL, there was a need to analyse the issue in terms of structures of the international economic system. Thus, the development of the periphery could not be dissociated with that of the core, nor vice versa. Unprecedently an economist from the periphery was offering a systemic view from which development strategies stemmed for his own (peripheral) region. According to CEPAL the way out of the situation of periphery and underdevelopment should be directed through embracing active government intervention, advocating that industrialization had to be planned (‘programmed’ in CEPAL’s language). To speak of programming was new and challenging in connection with the idea of ISI and the need of regional integration for such a policy to be efficient. Through CEPAL, the UN became a channel through which Latin Americans could express themselves and influence policies as well as access international currents of thinking. The need for regional integration became one of the commission’s key themes in the years that followed. Regionalism was now embedded in a rational analysis which revealed that Latin American industrialization required the development of reciprocal trade in manufactured goods, in addition to trade in raw materials (see Chapter 5 by Nesadurai in this volume). In 1962 the visions from the regional commissions and other development-oriented entities consolidated a new global platform in the UN Conference on Trade and Development (UNCTAD). At a global level, over the regional commissions, there was an institutional and intellectual connection to entities such as ECOSOC and even the stillborn International Trade Organization (ITO). The UNCTAD, with Prebisch as its first General Secretary was conceived in the aftermath of the Cuban missile crisis. The showdown led to serious concern over the influence of the Soviet Union and a softened stance on development in the so-called Third World could emerge due to a more open policy line in the US (during the presidency of John F. Kennedy, 1961–1963). The first UN Conference on Trade and Development was held in 1964. According Toye and Toye (2004, p. 212), the establishment of the UNCTAD was nothing less than the attempt to institutionalize ‘defiant bureaucracy’ at the UN. Many of the supporters of this initiative understood that it could become a global arena where weaker countries/regions could come out from the margins, with an alternative vantage point on ‘development’. 4 Singer was a researcher at the UN’s Department of Economic Affairs and had published his influential work on the deterioration of terms of trade in 1950.

The United Nations and the politics of development  411 The original UNCTAD programme was that of CEPAL now amplified and extended to the global level. According to pundits (Pollock et al., 2001, p. 19), Prebisch’s reports to the two UNCTAD conferences of 1964 and 1968 contained the development-oriented theses outlined in CEPAL. Namely, that the world was divided into ‘centres’ and ‘peripheries’ and that the secular deterioration of the terms of trade of agriculture and mineral exporters was a fact. Following the evolution of ideas formerly expressed in Latin America, Prebisch now insisted on a policy directed towards the replacement of traditional commodity exports with manufactures of semi-manufactures. From the UNCTAD platform, there was also a broader challenge to the developed countries. An example was the appeal to create a Generalized System of Preferences (GSP) whereby the industrialized countries would make tariff and other trade concessions to low-income countries for their new industrial products, without requiring reciprocity (Pollock et al., 2001, p. 19). At the centre of UNCTAD’s message was to point out global asymmetric trade exchange, denouncing the increasing gap, and pleading for concessionary financing and export-substitution industrialization to Africa, Asia and Latin America. At the core was a belief in multilateralism and consensus building as the foundation for what was regarded as a ‘new international economic order’ (NIEO). In this sense, the UNCTAD rivalled the ideas of development held and implemented by the World Bank, that were more aligned with the US geopolitical priorities. The same tension existed in Europe between the ECE and the CEEC that later was transformed into the Organisation for Economic Co-operation and Development. In the American continent, the institutional expression of this tension was the rivalry between the US-led Organization of American States (OAS) and the more plural CEPAL, both created in 1948.

THE POLITICS OF DEVELOPMENT There were several vantage points related to ‘development’, differentiated by differing national or regional priorities, as well as geopolitical interests of influential states. The United States and its allied industrialized countries had a large leverage on international organizations, but their power was constantly challenged and never became hegemonic. In the case of the UN there was a power struggle with the Soviet Union that had a sceptical if not negative position concerning the ‘development’ issue. The Soviet Union was, for example, originally contrary to the establishment of CEPAL. The argument was that the pledge of ‘development’ aimed to insert these countries into the capitalist system. For the Soviet Union and its followers, the path was to break with the system, eliminate the market economy and create a system of international exchange in the model of the COMECON. In other words, ‘development’ was associated with the market economy and the capitalist system. In general, the United States and its allies were more powerful than its communist opponent in creating and promoting international organizations. The Soviet Union therefore changed its position during the 1960s, to support so-called ‘Third World’ initiatives in order to promote ‘anti-imperialist’ positions as well as the denunciation of unjust asymmetries in the global and local capitalist system. However, there was room of manoeuvre for other positions. By the early 1960s, the impact of decolonialization was being felt through the new leverage of the so-called ‘developing’ countries at the UN’s General Assembly, where they engaged in forging new and higher levels of global solidarity. In July 1962, a Conference on Problems of Developing Countries was held in Cairo, which marked a first joint initiative of developing

412  Handbook on the politics of international development countries from three regional groups: Asia, Africa and Latin America. The so-called ‘Cairo declaration’ advocated an international conference on “all vital questions relating to international trade, primary commodity trade and economic relations between developing and developed countries” within the framework of the UN (Toye and Toye, 2004, p. 187). The awakening among the Non-Aligned countries opened the door for new venues of connection between ‘defiant bureaucrats’ and politicians from the periphery. Both groups were aware of the potential of adapting ideas of modernity to their cause at the same time as they learned how to use the new international tools at hand to promote their positions. It is in this context that one needs to see the creation of the UNCTAD which from then on enabled the coalescing of the G77 developing countries into one room and provided a tactical forum for the North–South Dialogue.5 In fact, the creation of the G77 group as a bargaining force has been pointed out as linked to the UNCTAD forum (UNCTAD, 1985). It was also a way of breaking the monopoly of the dominating forces in the UN administration (Pollock et al., 2001, p. 21). That is, to confront the hurdles faced by Myrdal at the ECE, the power of the US administration and to some extent of the Soviet Union in the UN system and its agencies. The developed capitalist countries were simply not interested in giving in to the ‘Third World’ demands and the Soviet bloc was not interested in fully supporting a ‘third way’ that did not back its international interests. When the less developed countries (LDCs) pressed, through UNCTAD, for higher commodity prices, lower tariffs, concessionary loans, more favourable terms of trade, and debt rescheduling, Moscow’s reaction was to play up the anti-Western, anti-imperialist, and anti-colonial animus underlying LDC demand as well as to reject Western efforts to equate socialist and capitalist countries. Yet, as Rubinstein further asserts, the Soviet Union offered little, it played an insignificant part in UN deliberations and it consistently opposed new international funds from ‘rich’ and ‘imperialist’ developed countries (Rubinstein, 1989, p. 325). The influence and role of the ECE had been curtailed by the showdown between the two superpowers almost from the very start. In the case of CEPAL and UNCTAD, the concessions in policy areas that could be obtained remained limited. Soon frustration ensued. A limitation was that the group of countries belonging to the ‘Third World’ were too weak and divided to make an effective opposition. At the Second Conference of UNCTAD in 1968 Prebisch proposed a programme of considerably more active commodity policies in order to raise price levels. When this was rejected and diluted Prebisch resigned from the organization (Dosman, 2008). There was a big deception around UNCTAD’s failure and the lack of political will of the developed countries to make concessions on commodity prices or on those of agricultural and manufactured products. There is no doubt that the UN’s structure and agenda was and is deeply influenced by interests and hegemonic ideas from big powers (Gowan, 2003), but it was also an ‘institutional home’ from which heterodox ideas on economic policy and theory were elaborated and diffused (see Chapter 6 by Marx and Otteburn in this volume). Studies on the evolution of development thinking cannot disregard the role of the UN and the outcome of geopolitical

5 The Group of 77 (G77) was established in 1964 by seventy-seven developing countries that were signatories of a joint declaration issued at the end of the first session of the United Nations Conference on Trade and Development in Geneva. The aim of the G77 was promote their economic interests, joint negotiating capacity around international economic issues, and South–South cooperation for development.

The United Nations and the politics of development  413 confrontations around it. The very geographic connotation of the UN’s economic commissions gave this geopolitical confrontation a new character, since it gave identity and voice to the post-war peripheral regions in which the devastated Europe was included. There was a linkage between the European and Latin American commissions but also with the regional commissions in Asia and Africa (Berthelot, 2004). In relation to heterodox ideas, as this chapter highlights, there was a pledge for a structuralist view of the world, acknowledging the interdependence among regions as well as the asymmetries that obstructed the ideal concept of free markets. There was also a common view on the need of a more active role of the state and the creation of new international mechanisms to improve the development conditions of the weaker countries. The experts behind such views were a kind of ‘social engineers’, attracted to the UN in pursuit of the highest ideals of humankind after the tragedy of the Second World War. But they had also differences, to some extent related to the different vantage points of the evolution of their regional experiences, due to ideological differences and the geopolitical contexts in which the different proposals were elaborated as we shall discuss in the next section.

DEBATING DEVELOPMENT The analysis of individuals who promote ideas, and the organizations through which they act, cannot be disconnected from their historical particularities (see Chapter 7 by Xi Lin in this volume). History and culture matter since scholars and policy makers are influenced by past policy and experiences. This motivated some of the different positions concerning development, at different agencies. Organizations are porous to legitimated norms and values transmitted through the institutional environment to which they conform to receive support and legitimacy (Scott and Meyer, 1991, p. 122). But the issue is not only about structures and institutions, there is also a role for individuals as challengers or drivers of ideas, as promoters of change or conservation. Myrdal, for example, brought with him the successful Swedish social democratic experience, that challenged orthodox liberal economic positions. There was here a call for ‘modernization’ with an appeal for a peaceful solution to the economic and social problems triggered by inequalities. Even though there were structural points of view in relation to global outlooks of an interdependent world, the main pledge was on institutional solutions. There was a rejection of a kind of ‘natural adjustment’ of markets with a call for state regulation, for example by creating ‘welfare economies’. There were in the industrially advanced countries important support groups for egalitarian values and a broad social growth, but also resources to cover the costs of this reforms. These forces were, however, absent at the international level. The pledges from entities such as the World Bank, in which the US was the main contributor with veto power, were associated with market liberalization. There was also an emphasis on education as one of the issues recommended to overcome underdevelopment. This was part of a broader liberal agenda of free markets, human rights and democracy as growth-oriented institutions that would provide a set of rules of the game leading to capitalist development, along the model set by developed countries. The developed countries ensured domestic social cohesion through the creation of welfare societies, benefiting from global opening of markets through the expansion of multinational companies, acquiring dominating positions in international production chains (see Chapter

414  Handbook on the politics of international development 9 by Fernández and Trevignani in this volume). For the underdeveloped countries, a consequence of open markets was a path of national disintegration, increasing domestic disparities, with export concentration in low value-added commodities to few export markets. One of the hurdles of development, rarely mentioned by donor agencies, was the geopolitical context that conditioned the establishment of institutional settings along priorities of the developing countries. That was particularly evident in the area of international trade, with highly negative reactions from developed countries to UNCTAD’s proposals or initiatives for regional integration. This strengthened a peripheral geopolitical outlook where the ‘core’ was not only associated with ‘development’ but also with an unjust power system. A system that to large extent was centred on what Prebisch called, referring to the US, a ‘capitalist superpower’. In Prebisch’s view, the structure of the system was such that the peripheral countries had limited decision-making power, sometimes taking decisions against their own interests (Prebisch, 1981, p. 203). Prebisch was here referring, of course, to the most important and worldwide market economy system, since there was also (during the Cold War) a ‘socialist superpower’. It could also be said that there was limited decision-making of its peripheral states in relation to the socialist superpower although the issue took a different form than in the capitalist side. Whatever power bloc one referred to, the aim of many promoters of ‘Third World’ alternatives was to use UN agencies to build their own regional and global blocs. The fostering of regional integration as well as the cooperation at a global level through UNCTAD, were two forms of constructing alternative development and geopolitical agendas. In relation to the ‘development’ issue, there was here a construction of a peripheral vantage point in terms of ideas (see Chapter 1 by Ocampo in this volume) Much of that was led by a repudiation of a ‘false sense of universality’ contained in the ‘general economic theory’. Yet it is important here to distinguish between different peripheral points of view on this. Those acting through organizations as CEPAL or UNCTAD pursued, fundamentally, a reformist position. In spite of the critical position, there was not any call to break with the system. Such position was contrary of those following the Soviet sphere of influence, from which the capitalist system was regarded as they key problem. Those following this line had, in general, a negative view of ‘development’, a concept associated to insertion in the capitalist system that was regarded as the root of injustice. Such a position became influential among scholars and social movements, but not at the UN organizations.

CONCLUSION The ‘development’ concept has a complex origin, drawing on insights from different venues as well as geographical contexts. A common element among divergent views about ‘development’ was the framing around a new ‘world culture’. It provided new social identities along which individuals and states organized to pursue their interests. The ‘experts’ (in the case of ‘development’, often economists) acquired a pivotal role, but these were not separated from power structures and interests that influenced the shaping of institutions. In the case of the UN, there was a tension between those experts aligned with the views of the main sponsors (great powers) and those with diverging goals, the so-called ‘defiant bureaucrats’. In the case of peripheral regions and some cases also at the core, as exemplified by Myrdal and the ECE, the development views of the ‘defiant bureaucrats’ were supported by political forces promoting ‘development’ as a path within the capitalist system, not as an alternative.

The United Nations and the politics of development  415 Ideas of industrialization, regional integration and a more prominent role for the state in promoting development were of key importance here. The UNs regional economic commissions were at the front of such ideas, with a particular focus at the regional level. At a global level there were organizations such as UNCTAD, projecting heterodox thinking and connecting peripheral states across the world. The ‘defiant bureaucrats’ were part of the driving forces propelling UNCTAD. Yet their role and political room for manoeuvre have to be seen in the light of the geopolitical struggles and the alliance among states supporting this kind of organization. Together with experts at national and international level, political forces at the command of states supported the construction of a peripheral perspectives repudiating what they regarded as a false sense of universality in mainstream economics (see Chapter 3 by Gabusi in this volume). As suggested in this chapter, this technical and geopolitical difference was at the heart of the tensions inherent in the ‘double nature’ of the UN system. The UN’s heterodox platforms, exemplified in this study by the regional commissions and UNCTAD, could be regarded as the ‘institutional home’ where reformist heterodox ideas on economic policy and theory were elaborated and diffused. There was here a contribution to policies and theories linked to ‘development’, that are still of great relevance in our days (see Chapter 6 by Marx and Otteburn and Chapter 20 by Currie-Alder in this volume). The UN remains an arena to find synergies across developed and underdeveloped states, as can be seen in the promotion of the Sustainable Development Goals which applies to all countries without distinction. Both in the creation of the UN system, as today, the shaping of institutional spaces and diffusion of ideas is not only a matter of experts. There is also a need of geopolitical convergence from states and political forces to move ideas. Ideas need power and vice versa.

REFERENCES Arndt, H. W. (1989), Economic Development: The History of an Idea. Chicago: University of Chicago Press. Baylis, John, Smith, Steve, and Owens, Patricia (2011), The Globalization of World Politics: An Introduction to International Relations (5th edition). Oxford: Oxford University Press. Berthelot, Yves (ed.) (2004), Unity and Diversity in Development Ideas: Perspectives from the UN Regional Commissions. Bloomington: Indiana University Press. Boli, John and Thomas, M. Georg (eds.) (1999), Constructing World Culture: International, Nongovernmental Organizations since 1875. Stanford, CA: Stanford University Press. Dosman, Edgar J. (2008), The Life and Times of Raúl Prebisch, 1901–1986. Montreal: McGill-Queen’s University Press. Gowan, Peter (2003), ‘US: UN’, New Left Review, 24, 5–28. Harvey, David (2005), A Brief History of Neoliberalism. Oxford: Oxford University Press. Meyer, John W., Boli, John, Thomas, George, and Ramirez, Francisco (1997), ‘World society and the nation-state’, American Journal of Sociology, 103, 144–181. Perälä, Maiju Johanna (2001), ‘Early development theory from Sun Yat-Sen to Ragnar Nurkse’, in Rainer Kattel, Jan Kregel, and Erik S. Reinert (eds.), Ragnar Nurkse (1907–2007): Classical Development Economics and its Relevance for Today. London: Anthem Press. Pollard, Sidney (1997), The International Economy since 1945. London and New York: Routledge. Pollock, David, Kerner, Daniel, and Love, Joseph H. (2001), ‘Raul Prebisch on ECLAC’s achievements and deficiencies: An unpublished interview’, CEPAL Review, 75, 9–22. Prebisch, Raúl (1981), Capitalismo periférico: crisis y transformación. México DF: Fondo de Cultura Económica. Rivarola Puntigliano, Andrés and Appelqvist, Örjan (2011), ‘Prebisch and Myrdal: Development economics in the core and on the periphery’, Journal of Global History, 6(1), 29–52.

416  Handbook on the politics of international development Rubinstein, Alvin Z. (1989), Soviet Foreign Policy since World War II: Imperial and Global (3rd edition). Glenview, IL: Scott, Foresman and Company. Scott, Richard and Meyer, John W. (1991), ‘The organisation of societal sectors: Propositions and early evidence’, in Walter W. Powell and Paul J. DiMaggio (eds.), The New Institutionalism in Organisational Analysis. Chicago: University of Chicago Press. Toye, John and Toye, Richard (2004), The UN and Global Political Economy: Trade, Finance, and Development. Bloomington: Indiana University Press. UNCTAD (1985), The History of UNCTAD 1964–1984. UNCTAD Sales No. E.85.II.D.6.

27. From ‘club of the rich’ to ‘globalization à la carte’? Is the OECD becoming a global player?1 Judith Clifton and Daniel Díaz-Fuentes

From around the middle of the decade of the 2000s, the Organisation for Economic Co-operation and Development (OECD) adopted a bold new mantra: to guarantee its global nature and relevance in the architecture of international organizations, partly, by extending its membership to non-core ‘Western’ countries as well as to ‘emerging economies’ (OECD, 2006). From this time onwards, organizational changes towards this aim accelerated. Enlargement to Chile, Israel, Slovenia and Estonia in 2010, Latvia in 2016, Lithuania in 2018, and Colombia in 2020, brought its membership to 37 countries. Despite these enlargements, however, the organization has still arguably not successfully rendered its traditional bent towards Western countries more significantly diverse in political and economic terms. Deeper cooperation with important emerging economies – Brazil, China, India, Indonesia and South Africa – was formalized through its ‘enhanced engagement’ programme, with a view to their possible future membership – though, to date, this has still proved elusive (OECD, 2005a; Clifton and Díaz-Fuentes, 2014a, 2014b). No longer is OECD research and analysis of non-members conducted ‘at the margins’ by its development-related bodies, since this work has been mainstreamed throughout the organization. Regional programmes have been set up throughout the developing world in Africa, Asia and Latin America (OECD, 2019a, 2019b, 2019c). The OECD is also seeking to play an increasingly influential role in the preparation for and holding of G20 summits, as well as to collaborate more extensively with an array of international, national and local organizations. But these ambitions raise important questions. From its establishment in 1961, the OECD constituted a North Atlantic organization, known colloquially as the ‘rich man’s club’ or the ‘economic NATO’. When founded, it replaced – while absorbing much of – the Organisation for European Economic Cooperation (OEEC), essentially a realpolitik project promoted by the United States to oversee the management of Marshall Aid and coordinate economic policy in Western Europe during the post-war period, in preference to permitting a Bretton Woods organization to take on the task (Reinalda, 2009; Ul Haq et al., 1995). Evolving over five decades, the OECD became known as an exclusive club with membership restricted to industrialized countries, mostly based on the transatlantic alliance. Given its particular evolution and idiosyncrasies, the central aim of this chapter is to inquire whether the OECD is emerging as a genuinely global actor, and map some of the limits of this transformation.

1 This chapter is an updated version of a previously published article ‘From “Club of the Rich” to “Globalisation à la carte”? Evaluating Reform at the OECD’, Global Policy 2(3), 2011. The authors are grateful for Wiley for permission to reuse much of this article in this chapter.

417

418  Handbook on the politics of international development To help frame the discussion, we utilize concepts of public and club goods and the related concepts, global and club models of multilateralism. Public goods are traditionally conceptualized as being nonrival in consumption and having nonexcludable benefits, while club goods are thought of as being partially nonrival in consumption while the benefits of their consumption can be rendered excludable. Global models of multilateralism refer to inclusive forms of governance, where concerns focus on ensuring membership is representative, democratic and fair, and where participation means that members can actually contribute to and influence policy outcomes (Kaul et al., 2003). Club models of multilateral cooperation, in contrast, are understood as those where a small number of rich countries forge the rules in often non-transparent ways, excluding poorer countries as well as other actors, such as labour, NGOs and civil society (Keohane and Nye, 2001). After setting out these concepts, we argue that the OECD historically constituted a club model of multilateralism par excellence, and opted to provide particular goods to a restricted membership from its origins to the end of the Cold War. Our argument is based on close examination of the evolving logic of OECD membership, its decision-making norms, the way in which its staff was dominated by nationals from Western Europe, and the organization’s priorities as regards the goods it provided, how and in whose interests. We then critically analyse the organization’s efforts to transform itself from a club to a more inclusive global organization, which started gradually from 1989 but accelerated during the middle of the decade of the 2000s, particularly as regards its strategy towards greater inclusiveness through rapprochement with non-members. Reform has entailed significant change to its governance, organizational design and budget. We sourced information through interviews with high-ranking current and former OECD officials, including former Secretary Generals and their Chief Economic Advisers, current and former OECD Directors of Global Strategy, Economics, Trade and Agriculture, Development Cooperation, Public Governance and Territorial Development, Public Affairs and Human Resources, as well as through formal documents in the Paris archive, official data on the human resources profile of the OECD Secretariat from 1961 to 2019, personal staff memoirs, private notes, correspondence and secondary material.2 We find that organizational survival is the prime driver of OECD reform. The OECD has recognized above all the importance of functional challenges to its future efficiency and legitimacy (Randall, 2001). OECD members and staff are cognizant that members’ combined share of economic growth is shrinking as emerging economies make their mark (OECD, 2010a, 2019d). Its highest body, the Council, has publicly recognized that if the organization does not become more inclusive, it risks being ineffectual and, even, irrelevant (OECD, 2006). Confronting the challenges head on, bold steps have been taken by officials and members to transform the organization, particularly as regards re-engineering its club mentality towards more inclusion through transforming its external relations with non-members. One indicator of change is that official documents have acknowledged that there are more paths to development than the ‘OECD way’ (OECD, 2003). But two internal obstacles may slow down deeper change: first, vested interests of OECD members, particularly European countries, which may not always perceive power sharing with newcomers as being in their interest; second, the continued overrepresentation of Europeans in OECD posts, which, though has been more evenly spread across a greater number of member countries in recent years, may limit the



2

In order to enjoy frank discussion with OECD high officials, interviews have been anonymized.

From ‘club of the rich’ to ‘globalization à la carte’?  419 organization’s effectiveness in attracting new members. But both these issues are linked to a formidable and ongoing external challenge: to persuade key non-members of the desirability of deeper integration into the organization.

CLUB VERSUS GLOBAL GOODS AND MODELS OF MULTILATERALISM Much of the discussion on club and global models of multilateralism in the international organization and political economy literature is based on seminal contributions from economics, particularly those by Nobel Prize winners Paul Samuelson and James Buchanan, on public goods and club theory, respectively (Buchanan, 1965; Samuelson, 1954). A ‘pure’ public good is a good (or, usually, a service) that is nonrival in consumption and that has nonexcludable benefits. Commonly cited examples are law and order, security and defence, economic and financial stability and communicable disease control. Once these goods have been provided, individuals can – and sometimes must – consume them. The goods’ benefits are indivisible in that they exist for all individuals in the same amount and with the same characteristics. Some scholars have argued that public goods become more apparent when they are undersupplied: for instance, people take financial stability and health for granted, but are alarmed by financial crises or flu epidemics. Beyond ‘pure’ public goods are goods whose characteristics fulfil only part of these two requirements. For instance, some goods are rivalrous in consumption but their benefits are not excludable, such as the atmosphere. Other goods are partially nonrival in their consumption (until there is ‘congestion’), but their benefits are potentially excludable. Some of these are classified as ‘club goods’ and textbook illustrations include swimming pools, cable television and golf clubs, but a more relevant example for international organizations is knowledge. These classic definitions of public and club goods have been recently challenged and reconceptualized in a series of highly influential publications led by Inge Kaul under the auspices of the United Nations Programme for Development, as we discuss below. Following this logic, Keohane and Nye (2001) analysed international organization reform using ideal-type models of club and global multilateralism. They defined club multilateralism as a form of governance dominated by a small number of rich and usually like-minded countries. Here, negotiations typically took place between technically trained national experts in specific issue areas, for instance linking trade, intellectual property rights or environmental regimes, across the leading capitalist countries. Excluded from discussions are developing and communist countries, as well as experts from other potentially related fields (environmental and labour standard experts in trade talks, for instance). Because governance is closed off and not transparent, decision makers cannot be made fully accountable. Policies and other decisions emanating from such a process serve the interest of the selected few, reflecting national interests and cross-national compromises. Keohane and Nye argued that most international economic organizations, including the General Agreement on Tariffs and Trade (GATT) and the International Monetary Fund (IMF), were run as clubs until at least the late 1990s. However, the end of the Cold War marked a change, as club politics came under increasing attack due to functional and normative challenges (Randall, 2001). Functional challenges included the perception that developed economies were vulnerable to developing ones, so, club-like governance was seen as increasingly obsolete since it excluded key economies from partaking in financing and managing goods or services required. Related to this was the nor-

420  Handbook on the politics of international development mative concern that broader and greater participation in organizations by developing countries and NGOs was required in order to ensure the legitimacy of organizations and compliance with the decisions they took. Not broadening the club towards a more global configuration of governance could mean policies are perceived as lacking legitimacy, even generating popular protest. Accepting the challenge that international economic organizations need to adopt more inclusive and broader forms of governance, scholars have put forward recommendations on how best this could be achieved. One of the most influential recent contributions to this debate has been articulated by Inge Kaul and associates (Kaul et al., 1999, 2003; Kaul and Conceição, 2006). The point of departure is to revisit the classic formulation of public goods, critiquing this as inadequate, since society has become highly capable at modifying the (non)rivalrous and (non)excludability of a good’s benefits, for instance using technology. Samuelson’s public goods theory is reconceptualized based on the insight that public goods are socially produced through political decisions. In addition, she critiques classic public goods theory as assuming provision is at the local or national level, as she argues that globalization has meant more public goods and bads can potentially spill over national borders. It follows that states need to adopt political decisions to prioritize provision and management of certain public goods in order to avoid their underprovision. Kaul et al. establish links, or ‘match’ the design of international organizations with the efficiency with which they produce public goods. In particular, Kaul et al. argue that global models of multilateralism, which promote more inclusion, participation and democratic governance, are better equipped than club models in the task of providing and managing global public goods (Kaul et al., 2003). Club multilateralism may produce ‘mismatch’ when producing global public goods, since policy formation leaves out important actors involved in the producing of a particular good or the suffering of a particular bad, leading to poor quality policy and growing perceptions of illegitimacy, sparking discord. Coinciding with a number of international organization scholars, Kaul et al. encourage international organizations to shift away from club towards a more global multilateral approach (Helleiner, 2010; Woods, 2010). Now, it is oversimplistic to expect that global governance will simply replace club governance evenly across international economic organizations (see Chapter 6 by Marx and Otteburn in this volume). Most will opt for mixes of governance arrangements, as Beeson and Bell argued in the case of G20 governance (Beeson and Bell, 2009). Nevertheless, there is a trend whereby club governance is increasingly perceived as inadequate, while major international economic organizations, such as the IMF and the World Bank, are embracing more inclusive, diverse approaches (Keohane and Nye, 2001). The ongoing reform of the OECD should be placed in this context. Before we examine the extent and limits of reforms, we use the concepts of club and global goods and models of multilateralism to examine the evolution of the OECD’s club inheritance.

THE CLUB INHERITANCE OF THE OECD For the OECD successfully to transform itself from ‘club’ to more ‘global’ governance, it must overcome a distinct challenge not faced by peer organizations with more universal membership such as the IMF, the World Bank or even the World Trade Organization (WTO): for decades, most countries in the world were unwelcome to join the ‘club’, while its Western members assumed they were ‘developed’, ‘advanced economies’ or ‘superior’ to their Eastern

From ‘club of the rich’ to ‘globalization à la carte’?  421 and Southern non-member counterparts. Today, the OECD is seeking to ‘woo’ some of those very countries it previously deemed unsuitable for membership. In order to explore the club inheritance of the OECD we examine four significant aspects of its inheritance: the logic of its membership; norms governing decision making; the evolution of its staff by number, profile and nationality; and the kinds of public goods or services it provided and in whose interests. On all counts, we argue that, until the beginning of change from 1989, the OECD constituted a club model of multilateralism par excellence. What logic guided OECD membership? Analysis of the evolution of its membership points to a predominant logic bound up with Cold War politics and capitalism which remained largely unchanged until the collapse of the Soviet Union. The OECD was created in 1961, replacing, while also inheriting important features – including membership – from the OEEC. The OEEC, in turn, was essentially a realpolitik project, established in 1948, in parallel with the Berlin Blockade (1948–49) and the ensuing Korean War (1950–53), on the initiative of the United States, in order to control Marshall Aid distribution and the reconstruction of Western Europe more directly than it would be able to via the International Bank of Development and Reconstruction (Ul Haq et al., 1995). Its contemporaries labelled the OEEC the ‘economic counterpart’ of NATO and the political ‘rival’ of the Molotov Plan, later to become COMECON (Gordon, 1956). OEEC membership was restricted to certain Western European members: Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, the United Kingdom and both occupied zones of Western Germany. Although much later, during the 1990s, OECD publications would make reference to one of the core values of its members as being ‘democratic’, this was not always so, as lacking democratic government did not prove a barrier to joining or remaining a member, as borne out by the instances of members under authoritarian rule: Greece, Portugal, Spain and Turkey. Together, OEEC members developed a strong ‘club-like’ mentality, which often involved assuming confrontational postures towards the Soviet bloc.3 Physically, its headquarters were located in a privileged Parisian suburb, in the Chateau de la Muette, previously home to French royalty and rebuilt for Henri de Rothschild, before being occupied during the Second World War by the German Naval Command until it was taken over by the United States Army. Marshall Aid was terminated in 1952 and the European economy recovered more quickly than had been expected. Rather than disbanding the OEEC, in 1961 – the same year as the Berlin Wall was being built – the OECD was established to replace it. Contemporary scholars understood that the purpose of the OECD was to help consolidate the transatlantic military and economic alliance between North America and Europe in a context of the Cold War and of increased interdependence (Diebold, 1963). The OECD inherited all the OEEC members, in addition to the US, Canada and Spain, taking its membership to 20. It also inherited its infrastructure in Paris and its nearly 620 staff. Expansion beyond the original set of members was restricted to Japan (1964), Finland (1969) and ‘western offshoots’ (Maddison, 2006) Australia (1971) and New Zealand (1973). Although membership had expanded to the Pacific, the organization remained a predominantly transatlantic one, and members assumed that the main attraction of the OECD for new members was economic activity within the transatlantic axis.4 Membership expansion froze from 1973 onwards, coinciding with the crisis of United States hegemony epitomized by the

3 4

Interview with OECD officials, July 2010. Interview with OECD officials, July 2010.

422  Handbook on the politics of international development collapse of the gold standard and the first petroleum crisis (Clifton and Díaz-Fuentes, 2011a). It would not be until after the end of the Cold War that the question of OECD enlargement would find its way back to the negotiating table, as we discuss in the third section. Decision-making norms at the OECD differ, as in other organizations, depending on the layer of governance in question. The OECD governing structure is pyramidal, comprising the Council at its apex, the Committees and the Secretariat. Governance in the Council is achieved through one representative for each member plus the European Commission, each of whom have one vote. Decisions are taken by consensus, and countries that abstain are not obliged to comply. Member representatives are most often ambassadors who work on a full-time, permanent basis in Paris. The preferred method of decision making at the Council is consensus seeking. Theoretically, then, each member has an equal say, though members of the European Union enjoy a strong presence both through the sum of their members as well as through the Commission representative. The Committee structure, which has grown organically, is often seen as the OECD’s most unique organizational feature: here, national policy makers from the capitals interact with each other and also with professional staff working on the same issue areas from the Secretariat to debate, produce and diffuse policy. By 2020, there were around 300 committees, subcommittees, expert and working groups on a great diversity of topics (OECD, 2020a). Each of these bodies is allowed to establish its own rules for membership: while many are open to all OECD members, a few are restricted to ‘inner circles’ of select members. Business and workers’ interests have been organized in the OECD through the Business and Industry Advisory Committee and the Trade Union Advisory Committee since 1962. It was not until the first decade of the 2000s that the OECD institutionalized relations with civil society through organizing open ‘forums’ and increasing invitations to participate in committees, partially in reaction to an unexpected popular outcry from the middle of the 1990s against its work on the Multilateral Agreement on Investment (Kobrin, 1998). Governance of organizations is partly shaped by those individuals working inside it. Although data on staff numbers, profile and nationality are imperfect indicators, this is one route to offering some insight into an organization’s path dependency. First, we examine data on staff evolution organized by job categories used by the OECD, whereby: ‘A’ grade are professionals, including economists, policy analysts, heads of department, deputies or directors; ‘B’ are secretarial, administrative or support staff; ‘C’ are manual staff; and ‘L’ are translators. Regarding overall numbers, there was a ‘golden age’ between 1961 and 1973, when staff numbers doubled, to 1,580 (Table 27.1). In the same period, staff became increasingly professionalized; by 1973, one-third belonged to category ‘A’. Crisis in the form of the outbreak of the oil crisis and the collapse of the US dollar convertibility to gold was reflected in a significant slowdown of recruitment, mirroring slow membership expansion. Worse was to follow: the arrival of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom coincided with a period of recruitment stagnation across all categories. New blood, and greater professionalization, would only begin again from the 2000s (Clifton and Díaz-Fuentes, 2011b). Next, OECD total staff and those included in professional category ‘A’ are broken down by nationality to show how certain countries have dominated positions (Table 27.1). The OECD claims to recruit on merit and does not use national quota systems. For decades, staff were dominated by nationals from three post-war allies, France, the United Kingdom and the United States, in that order (Table 27.2).

From ‘club of the rich’ to ‘globalization à la carte’?  423 Table 27.1

Composition of OECD workforce by staff number category 1961–2019

 

1961

1973

1980

1990

2000

2009

2019

Total official staff

617

1580

1813

1843

1918

2274

3202

Managerial (Category A)

20.9

32.0

32.2

34.1

42.7

49.3

61.1

4.4

6.3

7.3

7.7

8.7

7.7

6.1

10.5

19.8

22.0

24.4

29.7

34.1

34.9

Official staff by categories (%) A 5–7 Top A 3–4 Intermediate

6.0

5.9

2.9

2.0

4.3

7.4

20.2

Administrative (Category B)

A 1–2 Low

53.8

49.9

50.6

48.7

46.2

44.3

37.2

Manual (Category C)

19.6

13.0

12.3

12.0

6.3

3.0

0.7

5.7

4.7

4.6

4.8

4.5

3.1

0.8

Linguistic (Category L)

Notes: A 1–2: Professionals with less than three years’ experience; A 2–4: Professionals with at least 3 years’ experience; and A 5–7: Head of Divisions and Directors. Source: Based on OECD (2012 and 2020b).

Table 27.2

OECD official and managerial staff by main countries 1961–2019

  Total official staff

1961

1973

1980

1990

2000

2009

2019

617

1580

1813

1843

1918

2274

3202

Official staff by country (%) France

70.5

53.5

49.6

46.6

39.8

37.3

29.7

United Kingdom

12.8

18.2

18.2

15.8

15.0

13.1

9.5

United States

0.3

3.8

5.7

8.7

11.6

10.0

8.0

Italy

1.6

3.1

3.0

2.9

3.5

4.6

7.2

Germany

2.1

3.8

3.8

4.0

3.6

4.5

6.2

Canada

0.2

0.9

1.4

2.4

4.1

3.8

3.8

Japan Total managerial staff

 

1.1

1.9

2.3

2.8

2.7

129

505

583

627

817

1120

3.2 1957

Managerial staff by country (%) France

38.0

30.7

25.6

22.8

19.8

21.9

20.4

United Kingdom

23.3

17.0

15.3

12.8

11.3

10.9

8.3

United States

0.8

8.5

13.2

15.0

16.2

11.7

8.0

Italy

3.1

3.8

3.6

3.7

5.1

6.6

9.1

Germany

7.8

8.7

8.2

8.1

5.6

6.4

8.3

Canada

0.8

2.4

3.4

5.6

7.1

5.8

4.4

Japan

 

3.4

4.5

5.4

5.6

4.9

4.6

Source: Based on data on OECD (2012 and 2020b).

When the OECD inherited OEEC staff, over 70 per cent were French nationals, followed by the British, comprising nearly 13 per cent.5 In that year, the French made up the bulk of secretarial, manual and linguistic posts, but they also occupied 38 per cent of professional posts, as seen in Table 27.2. Over time, the proportion of French nationals was reduced, while staff from US increased until 2000, particularly in the professional category, while United Kingdom staff fluctuated, remaining relatively constant, though the proportion of professionals fell. By 2019, OECD staff was more evenly distributed between the UK, US, France, as well as Italy, Germany, Canada and Japan, even though the UK, US and France still make up around 40 per cent- of its professional posts.

5

Data on five decades of OECD staff were provided by the OECD’s Human Resources Department.

424  Handbook on the politics of international development Comparing staff numbers and budgetary contribution by country reveals that some countries are sharply over or underrepresented. In both 2009 and 2019, the US paid 22 and 20.5 per cent of the budget, respectively, followed by Japan, which paid 12.65 and 9.4 per cent, again, respectively. But Japanese staff only comprised relatively low levels of staff in the OECD, with 2.7 and 3.2 percentage of staff in 2009 and 2019, despite the fact that Japan has been a long-term member, having joined in 1964. Though Japanese representation has increased, it remains quite low: the Japanese experience could be off-putting to potential new members from Asia (Mahbubani, 2012). While staff nationality can only be taken as a crude organizational indicator, it arguably became more important from the 1980s, when the tradition of awarding indefinite contracts as ‘international civil servants’ was drastically reduced, replaced by fixed-term contracts. From then, hired staff would seek increasingly to reflect national interests, since their next job would most likely be there, rather than prioritize the defence of international, collective interests.6 Dominance by France and the US was also visible in recruitment at the top levels of the organization. Between 1961 and 1984, the OECD Secretariat was headed by a Secretary General which rotated among small European countries, Denmark then the Netherlands, but was always supported by two deputy directors, one from the United States and the other from France. It was only in 1984, when the French diplomat Jean-Claude Paye was selected as Secretary General, that France relinquished its traditional post as deputy. Changes to this configuration at the top did not start to change until 1990, as we discuss below. What public goods or services has the OECD provided, how, and in whose interests? The organization has little recourse to mandating countries through passing laws and, since the OEEC lost its role in allocating Marshall Aid, the OECD has not had funds to dispense. The goods or services it produces are usually understood to fall under the concept of ‘soft governance’ (Mahon and MacBride, 2009). One of the most important services produced by the OECD comprises the vast databases on a multitude of economic and social phenomena, collected, organized and analysed by its staff. These data constitute the bedrock upon which the organization conducts its analysis, publishes reports and formulates policy recommendations. The tradition of collecting and assorting data commenced under the OEEC, which pioneered in Europe the standardization of national accounts, information required in order to calculate Marshall Aid allocation (Maddison, 1994). Over the next few decades, efforts increased to collect and analyse a broad range of data on OECD members, not just on economic issues, but also on education, social policy, technology, innovation, employment and so forth. However, data collection and analysis of non-members was of secondary importance (Maddison, 2005). Typically, projects involving non-member data were conducted by the Development Centre, and usually financed by particular members on a voluntary basis (through ‘part 2’ of the budget). OECD reports on non-members took the form of ‘unidirectional’ recommendations, since it was assumed that its members and staff enjoyed superior policy ‘know-how’ based on the assumption of the superior functioning of their economies.7 It was also often assumed that the ‘OECD way’ to economic growth, pursuing broadly liberalization strategies, was a ‘one-size-fits-all’ recipe that could be applied to diverse economies and societies. Although, 6 The death of the international civil servant in the OECD was lamented by Stephen Marris, Economic Adviser to Secretary General Emile Van Lennep, who left the organization in 1984 after 27 years due to the rise of national politics. See Marris (1983). 7 Interviews with OECD officials, July 2009 and July 2010.

From ‘club of the rich’ to ‘globalization à la carte’?  425 in the early days of the OEEC and OECD, Keynesianism was very influential, a shift occurred from the end of the 1970s whereby neoliberal economics and faith in market-based solutions, such as privatization, became dominant (Clifton et al., 2003, see Chapter 1 by Ocampo and Chapter 26 by Rivarola Puntigliano in this volume). These ideas, or ideologies, were deemed suitable both for OECD members and for non-members alike. It was not until the 2000s that the OECD acknowledged their errors and the need for a more nuanced approach that appreciated diversity and difference (OECD, 2003). A second major service is the OECD’s role as host of forums for policy makers, enabling them to meet peers from other member countries as well as the relevant OECD expert staff to discuss a particular agenda. These mostly closed forums are regarded by policy makers and staff as one of the organization’s chief assets. From the policy makers’ perspective, their advantage is that policy makers can talk frankly and exchange ideas in private, without having to be seen to ‘win’ any particular debate. The tradition of holding ‘secretive’ meetings dates back to the OEEC’s organization of meetings to discuss the sensitive topic of Marshall Plan Aid allocation.8 But their opaque nature has aroused suspicion and criticism from observers, who have claimed that they served as places where the richest member countries can forge common postures with their allies before taking their agenda on to other international organizations or back home. For example, during the 1970s, the forums were used by the United States to engineer a Western consensus on the G77’s demand for a Generalized System of Preferences before confronting them at the UN (Meltzer, 1976). One of the outcomes of these forums leads us to a third major OECD service, the establishment of an array of governance concepts, including ‘Codes’, ‘Best Practice’, ‘Guidelines’, ‘Standards’, ‘Norms’, ‘Principles’ and ‘Criteria’. Once established, the OECD uses these concepts as benchmarks with which members’ – and often, non-members’ – policy practice is evaluated. Most concepts from the 1980s have been inspired by neoliberal economic ideologies. In addition, policy makers can use the concepts to justify policy domestically, ostensibly legitimized, as they are, as ‘best practice’ by rich, developed countries. Again, the origins of this work go back to the OEEC, responsible as it was for ensuring Marshall Plan Aid candidates were implementing trade and capital liberalization policies to the satisfaction of the ‘paymaster’. To ensure this was so, candidates had to present their policy achievements to an elected peer country, which would then subject the candidate country to rigorous questioning on its progress, a process known as ‘confrontation’. If the candidate could not defend its position, it would be forced to modify policy before receiving finance from the Marshall Plan (Pagani, 2002). Although the OECD subsequently lost this financial leverage, nonetheless the process was gradually diffused across most levels of the organization. Today, ‘peer review’ and ‘peer pressure’ are considered to be among the OECD’s major attributes, to the extent that this was emulated by another ‘club’, the European Union, under the name ‘Open Method of Coordination’ (Schäfer, 2006) as well as by the World Trade Organization whose Trade Policy Review Mechanism was modelled on the OECD (see Chapter 25 by Narlikar in this volume). Scholars studying compliance argue that intellectual pressure and the desire to be seen to be ‘doing the right thing’ help explain the OECD’s success (Webb, 2004). However, economists such as Chang and Grabel (2004) and Rodrik (2008) have argued that Western countries’

8 See OECD History _1876912​_1​_1​_1​_1​,00​.html.

website,

http://​www​.oecd​.org/​document/​48/​0​,3343​,en​_2649​_201185​

426  Handbook on the politics of international development insistence of ‘best practice’ policy such as free trade for the developing world amounts to denying their own use of trade instruments in the past. In synthesis, we have argued that the OECD, though ostensibly an economic organization, was organized along political lines associated with the Cold War, as reflected in the composition and evolution of its membership and staff. Its major tasks – data collection and analysis, organizing forums and establishing governance concepts for policy recommendation and evaluation – were conducted for members’ economies in their interests. The use and appropriateness of their work for countries beyond members was not an issue. As a consequence of this inward-looking stance, the OECD became overconfident that its policies were applicable universally. The assumption was that all countries seeking to develop successfully should follow its guidelines and recommendations. This confidence started to sap – gradually – once members and staff recognized that the world was changing and the OECD was being gently nudged out from its centre: the import of their situation dawned slowly and reform began.

FROM CLUB TO GLOBAL ACTOR? ASSESSING OECD REFORM Reform of the OECD from a club to a more global organization occurred in two phases. The first phase was triggered by the end of the Cold War, which OECD officials and members perceived as a political – but not an economic – challenge to the organization. The challenge was understood as an important, but not a ‘life-threatening’ one; reform was somewhat slow, and the OECD ‘club’ approach did not disappear. Indeed, it was not until the second phase of reform, from the end of the 1990s, that decisive and bold action was taken to attempt to reform the organization, including transforming what was increasingly perceived as an obsolete ‘club’ approach into a more inclusive global organization (Gurría, 2011). Our analysis evaluates the status of reform, particularly as regards changes in membership logic, organizational changes to staff and governance, and the ways in which the organization produced goods and services and for whom. Post-1989 Reform The fall of the Berlin Wall and subsequent collapse of the Soviet Union was interpreted by OECD members and staff as proof of the superiority of the kinds of neoliberal economic policy they had been advocating, and thus was used to legitimize the organization, particularly its economic expertise and functions. On the other hand, the political logic around which the organization had evolved had changed dramatically. With the end of the Cold War, questions about the future utility of the OECD increased and pressures grew from members to reduce its budget. Staff recruitment stagnated. As communism collapsed, the organization reacted, as regards its membership, organization and purpose, but only slowly. It took until 1990 to grant Japan one of the three deputy Secretary General posts. Still, the ‘club’ approach was not altered in this period. Indeed, in retrospect, many OECD members and officials regretted that more steps to reform had not been taken. Despite multiple countries in Eastern Europe expressing interest in joining the OECD from 1989, its own members limited enlargement. OECD officials argue that membership expansion is based on two internal dynamics which seek to combine attaining ‘symmetry’ with polit-

From ‘club of the rich’ to ‘globalization à la carte’?  427 ical ‘horse trading’.9 In 1991, members agreed to accept only three candidate countries from Eastern Europe: the (then) Czechoslovakia, Hungary and Poland. Their restrictive approach can be explained by the fact that many non-European members did not to want the organization to become ‘even more’ European. Accession to Eastern Europe was ‘balanced’ by the agreement to expand to Mexico, which joined the North American Free Trade Agreement (NAFTA) in 1994 and whose accession was promoted by the United States and South Korea. Enlargement thus proceeded with Mexico (1994), the Czech Republic and Poland (1995), Hungary and South Korea (1996) and, finally, the Slovak Republic, in 2000. On joining the OECD, Mexico and South Korea left the G77, as it was perceived that joint membership involved a conflict of interest. Symbolically, they left behind their status as a ‘developing’ economy. Interestingly, the accession of Chile in 2010, long perceived to be a neoliberal stalwart differed, as it remained in both organizations, to the consternation of some G77 members (Deen, 2010). The OECD was later to acknowledge errors it made during the management of this stage of enlargement, particularly as regards its approach to the Eastern European members. These countries’ accession had been made conditional on their following successful adoption of neoliberal economic policies recommended by the OECD, set out in their programme ‘Partners in Transition’. But these policies assumed that a ‘one-size-fits-all’ recipe of price and trade liberalization, macroeconomic stabilization, privatization and the creation of market institutions should be applied to all countries (OECD, 2003). Later, officials acknowledged that their lack of experience in managing non-Western economies had meant they had underestimated the diversity of these economies and their need for institutional building; they had shown themselves unprepared to understand what was required for successful transition (OECD, 2004). This foreshadowed another weakness of the OECD would need to confront later – its lack of experience and knowledge about proposing policies that would work in developing countries. Seeds of future reform were sown, however, as OECD officials modified the priorities as regards what goods the organization should provide, and how. Before 1989, most OECD work on non-members had been considered a secondary activity. Publications on non-members generally took the unidirectional form of ‘policy advice from the OECD’. Immediately, in 1990, the Centre for Cooperation with European Transition Economies was set up and dozens of economic and policy studies ensued including the first – and last – Study of the Soviet Economy, in conjunction with the IMF, the WTO and the European Bank for Reconstruction and Development (EBRD) in 1991. Most staff lacked experience working on transition economies, and some training was required (OECD, 2004). The OECD ‘club’ approach was not undermined; yet work ‘on’ non-member economic systems had begun in earnest. Going Global – à la carte Genuine attempts to transcend its exclusive ‘club’ mentality commenced from the end of the 1990s.10 Both members and staff increasingly came to the view that the organization’s restrictive membership was becoming its principal handicap. Economic governance would become difficult if not impossible if major economic players were not involved. Moreover, the ‘rich man’s club’ was looking increasingly less rich. The shrinking share of economic wealth con

9

Interviews with OECD officials, July 2010. Interviews with OECD officials, July 2009.

10

428  Handbook on the politics of international development Table 27.3   OECD members

Weight of OECD versus G20 non-OECD countries in the world economy 1961–2019 1961

1973

1980

1990

2000

2009

2019

20

22

24

24

30

34

37*

Share in World Population OECD members

17.5

19.0

17.6

16.2

18.5

18.1

17.7

Non-OECD G20

47.8

48.3

49.0

49.2

48.8

47.9

46.5

OECD

53.2

58.5

57.2

56.4

60.3

49.7

46.6

Non-OECD G20

20.9

19.6

20.6

22.4

25.4

32.6

36.0

OECD

55.6

70.7

64.9

76.6

72.8

61.2

60.4

Non-OECD G20

10.0

7.7

12.5

10.3

13.2

19.5

22.1

OECD

59.6

69.5

69.4

77.7

75.5

64.0

61.0

Non-OECD G20

10.6

7.3

9.2

9.1

11.4

19.6

21.5

Share in World GDP (% international US$**)

Share in World Exports (% current US$)

Share in World Imports (% current US$)

Notes: * OECD members by 2019 plus Colombia who joined OECD in April 2020; ** International Dollars Geary Khamis criteria; non-OECD G20 = Argentina, Brazil, China, India, Indonesia, Russia, Saudi Arabia, South Africa. Source: Based on World Bank World Development Indicators (2021).

stituted by the OECD has been encapsulated in a new report, Shifting Wealth (OECD, 2010a). According to these calculations, OECD members’ share of the global economy measured in purchasing power parity was 60.3 per cent in 2000; by 2019, this had dropped to 46.6 per cent and, by 2030, would drop to just 43 per cent, as seen in Table 27.3. The share of G20 non-OECD members – Argentina, Brazil, China, India, Indonesia, Russia, Saudi Arabia and South Africa – had increased from 22 per cent in 1990 to 36 per cent in 2019. Between 2000 and 2019, OECD exports had fallen from 72.8 to 60.4 per cent of world totals. The ‘rise of the rest’ was understood as structural, not transitory, and supported by new dynamics including ‘South–South’ trade, investment and technology transfers between firms and industrial clusters based across Asia, Latin America, Africa and Asia (OECD, 2019a, 2019b, 2019c; Clifton and Díaz-Fuentes, 2015). For decades, the OECD’s involvement in these regions had been minimal. It now needed them to bolster its own capacity to govern, its legitimacy and its relevance (OECD, 2004). Reform was implemented in the shadow of increasing financial pressure on the organization by its members who questioned its continued relevance. Donald Johnstone’s election as Secretary General from 1996 to 2006 was made conditional on his delivering sharp cuts to staff and efficiency savings.11 Introspective soul-searching, critical self-assessment and complex negotiation marked the winding process towards agreeing on a new strategy. Senior officials were charged with spearheading a reform strategy while identifying its potential pitfalls. One such obstacle was the public image of the OECD: during the 1990s, its officials had made overtures to East Asian ‘tiger’ governments, but these were met with suspicion since the organization was associated with a negative view on state activism (see Chapter 3 by Gabusi and Chapter 5 by Nesadurai in this volume). Its unidirectional approach to recommending neoliberal policy prescriptions for all economies was perceived as patronizing and not always appropriate for non-Western countries. Although some OECD documents admitted more policy options towards interna Interviews with OECD officials, July 2010.

11

From ‘club of the rich’ to ‘globalization à la carte’?  429 tional development existed than the ‘OECD way’ (OECD, 2003), in practice, its wealth of policy knowledge and experience based on the West continued to dominate its policy work. For example, in the field of State-Owned Enterprises, most OECD work continues to promote their conversion through corporatization and privatization into enterprises more resembling their private counterparts (OECD, 2015), policies that may clash with those of countries such as China. Another potential obstacle to change was OECD members themselves, especially smaller European countries, reluctant to share their privileges with more members. A further challenge was OECD staff, both professional and administrative, most of whom lacked an understanding of non-Western economies, languages and cultures (OECD, 2005a). Gradually, a consensus was forged on a blueprint for reform, with enlargement at its heart, which was implemented from the second half of the 2000s. Critically, enlargement was made conditional on prior approval of governance and budget reforms. As a sign of the changing times, for the first time a Secretary General from a developing country, Mexico, was elected, through open competition, not by political nomination, from 2006. The major significance of the governance reform passed in 2006 – which had mainly been at the insistence of the US – was the introduction of the Qualified Majority Voting mechanism. Decisions no longer required unanimity but could be taken with support of 60 per cent of members, unless they were blocked by a group of three or more members who combined 25 per cent of part 1 of the budget (OECD, 2006). Budgetary reform was completed in 2008. A new system was introduced whereby one-third of the core (part 1) budget would be equally financed by all members, phased in over a ten-year period, while the cost of the other two-thirds would be shared according to capacity to pay. The overall effect was that the share of the budget paid by the two major contributors, the United States and Japan, would decrease (OECD, 2008). Another decision was that that new members would have to cover all the costs of membership, paying more than that paid by original members of the same size (Bourgon, 2009). The first twenty-first century enlargement finally got the green light. Road maps for accession to Chile, Estonia, Israel, the Russian Federation and Slovenia were signed in 2007. Again, the combined geographical profile of the accession countries reflected the desire of OECD members to balance ‘European’ versus ‘non-European’ entrants. Chile, Estonia, Israel and Slovenia acceded during 2010, while in 2014 Russia’s accession was ‘postponed’. Of these five countries, Russia had been the first to be considered as a candidate for accession as far back as the mid-1990s. Prime Minister Chernomyrdin had expressed an interest in Russia’s joining in 1996, to which the Council replied formally that this was an ‘ultimate shared goal’ in 1997. Since then, extensive cooperation has taken place but a number of obstacles have reared their heads both from within Russia as well as from certain OECD members. Delays ensued as frustration grew. When the 2007 road map was drawn up, Russia was nearly not included, being listed only at the last minute after intensive lobbying. Its future accession has been made conditional on its joining the WTO and signing the OECD anticorruption convention, and top officials remain optimistic, though there are private concerns that Russia should not be kept waiting too long. In May 2013, the OECD opened a new round of accession discussions with Colombia and Latvia: Latvia accessed in 2016 and Colombia in 2020. Finally, in April 2015, the OECD opened access negotiations with Costa Rica and Lithuania; Lithuania joined in 2018 and Costa Rica was invited to become a member in 2020. But these waves of enlargements are limited in a fundamental change regarding the declining economic importance of OECD members. As part of the efforts to transcend its traditional

430  Handbook on the politics of international development membership, a programme entitled ‘enhanced engagement’ was launched in 2007, for implementation in five key economies: Brazil, China, India, Indonesia (due to pressure by Australia and Italy) and South Africa. Although these countries had not stated their interest in joining, they were targeted by the OECD as countries that “might eventually be willing and able to join” (OECD, 2010b, p. 5) as well as being those the organization needed to engage with in order to presume it was representative of the world economy. From 2008, these countries were invited to participate in the main economic sessions of Ministerial Council Meetings, as well as in a select number of committees and working parties at different levels of intensity, from ad hoc to regular or full participation. This participation of these non-members in OECD business is ongoing and a comprehensive list of individual countries’ participation is published as part of the OECD Global Relations Programme. Participation, however, for the first few years of this process was uneven: Brazil and India became much more involved than China. Brazil participates in over a dozen committees, from environmental policy to trade, competition and science and technology, while India is involved in the committees on agriculture, often, with full member rights, fiscal affairs, information and communications technology, consumer policy, steel, higher education and statistics (OECD, 2010b, table 4). In contrast, China’s participation is mostly limited to work by the Committee on Fiscal Affairs. Interestingly, non-members such as Argentina and Singapore are active in more committees than China. Overtures by the OECD towards more inclusive governance can, and do, backfire. The case of China, an OECD priority, is revealing. Formal bilateral relations between the OECD and China were pioneered by Secretary General Jean-Claude Paye (1984–96) and were centred on taxation. By 2005, OECD officials perceived relations with China to be blossoming (OECD, 2005b). Although some members queried China’s human rights record, it was decided that the advantages of engaging with China far outweighed any potential disadvantages. Tensions in the relationship started to emerge, however. China was concerned about the overrepresentation of Europeans in the OECD: for instance, if it attended Working Party 3 meetings, Chinese delegates had to listen in silence to speeches by small countries such as the Netherlands. OECD members and officials became concerned that China enjoyed the OECD’s services but did not intend to commit itself to its standards and norms through membership. Tensions came to a head in 2009 with the OECD’s tax havens work, which included a project to name and shame ‘non-cooperative’ tax havens. Hong Kong and Macau were included on the provisional list: China responded furiously, stating that this was its affair. The OECD finally backed down, removing both, on the agreement that China would assume responsibility for their management. Still vexed, China blocked the OECD from participating in the G20 summit in London in April 2009. The OECD returned to G20 business when, on the direct invitation of President Obama, Angel Gurría attended the Pittsburgh meeting in September 2009 (OECD, 2010b, p. 11). Another strand of reform is organizational, relating to OECD staff and the ways in which work was done. After freezes on recruitment during the 1980s and 1990s, new blood was recruited into the OECD, especially professionals at the lower level, as shown in Table 27.2. Despite the share of French, British and American staff in ‘A’ category posts having fallen, in 2009 the three countries combined made up 43.5 per cent of the professionals and half the top posts (categories A 5–7). Prior to reform, most OECD work on non-members was done through the ‘Centre for Cooperation with Economies in Transition’. This was replaced by the ‘Centre for Cooperation with Non-Members’ in 1997. Staff received training in non-Western economies and languages, and different theoretical perspectives, and were encouraged to

From ‘club of the rich’ to ‘globalization à la carte’?  431 adopt less confrontation and more confidence-building approaches to non-members. But this was quickly perceived as not going far enough: OECD work for non-members was still perceived as being too patronizing and ‘missionary’ by internal critics. A more ‘aggressive’ strategy which ensured that other countries deemed vital for the organization’s future were brought on board was required (OECD, 2004). This required that key countries be treated as equals or ‘peers’ (OECD, 2010b, p. 5). So, work on non-members was reformed: in 2001, the nearly 120 staff working at the ‘Centre for Cooperation with Non-Members’ was transferred directly into standard OECD Directorates. Henceforth, OECD work on non-members would be mainstreamed; a publication on agricultural reform in Africa would henceforth be published by the Directorate on Agriculture, as part of core OECD work. By mainstreaming work on non-members, it was hoped the OECD’s former emphasis on training and assistance could be replaced by policy dialogue, and promotion of ‘good international practice’ (which sometimes replaced the notion of ‘best practice’), standards and instruments (OECD, 2005a). The reform also meant that work on non-members would be financed by the core budget, not by voluntary contributions. Finally, OECD reform has attempted to render the distribution of the goods and services it provides more inclusive. This has taken two major forms: the establishment of ‘network’ governance across all continents, and accelerated collaboration with other organizations, including at international, national and local levels. Network governance is organized on a regional basis, and targets Europe, Caucasus and Central Asia, Latin America, the Middle East and North Africa, Africa and other Asian non-members. OECD staff attempt to identify areas of existing work that are of interest to the region. Incentives are offered to staff to establish relations with governments or institutions such as development banks and other organizations, and then to identify common projects. Countries from these regions are also invited to participate in various OECD committees and working parties at different levels (ad hoc, regular or equivalent to a member). Second, significant steps have been taken, particularly from 2005, to increase sharply the OECD’s collaboration with other international, regional and local organizations in the production of joint reports, or the holding of jointly organized conferences or training sessions. This is justified by the need to legitimize OECD output around the world, especially in those areas where it has not traditionally worked, as well as to avoid duplication. A comprehensive inventory of these activities outlining the nature of the activities, expected outcomes and the division of labour has been published by the OECD and reveals a clear change in strategy (OECD, 2007).

CONCLUSION Established in 1961, the OECD, inheriting much from its predecessor, the OEEC, functioned as a club model of multilateralism par excellence for much of its history. By restricting membership to certain Western capitalist economies, it was deemed by some to be an optimum place for discussion by the powerful countries, as, following club theory, negotiations among a few, homogeneous members were easier to execute than those at universal organizations such as the UN (Fratiani and Pattison, 1976). When the Cold War ended in 1989, the OECD lost much of its original political rationale, and yet its economic rationale, as a champion of Western-style capitalism, seemed to have been legitimized by the fall of communism. But the loss of its political rationale – coinciding with the hostile decade of the 1980s for international

432  Handbook on the politics of international development organizations – meant it came under increased pressure by members to cut costs. The next challenge was more critical: the recognition that OECD members were increasingly vulnerable to the economies of non-members, which were, in addition, becoming increasingly important in the world economy. If it was no longer a club of Western allies fighting communism and only a declining club of the rich, industrialized nations, what did its future hold? Real reform accelerated from the turn of the twenty-first century. At its heart was the recognition that the OECD club needed to address its place in the changing global economy by becoming more inclusive. For members, it was vital that key economic players were brought in if economic governance was to be meaningful. For staff, enlargement became one of the main keys to organizational survival. Inclusion did not amount to a strategy to transform itself from a club to a fully inclusive or global organization, however. The new logic of inclusion follows a more limited strategy of incremental enlargement: going global ‘à la carte’. The so-called ‘enhanced engagement’ programme reveals the OECD’s interest in the ‘big players’, especially China and India, but also Brazil, South Africa and Indonesia. The OECD could be criticized on the grounds that its inclusive approach is so limited: it merely wishes to extend the club to a few other rich or semi-rich countries. But its reform is not superficial. Change is palpable in a change of attitude; pride has been swallowed and staff and members are determined to engage with non-member countries as ‘partners’. For decades, the goods and services provided by the OECD were nearly exclusively for Western developed economies. The OECD is trying to change this – gradually – recognizing that the ‘OECD way’ is not the only way, because diverse legitimate approaches to development exist. The OECD is attempting to move away from unidirectional ‘policy advice’ and ‘best practice’ and instead encourage ‘policy dialogue’. Mainstreaming its work on non-members across all Directorates is one important example of this change. But changing path dependency is not simple, and it is possible that this reform has come too late to position the OECD as a key player in the architecture of global governance. In its favour, the OECD has earned a solid reputation for producing data and analysis; indeed, this is its chief asset in its search for a role in global governance. New structures, such as the G20, lack a secretariat, so there are avenues for synergy here. Its main disadvantages continue to be its legacy as a transatlantic organization, with the bulk of jobs still staffed by Western Europeans and Americans, and a bias for neoliberal economic solutions. This will limit its capacity to communicate with and understand non-Western potential members, particularly Asian ones. So, if the OECD does not reform substantially, it faces a decisive challenge: the organization needs the emerging economies, but do they need the OECD?

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28. The politics of the regional development banks Stefano Palestini

1. INTRODUCTION Regional development banks (RDBs) are a group of institutions that provide financial and technical assistance for development to low- and middle-income countries within regional geographical areas. As such, they are part of the larger family of multilateral development banks (MDBs) which includes institutions that lend across regions, such as the World Bank (WB) (see Chapter 23 by Mendes Pereira in this volume). Since the creation of the first RDB in 1959, there has been a proliferation of this type of institutions. The largest institutions in the family operate in macro regions, such as the Interamerican Development Bank (IADB), the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), and the recently established Asian Infrastructure and Investment Bank (AIIB). Next to this first group there are around fifteen smaller institutions that operate in sub-regional spaces. Some of these sub-RDBs remain small and resemble rather a fund than a bank, while others such as the Development Bank of Latin America (former Corporación Andina de Fomento, CAF) have become important sources of finance in their regions. This chapter has the purpose of introducing the different aspects of the politics behind the creation and functioning of the RDBs, revealing a fascinating object of study. To understand what is so special about RDBs, one should ponder the three words that make up the name: regional development bank. To begin with, RDBs are banks. Their business is to lend money to clients that, besides governments, increasingly include private actors. Similarly to commercial banks, they borrow on capital markets and are scored by credit rating agencies. Differently from a commercial bank, however, RDB loans have slightly lower interest rates and their shareholders are states, whose representatives sit in the boards and take decisions. Their staff is accountable to the governments of member states. Therefore, RDBs are simultaneously sui generis banks and sui generis intergovernmental organizations (IGOs). In contrast to traditional IGOs such as the UN or the WTO, which operate through a one-vote-per-country system, RDBs emulate the one-dollar-one-vote system of the WB: member states with larger capital subscriptions gain larger voting power or even veto power. Due to the influence these powerful member states wield in the RDBs, they are arguably more politicized institutions than commercial banks. Periodically, RDBs freeze loans to governments that are perceived as not aligned with the interests and/or values of RDBs’ most powerful member states, like in the case of Salvador Allende’s Unidad Popular in Chile (1971–1973), or Jean-Bertrand Aristide’s government in Haiti (2000–2004). Currently, Cuba, several Middle East states, Venezuela, and North Korea are banned from RDB loans. Let’s continue with the second word: development. Few concepts are as contested in the social sciences (see Chapter 1 by Ocampo in this volume). As children of the post-Second World War settlement, the first RDBs borrow their understanding of development from the paradigms in vogue at the time, which emphasized industrialization, urbanization, and eco435

436  Handbook on the politics of international development nomic planning as crucial elements. Yet, RDBs have had to adapt to shifting policy paradigms and to changes in the global political economy. Because they are banks and designed as a capitalist corporation, RDBs must strike a balance between development and finance, aid and profit. Some stakeholders would like to see RDBs behaving only as banks, while others press RDBs to behave as developmental agencies. This posits a dilemma: Should RDBs provide financial assistance to the poorest countries of the region or to the medium income countries and emergent economies, which have better chances of repaying the loan? Should they finance projects with a larger social impact or those that are more “bankable”? Should they serve the interest of the borrowing member states, the donors, or the bondholders? The third word, regional, accounts for the most distinctive aspects of RDBs when compared, for instance, with the WB. RDBs lend exclusively to countries in their regions and were created in part to satisfy the needs and demands of their regional constituency. They have a special – sometimes conflictive relation – with “regional powers” and have accomplished a crucial role as financiers and sometimes orchestrators of regionalism. Nowadays, the gap between the lending capacity of the largest RDBs and the WB has shrunk, and RDBs provide more loans in absolute terms to the poor countries in their regions than the WB. RDBs and sub-RDBs have contributed to shape the identity and actorness of their respective regions. These characteristics have led to a continuous rise of RDBs as important political actors. RDBs are created with the promise to challenge the existent global development regime and its rules. Just like the first RDBs were created to challenge and provide alternatives to the WB, new RDBs have been created in the last decade to challenge the prevalence of old RDBs in their respective regions. These new-RDBs are associated with the hegemonic aspirations of rising economic powers, the clearest example being the China-led AIIB. Thus, two main questions arise: Are these institutions an indicator or even a driver of power shifts in the regional and global arenas? Or is the prevalent global financial system going to eventually mainstream these challengers? Drawing on the existent literature on RDBs from various disciplines in social sciences, this chapter will provide a state-of-the-art panorama on these questions. Section 2 addresses the politics of the creation and design of the three generations of large RDBs. Then, in the third section, I will focus on the politics of these institutions in three dimensions: voting, lending, and accountability. The fourth section addresses the link between RDBs and comparative regionalism. The chapter concludes with some final remarks and future research avenues.

2.

THE POLITICS OF THE DESIGN OF OLD AND NEW RDBS

The creation of major RDBs is associated with three critical junctures. The oldest RDBs – the IADB, the ADB, and the AfDB – were created during the high points of the Cold War marked by the Cuban Revolution and the Missile Crisis, the Vietnam War, and the processes of decolonization in Africa and Asia. The EBRD was created right before the collapse of the Soviet Union and under the prospect of a dramatic economic and political transformation in post-socialist states. New RDBs – particularly the NDB and the AIIB – have been established in the wake of the Global Financial Crisis of 2008, and amid the rise of China as a global

The politics of the regional development banks  437 power. Besides these critical junctures, there are three conditions that are – in different combinations – present in the creation of all RDBs and that allow for a comparative analysis: ● the demand for development ● the hegemonic aspiration of regional powers ● the policy ideas. 2.1

The Cold War and First-Generation RDBs

The demand for development by poorer countries played a crucial role in the creation of the IADB (1959) and the AfDB (1966) and, less so, the ADB (1967). These demands were intimately linked to postcolonial identities and dissatisfaction with the design of the post-Second World War financial architecture which marginalized developing countries (Krasner, 1981; Culpeper, 1997). As one of the first scholars interested in the RDBs put it: “[their creation] is essentially an act of political resistance against the developed countries’ hegemony in the world economy” (White, 1970, p. 29). The IADB was born out of the demand of Latin American states for adequate financial assistance to achieve domestic industrialization and developmental goals. Latin American pledges for an Inter-American Bank can be traced back until the International Conference of American States in 1889, and had a crucial moment in the late 1930s when the Roosevelt administration backed the idea of an international bank controlled by governments and oriented to promote development in poorer countries (Tussie, 1995; Culpeper, 1997; Helleiner, 2009). This original proposal had an influence in the blueprint of the WB that took form during the Bretton Woods conferences in 1944. The IADB was eventually established in 1959 with the support of the Eisenhower administration. In contrast, the AfDB was mostly an initiative of African states. This explains its regional-exclusive membership and the lack of extra-regional donors until 1982. However, due to its exclusive regional membership, the AfDB counted with fewer funds than the IADB and lower callable capital amounts hindered its financial growth through investment. Thus, in 1982 the bank opened up to non-regional members. Similarly, the ADB (created in 1967) was driven by the dissatisfaction of Asian states with the WB. In a meeting convened by the UN Economic Commission for Asia and the Far East, the delegate of Cambodia stated that “the doctrine which has been put forward [by the WB] is in contradiction with its practice and concrete reality … the time of the [ADB’s] establishment must be an occasion to rethink and reexamine the principles” (quoted in Kellerman, 2019, p. 121). Hegemonic aspirations are especially visible in the creation of the ADB and the IADB. For example, the US and Japan played an important role in the establishment of the ADB. Japan had made a first proposal in 1962 that received a lukewarm endorsement by other Asian countries. The experience with Japanese imperialism can explain the absence of a pan-Asian political movement underpinning the demand for the ADB (Yasutomo, 1983; Culpeper, 1997, p. 30). For Japan, the bank offered the opportunity to solidify its increasing economic regional hegemony (Kappagoda, 1995; Dutt, 2001), while for the US it was perceived as a way to keep a stronghold in Asia, especially necessary at the time of the Vietnam War. Hegemonic interests also played a role in the IADB. In particular, the Cuban Revolution placed the involvement and influence in Latin America at the top of Washington’s foreign policy agenda. The Alliance for Progress – as the new foreign policy towards Latin America during the 1960s was called – helped the institutionalization of the new bank. But US support came with a price: the bank’s

438  Handbook on the politics of international development headquarters were established in Washington and the US acquired control over the vice presidency of the bank and restricted the capital subscriptions in order to ensure US dominance over the bank (Tussie, 1995). While developing countries’ demands and hegemonic aspirations were pivotal for the decision to create the RDBs, policy ideas were fundamental to provide what John Ruggie calls the “social legitimate purpose” of the newly created institutions. A combination of ideas from what we call the Global North and the Global South shaped the Articles of Agreement that codify the mission, principles, rules, and procedures of RDBs. From the South, Chinese thinker Sun Yat-sen, for example, advocated for an “international development scheme” to bring development to Chinese people (Sun, 1922) and Argentinian economist and director of the UN Economic Commission for Latin America (ECLA, later ECLAC) Raúl Prebisch also supported an international development bank to bridge the state’s efforts to modernize the economy with the resources available in capital markets (see ECLA, 1959; Prebisch, 1963; Tussie, 1995). In the wake of the international debt crisis in the 1980s, RDBs became less developmentalist, more financialized and dependent on capital markets announcing the turn to a second critical juncture (Bruszt and Palestini, 2016). In this critical juncture, a new RDB, the EBRD was born. 2.2

The Collapse of the Soviet Union, the Rise of Neoliberalism and the EBRD

The EBRD’s raison d’être was to foster the transition to liberal-market economies in the former socialist bloc and its strategy and instruments were fully aligned with the neoliberal ideas promoted by the international financial institutions (IFIs) and the European Commission (Bronstone, 1999). This demonstrated that states (rich and poor) still believed that this type of institution – if adequately reformed according to new economic thought – had a place in the financial architecture of the fin de siècle. Thus, Ben-Artzi (2016, pp. 103–104) argues that the creation of the EBRD was also important for the future of the first-generation RDBs. Instead of the prospective borrowing states (former socialist countries), in this case the initiative came from interested lenders: it was the US, and the Western European powers who were advocates of the creation of the EBRD. The end of the Cold War implied that the hegemonic interests behind the EBRD were less related to geopolitical concerns as in the case of the IADB and the ADB but rather to economic influence at a juncture when the US was perceived as the only global power. The EBRD was originally conceived by France as a European institution that would counterbalance the US influence in Eastern Europe. Germany, however, set as a condition for its endorsement that the US should be involved. And the Bush administration was keen to become a member in order to counterbalance the expected membership of the Russian Federation (Bronstone, 1999). But perhaps the most striking aspect of the creation of the EBRD is that it embodied a totally different set of developmental policy ideas. The EBRD was conceived as a bank that would lend preferably to the private sector. In doing so, the EBRD is not only less “developmentalist” – it is closer to an investment bank – but acted upon a deeply political mandate to structurally transform the economies of borrowing post-socialist states into functional liberal market economies (Shields, 2016). Thus, in the EBRD, the dilemma between development aid on the one hand and financial profitability on the other seems to be resolved towards the latter.

The politics of the regional development banks  439 In the 1990s, the first-generation RDBs also adapted to the neoliberal paradigm. They drew inspiration from their young sibling (the EBRD) and their parent (the WB) and started engaging in policy lending for the structural adjustment of Latin American, African and Asian countries (Culpeper, 1997; Babb, 2009; Vivares, 2013). Together with structural adjustment reforms the WB and the RDBs adopted the “good governance” policy framework based on the principles of accountability, the rule of law, and political liberties (Casaburi et al., 2000). Free markets and good governance became the “social legitimate purpose” of RDBs. 2.3

The Global Financial Crisis, the Rise of China: New-Generation RDBs

In the past two decades, new RDBs have been created, partially overlapping the regions and membership of the existent RDBs (Kellerman, 2019). These new RDBs have attracted a great deal of attention from scholars as they are perceived as part of a revisionist countermovement that challenges not only the old RDBs but the IFIs and global financial governance in general. While first-generation RDBs were driven by a deep dissatisfaction with the world order represented by the Bretton Woods institutions (White, 1970), new-generation RDBs are driven by a similar dissatisfaction with the existent RDBs and IFIs and the role they played in the structural adjustment and market reforms of the 1990s, and in the management of the last two financial crises: the Asian financial crisis, and the global financial crisis of 2008 (Griffith-Jones, 2014). Furthermore, in the last decade there has been almost no adjustment in the extant RDBs to the rising economic power of China and other emergent economies, yet another stimulus to create countervailing RDBs (Strand and Trevathan, 2016). The demand for development finance (see Chapter 14 by Vivares and Stanley in this volume) is an important factor in the creation of both the AIIB and the NDB. In the case of the AIIB, both emergent economies and less-developed countries publicly welcomed the creation of a new RDB that could provide additional long-term financing for infrastructure and development (Chin, 2016). The demand for long-term investment grew hand in hand with the drop in private investment after the global financial crisis of 2008. Similarly, India’s and South Africa’s discontent with the management of the crisis by IFIs and their demand for development finance are part of the story behind the NDB (Cooper, 2017; Bradlow, 2015). Although the effect of these economic and developmental demands should not be underestimated, scholars have been more interested in the hegemonic interests and power politics that drove the creation of these RDBs and that, arguably, announce a global power-shift (Huiyun and Kai, 2019). Yet, there are reasons to wonder whether this is so different from the two previous generation of RDBs. In fact, first-generation RDBs originally represented a departure from the power order represented by the Bretton Woods institutions (whether this departure materialized into an alternative world order, is a different story). Likewise, in Europe, the EBRD represented a major rupture with the prevalent structure of power after the disintegration of the Soviet Union at a time when unified Germany rose as the economic powerhouse of an integrated Europe. The new-RDBs are, no doubt, associated with the rise of China and other regional powers (see the Introduction to this volume) . The AIIB, headquartered in Beijing, is the main financial supporter of the One Road One Belt Initiative (OBOR), which is China’s overarching regional and global political project. However, even though the AIIB was a Chinese idea, it is not a Chinese bank. China seems so far reluctant to use its veto in order to avoid signals of hegemonic behavior (Chin, 2016). The influence of China in the bank is also tamed by

440  Handbook on the politics of international development the presence of extra-regional members, among them European states, Australia, and New Zealand. Knoerich and Urdinez (2019) argue that China skillfully induced Western states to join the bank by allowing them considerable influence on the design of the new bank. In return, the AIIB benefited from financial robustness thanks to the mix of borrowing states and rich Western creditors. According to these authors, the Western membership in the AIIB has “integrated the organization into the prevailing financial order” (Knoerich and Urdinez, 2019, p. 337). In the case of the NDB the main power-politics factor has been the relation between China and India as the two Asian powerhouses within the BRICS group. While the AIIB can be seen as an almost exclusive Chinese initiative, the NDB has been importantly shaped by New Delhi’s preferences. India’s main concern was to design a bank in which all members would have equal control. During the negotiations of the NDB, China proposed to do a larger contribution under the argument that to go for equal contributions would undermine the bank’s financial performance. Eventually, India’s preferences prevailed and the US$50 billion subscribed capital became equally shared among the five member states. China, in return, obtained the headquarters of the bank which are located in Shanghai (Cooper, 2017). Developmental ideas seem to be less important to understand the new-generation RDBs. We do not find a coherent set of ideas similar to what structuralism and neoliberalism meant for the first-generation RDBs and the EBRD. In the new-generation RDBs we find rather the emulation of elements from both policy paradigms. In this regard, the new RDBs are quite more conservative than what challengers suggest. The articles of agreement of the AIIB practically copy-paste the founding acts of the ADB (Wan, 2016). Among the innovations of the AIIB are the use of green-bonds as an alternative instrument for capitalization, and the lean structure of the bank that includes a non-resident board of directors. The NDB seems to be more original than the AIIB in terms of ideas, which can be attributed to the Indian influence on the bank’s institutional design. Former Prime Minister Manmohan Singh and NDB first President Kundapur Vaman Kamath have acted as policy entrepreneurs of the NDB, implementing, for instance an – in IFIs and RDBs – unprecedented principle of equality between the five member states. India has also pushed for a project portfolio specialized on sustainable development and renewable energy, in sharp contrast with the AIIB’s focus on infrastructure. Another innovative idea, this time with Chinese authorship, is the use of local denominated bonds (denominated in rupees and exchanged in the Chinese capital market) for the capitalization of the bank. This is part of a Chinese strategy of diversifying financial instruments. Finally, there is an emphasis on loans to national developmental institutions and national champions. 2.3.1 Divergence or convergence? It is a matter of perspective (and research interest) whether to focus on the differences or on the similarities among RDBs. Recently, scholars have emphasized the latter: all RDBs converge into a rather similar model of IGOs dependent on capital markets in order to lend to public and private actors for development projects (Ben-Artzi, 2016; Humphrey, 2016; Kellerman, 2019). The “discipline of the market” is a crucial force behind this convergence. As Humphrey (2016, p. 93) points out: “bond markets simply want to see the [M]RDBs run in what they consider to be a ‘sound way,’ they are not concerned with development or poverty alleviation, but with the security of their investment.” In comparison with powerful member states (shareholders), bondholders (creditors) are less visible principals of the RDBs, whose mechanisms of influ-

The politics of the regional development banks  441 ence remain to be uncovered more fully but operate via the financial markets and creditor countries sitting on the boards. Kellerman (2019) has provided a theoretical account of both the proliferation of RDBs and their convergence towards a similar model. His theory is based on a cycle of four phases: dissatisfaction with the existent institutions (1) that leads states to create countervailing RDBs (2), which eventually go back to the mainstream model (3), sparking new cycle of dissatisfaction (1’) (Kellerman, 2019, pp. 111–112). He posits that RDBs are created by coalitions of states which are dissatisfied with the status quo and purposefully differ from existent institutions. However, because RDBs are resource-dependent institutions the original coalition will need to open up the membership to external states that, to lower the risk, will press for making the countervailing RDBs converge with the prevalent mainstream model. It is this “reversion-back-to-the-status-quo” which sparks new dissatisfaction and drives the creation of new waves of countervailing RDBs. If Kellerman and Humphrey are right we should expect that the AIIB and the NDB, despite all the “fuss” will end up resembling their old siblings.

3.

OPENING THE BLACK BOX: THE POLITICS OF VOTING, LENDING AND ACCOUNTABILITY

In this section I will focus on the politics of the everyday functioning of the RDBs. I will group the corresponding literature into three interconnected dimensions: voting, lending, and accountability. 3.1 Voting Voting it is a critical dimension of the functioning of RDBs as it is the way in which member states decide on the most important operations. The designers of RDBs emulated the “one-dollar-one-vote system” of the WB, in which the voting shares are distributed according to the member states’ financial commitment with the banks plus a common component known as basic votes (Strand and Trevathan, 2016). Even though this system departs from the traditional “one-country-one-vote system” of IGOs such as the UN or the WTO, the distribution of votes between donor states (creditors) and borrower states varies a great deal across RDBs. For example, the ADB and the EBRD are described as controlled by donors, while the IADB, the AfDB and the AIIB are controlled by borrowers (regional members). Voting shares at the NDB are equally distributed among the five member states (see Table 28.1). While voting power is certainly one of the important influences on decision-making within an RDB, there are also complex interactions with structural factors. On the one hand, there is strong evidence that states that control larger shares of voting power tend to dominate the allocation of loans (Krasner, 1981; Kilby, 2006). For instance, loans are aligned with Japanese bilateral aid and countries at odds with the US (such as Afghanistan and Vietnam at different points in time) received few or no loans from the ADB (Wihtol, 1988; Kilby, 2006). Voting power also has an influence on membership decisions. Wihtol (1988) argues that the delayed accession of China to the ADB was due in part to US congressional opposition. On the other hand, the translation of voting shares into decision making within RDBs is far from automatic. In this process, both formal mechanisms (e.g. influencing the speed of board approval) and informal mechanisms (e.g. pressure on the banks’ staff) play a role

442  Handbook on the politics of international development Table 28.1

Top shareholders and distribution of voting power

RDB

Top 5 shareholders

Shares of donors %

Shares of borrowers %

IADB

US; Brazil; Argentina;

49.995 (non-regional and the US)

50.00 Latin American countries

40 (non-regional)

60 (African countries)

26.6796 (non-regional)

73.32 (Asian countries)

Mexico; Canada AfDB

Nigeria; US; Japan; Egypt; South Africa

AIIB

China; India; Russia; South Korea

NDB

Equal shares among member states (Brazil, China, India, Russia, South Africa)

ADB

Japan; US; China; India;

54.181 (non-regional, Australia,

Australia

New Zealand, and Japan)

US; France – Germany

87.65 (regional and non-regional

-Italia – Japan – UK

donors)

EBRD

45.819 (Asian countries) 12.35 (countries of operation)

Source: Author’s compilation.

(Kilby, 2011). Small states, for instance, can offset their disadvantage by building coalitions and aggregating their voting shares leading to outcomes that are not necessarily aligned with the preferences of the top shareholders (Lyne et al., 2009; on voting coalitions see Strand, 2003). In this process, the RDBs’ staff can play a major role. The staff develops projects in consultation with potential borrowing governments and then presents individual projects to the board for approval (Lyne et al., 2009). It can broker the support of different governments and improve the technical and financial setup of single projects increasing the likelihood of approval and/or circumventing the potential obstruction of powerful shareholders. Also, the RDBs’ presidents have agenda-setting competencies that help to overcome the influence of the most powerful shareholders by deciding what to bring for voting and what not. RDB presidents are not only well-respected experts in finance and banking, but also leaders equipped with strong ties and political capital (Tussie, 1995; Ben-Artzi, 2016). 3.2 Lending Lending is the core operation of RDBs. And it has been subject to a significant change in the last decades away from developmentally-oriented to investment-oriented. The first-generation RDBs were designed with two different modalities of lending: the concessional lending, and the non-concessional lending (also known as Ordinary Capital Resources or OCR). Through the concessional lending window, RDBs provide grants (not repayable disbursements) to their borrowers, becoming closer to a development agency than to a bank. The concessional lending is based on donor countries’ contributions thus opening room to the influence of powerful donors that can use their contributions as leverage over RDBs’ decisions and agenda (Babb, 2009). Humphrey (2016) contends that the US power over the concessional window of the IADB (the FSO) was the main reason why the IADB’s then president Ortiz Mena tried to enhance the capacity of the non-concessional window of the bank through the expansion of capital-market activities and, in this way, escape from political control. The policy shift from developmentalism to neoliberalism, the increasing financialization of the RDBs, and the criticism of donors against RDBs have all threatened the survival of the concessional window. Neither the EBRD – inspired by neoliberal ideas – nor the AIIB

The politics of the regional development banks  443 and the NDB comprise concessional windows. Nowadays, by far the most important lending modality for RDBs is the OCR. It consists of loans oriented to finance projects that would not otherwise attract funding from capital markets. OCR are similar to the loans by commercial banks even though their interest rates tend to be lower and maturities (repayment periods) are longer than those granted by commercial banks. While concessional lending makes RDBs dependent on states (donors), the OCR makes RDBs dependent on the market (bondholders) and credit rating agencies. In fact, OCR are generated mostly from issuing bonds rather than from members’ contributions and commitments (Culpepper, 1997; Ben-Artzi, 2016). This development makes external credit ratings a major parameter in the lending capacities and operations of RDBs. The better the credit rating of the RDBs, the better the chances to sell their bonds and generate income (Ocampo, 2014). The IADB, the ADB, and the EBRD are all rated AAA. The AfDB was downgraded in 1995 to AA+ or AA by Standard & Poor’s and Moody’s, probably because the low number of non-regional members impacted the overall creditworthiness of the AfDB according to rating agencies’ evaluations (Mingst, 2016). Credit rating is also a crucial factor for the establishment of the new-generation RDBs. Among the members of the NDB, only China has a high rating (AA-), which compromises the banks’ capacity to borrow on capital markets (Wang, 2018). As a strategy to circumvent this obstacle, the NDB borrows on the domestic Chinese market where the bank is rated AAA by Chinese credit rating agencies. The AIIB is on a better foot than the NDB due to the high number of rich non-regional member states with high scores (Knoerich and Urdinez, 2019). The sub-RDBs, in turn, have in general lower ratings with the exception of the Development Bank of Latin America (CAF) which is rated Aa3 by Moody’s. In 1991, its new president, Enrique García, traveled to New York to obtain a rating from Standard & Poor’s and Moody’s, despite the fact that no Latin American borrower had an investment rate and that some of them had been deeply hit by the international debt crisis (Humphrey, 2016; Rubio, 2015). This dependency on credit rating should not be underestimated. It has a major impact on the loans given to RDBs and to the projects that are being granted financial support. While in the 1960s and 1970s RDBs focused on the developmental needs of the borrowing countries, thus lending to public sectors such as sanitation, education, and housing with government guarantees, at the end of the 1980s, the IADB, the ADB, and the AfDB followed the global script adopted by the WB and the IMF to tackle the international debt crisis and implemented a policy-lending approach making loans conditional to the implementations of structural adjustment programs (Tussie, 1995; Casaburi et al., 2000; Babb, 2009; Vivares, 2013). This was in parallel with the creation of the EBRD and its focus on private sector bankable projects. Thus, bondholders have become – next to the states – principals of the RDBS. However, they are not concerned with infant mortality, primary school enrolment, infrastructure development and other developmental goals, but with non-performing loans, return on equity, loan portfolio concentration and other indicators that credit rating agencies report and score (Humphrey, 2016, p. 94; Kellerman, 2019). In fact, Ben-Artzi (2016, p. 145) has provided evidence that RDBs’ loans are associated with FDI inflows, meaning that they lend money mostly to those countries whose economies attract more investment, which normally are not the poorest and neediest. Furthermore, in the case of the IADB and the EBRD loans are positively associated with GDP, meaning that the richest borrowing countries are receiving more loans. This is again a proof that the dilemma between aid and profitability seems to be solved in favor of the second (Humphrey, 2016).

444  Handbook on the politics of international development It remains to be seen how the new-generation RDBs address this problem. Thus far, they have broken with well-established lending practices. The AIIB, for instance, has reduced conditionality in accordance with the demand of Asian member states and their criticism of the ADB and IFIs. The NDB, in turn, has emphasized timeliness over oversight, becoming a more risk-seeking bank than the other RDBs (Cooper, 2017). If we follow Kellerman’s theory of cycles, new RDBs will follow their old siblings. The “discipline of the market” and the need to satisfy bondholders will incentivize them to avoid risky borrowers and look for the most attractive financial opportunities in emergent economies. 3.3 Accountability Like the WB and the IMF, RDBs have faced contestation from local and international NGOs, cooperatives, and trade unions including mass protests in some cases. NGOs have also raised demands about transparency and disclosure in the design and strategies behind the projects financed by RDBs, that normally clash with the autonomy that the member states and the RDBs’ staff want to preserve (Casaburi et al., 2000; Park, 2017). Contestation comes about when projects financed and/or implemented by RDBs have negative unintended effects on local communities. Much of the attention of civil society and academia has been put on the negative consequences of large infrastructure projects, such as damns or international highways (Filho and Rios, 2007). Other problems are the displacement of local communities, irreparable change of the local environment, and threats to the livelihood and culture of indigenous people (Casaburi et al., 2000; Soutar, 2007). This brings the issue of accountability – the condition of being held responsible and answerable for decisions and (in)actions – to the fore (Casaburi et al., 2000; Uhlin, 2011; Park, 2015). By design, RDBs are only accountable to their member states. Their traditional mechanism of vertical accountability consists of reports that the president presents to the board of directors, management plans, and monitoring of the operations. Traditional mechanisms of horizontal accountability are internal audits, inspections, evaluations and investigations carried out by internal units. Until the 1990s, the citizens affected directly or indirectly by the operations of the RDBs had no formal mechanism to demand reparations (Bissell and Nanwani, 2009). But in order to enhance accountability and address contestation from the civil society, RDBs started adopting mechanisms of external accountability emulating the WB (Bissell and Nanwani, 2009; Park, 2015). Park (2017) argues that even though accountability as justice has become a new international norm, this norm is contested by borrowing states and RDB staff who engage in different tactics of norm-avoidance. Although RDBs accountability mechanisms have been improved in terms of transparency and independency, they still have limited capacity to respond and provide remedies to affected private citizens (Park, 2015). It has been observed that many sub-RDBs remain unaccountable to the civil society (Zappile, 2016). But also RDBs seem to favor corporate confidentiality over full disclosure and accessibility of information, thus compromising accountability (Nelson, 2012), especially when their borrowers are private corporations. The relation between RDBs’ accountability and lending to the private sector is particularly interesting as private–public partnerships have become widely used to implement projects financed by RDBs. It still needs to be researched whether the new-generation RDBs will engage with the “international norm of accountability as justice” and how civil society organizations will react to their lending practices.

The politics of the regional development banks  445

4.

RDBS, REGIONALISM AND REGIONAL GOVERNANCE

RDBs are different from the WB and other IFIs in their by-design relation with their regions of operation. From the outset, they have been central actors in projects of regionalism and regional governance, understood as state-led projects of regional cooperation and/or integration (Bruszt and Palestini, 2016). Most RDBs have units specialized in regional integration, policy frameworks to conceptualize regionalism, and implement policies and special-purpose vehicles focused on regional governance (Cammack, 2016). Regional cooperation and integration are the very purpose of the ADB, the AfDB and the IADB, and it is also part of articles of agreement of the EBRD and the AIIB (Tussie, 1995; Dent, 2008; Chin, 2016; Mingst, 2016). Even though regionalism crosses all the three generations of RDBs, the literature on comparative regionalism has paid little attention to the role that these institutions play in financing regional initiatives, brokering state and non-state actors, and bringing about regional public goods. As Bull and Bøås (2003) pointed out in one of the few studies on RDBs from a comparative regionalism perspective, RDBs are both the outcome of regionalism, as well as actors of regionalism in their own right, enjoying partial autonomy from their member states and from the financial system. Drawing on insights from the New Regionalism Approach, Bull and Bøås argue that RDBs have in different and contested ways contributed to the regional identity (regionness) of their respective regions. In fact, RDBs can shape the geographical and symbolic contours of the regions in which they operate. The EDB – as a sub-RDB associated with the Eurasian Economic Union – put forward a notion of “Eurasian region” that competes with Western notions of Europe (Libman, 2014). Similarly, the AIIB shapes the contours of Asia with an East–West vision that includes the Middle East and contrasts with the North–South maritime vision of the ADB which includes the Pacific Islands (de Jonge, 2017; Dent, 2008). RDB-driven regionalism is an alternative to the traditional forms of state-driven regionalism in which heads of governments cooperate through presidential diplomacy. RDBs are well-suited orchestrators of regionalism and regional governance because of their sui generis and rather unique triple nature as regional intergovernmental organizations, financial institutions, and epistemic communities. Each of these traits equips RDBs with a specific resource. First, although far from being democratic institutions, they have the procedural legitimacy of a regional IGO as governments’ representatives sit on their boards with the power to vote on the functioning and operation of the bank. Other institutions in the field of development finance – such as bilateral donors, investors, or national development banks – lack the legitimacy thereby conferred. Furthermore, RDBs cater to regional membership, which enhances a sense of ownership especially for borrowing states; this regional legitimacy is even stronger in sub-RDBs which are made up of mostly regional borrowing members and are more responsive to borrowers’ demands (Humphrey and Michaelova, 2013; Zappile, 2016). Second, RDBs have a financial capacity that other regional IGOs would only dream of. This is particularly important in regions of limited state capacities, transforming RDBs in crucial partners of regional IGOs (Zappile, 2016). Since they are financial institutions rated by credit rating agencies they are not only reliable partners for governments but also for market actors. Finally, RDBs have the technical capacity and know-how of an epistemic community. Their technocracies are made up of international engineers, economists, policy analysts, and experts in logistics, who can assist governments and firms in setting up and implementing projects (Palestini, 2020). Thanks to these capacities, RDBs have been partners of states

446  Handbook on the politics of international development and regional IGOs in several regional governance initiatives such as the Greater Mekong sub-region in Southeast Asia, financed by the ADB (Dent and Richter, 2011) or the Initiative for the Integration of the Regional Infrastructure in South America, led by the IADB, CAF and FONPLATA (Agostinis and Palestini, 2021). More recently, the AIIB has forged ties with ASEAN – a traditional partner of the ADB – to become a crucial actor in the ASEAN Community infrastructure, including the Master Plan of ASEAN Connectivity (MPAC) and its project priorities (de Jonge, 2017, p. 1069). In these initiatives of regional governance, RDBs are both the agents of member states, acting as a collective principal, and the orchestrators of different classes of state and non-state actors. In transnational governance jargon, orchestrators are actors that, through soft mechanisms, can enlist intermediaries to implement governance goals. While states usually prioritize nationally-bound projects (with higher electoral payoffs), RDBs can bypass governments becoming the orchestrators of states and non-state actors to implement regional integration projects. The Sistema de Interconexión Eléctrica de los Países de Centroamérica (SIEPAC) is a case in point. Central American states delegated to the IADB the construction of an electric grid and a regional electric market in Central America. The IADB convened national and transnational electric companies to form a “regional electric company” in charge of financing and managing the SIEPAC. The IADB in tandem with the Central American Bank for Economic Integration provided not only the loans to build the grid, but also the technical know-how to set up the supranational institutions that govern and regulate the market (Palestini, 2020). Certainly, RDBs and the regional initiatives that they orchestrate are not immune to power struggles between member states. We have seen that regional powers do play a role in the design and functioning of RDBs, normally by concentrating voting power and informal influence on RDB agendas and staff. As a consequence, changes in the power dynamics between member states can influence regionalism outcomes (Agostinis and Palestini, 2021). In June 2020, President Trump nominated an official of the National Security Council as president of the IADB, breaking the informal rule that IADB presidents had to be Latin American citizens. This unprecedented decision indicates a renewed interest of Washington to regain influence in Latin America in times of China’s increasing presence in the region. Some weeks before, a conflict had emerged at the border of India and China in an area that includes territories occupied by Pakistan and claimed by India, and in which a China–Pakistan economic corridor is being financed by the ADB and the AIIB. These examples show that hegemonic aspirations and power politics are important dimensions of RDBs’ politics.

5. CONCLUSIONS RDBs are complex institutions and, as this chapter has shown, the study of the politics of RDBs cannot be reduced to a single dimension. The increasing financialization of RDBs operations has made them less dependent on donors and powerful member states, but more dependent on the financial system, which enhances the influence of a new set of actors such as bondholders as well as credit rating agencies. The power of markets is a serious challenge to RDBs’ developmental mission. For instance, all RDBs have approved programs and loans to tackle the most serious economic effects of the COVID-19 pandemic. RDBs have raised money from the Fight COVID-19 Social Bond, which is the largest social bond ever launched on capital markets. The AIIB has opened a COVID-19 Crisis Recovery Facility to provide

The politics of the regional development banks  447 loans at reduced interest rates to low-income countries hit by the crisis. Future researchers will have to assess how RDBs reconcile the investors’ preference for high performance loans, with the developmental mandate they are expected to fulfill. The chapter has also shown the important role that RDBs play in orchestrating regionalism and regional governance. They can use their relative autonomy from member states to put forward projects with a regional vision that bypass nationally-bound interests. But this task is not free of challenges. Most RDB-led regional governance initiatives focus on large infrastructure projects which are attractive both for member states and for capital markets, such as the Greater Mekong Sub-region or the African Power Pools. RDBs must make sure that these projects are aligned with sustainable development goals and minimize potential negative consequences for local communities and the environment. This brings the politics of accountability and the relations between RDBs and the civil society to the fore (see Chapter 12 by Irrera in this volume). Finally, future researchers will have to investigate whether RDBs and specially the new-generation RDBs have the capacity that scholars have attributed to them, namely to transform the prevailing global financial architecture (see Chapter 14 by Vivares and Stanley in this volume). Some observers have seen in new-generation RDBs a case in point of “contested multilateralism,” in which rising powers propose multilateral responses oriented to challenge and change the status quo (Morse and Keohane, 2014). Yet, recent scholarship also suggests that the financial system can mainstream these institutions (Humphrey, 2016; de Jonge, 2017; Kellerman, 2019; Knoerich and Urdinez, 2019). Future researchers may investigate the causal mechanisms that make new-generation RDBs and sub-RDBs converge. The epistemic community of global development finance as well as the mechanisms of co-financing and cooperation between new and old RDBs surely are a promising object of study.

REFERENCES Agostinis, G. and Palestini, S. (2021). Transnational governance in motion: Regional development banks, power politics, and the rise and fall of South America’s infrastructure integration. Governance, 34(3), 765–784. Babb, S. (2009). Behind the Development Banks. Chicago: University of Chicago Press. Ben-Artzi, R. (2016). Regional Development Banks in Comparison: Banking Strategies versus Development Goals. Cambridge: Cambridge University Press. Bissell, R. E. and Nanwani, S. (2009). Multilateral development bank accountability mechanisms: Developments and challenges. Manchester Journal of International Economic Law, 6(1), 2–55. Bradlow, D. D. (2015). Southern African governments, multilateral development banks, non-state actors, and sustainable infrastructure: Managing changing relationships. South African Journal of International Affairs, 22(3), 289–305. Bronstone, A. (1999). The European Bank for Reconstruction and Development. Manchester: Manchester University Press. Bruszt, L. and Palestini, S. (2016). Regional development governance. In T. Börzel and T. Risse (eds.), The Oxford Handbook of Comparative Regionalism (pp. 374–404). Oxford: Oxford University Press. Bull, B. and Bøås, M. (2003). Multilateral development banks as regionalising actors: The Asian Development Bank and the Inter-American Development Bank. New Political Economy, 8(2), 245–261. Cammack, P. (2016). World market regionalism at the Asian Development Bank. Journal of Contemporary Asia, 46(2), 173–197.

448  Handbook on the politics of international development Casaburi, G., Riggirozzi, M. P., Tuozzo, M. F., and Tussie, D. (2000). Multilateral development banks, governments, and civil society: Chiaroscuros in a triangular relationship. Global Governance, 6(4), 493–517. Chin, G. T. (2016). Asian infrastructure investment bank: Governance innovation and prospects. Global Governance, 22(1), 11–26. Cooper, A. F. (2017). The BRICS’ New Development Bank: Shifting from material leverage to innovative capacity. Global Policy, 8(3), 275–284. Culpeper, R. (1997). Titans or Behemoths? London: Lynne Rienner. De Jonge, A. (2017). Perspectives on the emerging role of the Asian Infrastructure Investment Bank. International Affairs, 93(5), 1061–1084. Dent, C. M. (2008). The Asian Development Bank and developmental regionalism in East Asia. Third World Quarterly, 29(4), 767–786. Dent, C. M. and Richter, P. (2011). Sub-regional cooperation and developmental regionalism: The case of BIMP-EAGA. Contemporary Southeast Asia, 33(1), 29–54. Dutt, N. (2001). The US and the Asian Development Bank: Origins, structure and lending operations. Journal of Contemporary Asia, 31(2), 241–261. ECLA (1959). The Latin American Common Market. Santiago: General Secretariat. Filho, W. L. and Rios, R. (2007). Accountability Issues in International Development Projects. Frankfurt am Main: Peter Lang. Griffith-Jones, S. (2014). A BRICS development bank: A dream coming true? UN Conference on Trade and Development. Helleiner, E. (2009). The development mandate of international institutions: Where did it come from? Studies in Comparative International Development, 44(3), 189–211. Huiyun, F. and Kai, H. (2019). Leadership transition and global governance: Role conception, institutional balancing, and the AIIB. Chinese Journal of International Politics, 12(2), 153–178. Humphrey, C. (2016). The invisible hand: Financial pressures and organisational convergence in multilateral development banks. Journal of Development Studies, 52(1), 92–112. Humphrey, C. and Michaelowa, K. (2013). Shopping for development: Multilateral lending, shareholder composition and borrower preferences. World Development, 44, 142–155. Kappagoda, N. (1995). The Asian Development Bank. Boulder, CO: Lynne Rienner. Kellerman, M. (2019). The proliferation of multilateral development banks. Review of International Organizations, 14(1), 107–145. Kilby, C. (2006). Donor influence in multilateral development banks: The case of the Asian Development Bank. Review of International Organizations, 1(2), 173–195. Kilby, C. (2011). Informal influence in the Asian Development Bank. Review of International Organizations, 6(3), 223–257. Knoerich, J. and Urdinez, F. (2019). Contesting contested multilateralism: Why the West joined the rest in founding the Asian infrastructure investment bank. Chinese Journal of International Politics, 12(3), 333–370. Krasner, S. D. (1981). Power structures and regional development banks. International Organization, 35(02), 303. Libman, A. (2014). Commonwealth of Independent States and Eurasian Economic Community. In L. Levi, G. Finizio, and N. Vallinoto (eds.), The Democratization of International Institutions. First International Democracy Report (pp. 435–449). Abingdon: Routledge. Lyne, M. M., Nielson, D. L., and Tierney, M. J. (2009). Controlling coalitions: Social lending at the multilateral development banks. Review of International Organizations, 4(4), 407–433. Mingst, K. (2016). The African Development Bank: From follower to broker and partner. In J. Strand and S. Park (eds.), Global Economic Governance and the Development Practices of the Multilateral Development Banks (pp. 80–98). Abingdon: Routledge. Morse, J. C. and Keohane, R. O. (2014). Contested multilateralism. The Review of International Organizations. https://​doi​.org/​10​.1007/​s11558​-014​-9188​-2. Nelson, R. M. (2012). Multilateral Development Banks: Overview and Issues for Congress. Congressional Research Service Report.

The politics of the regional development banks  449 Ocampo, J. A. (2014). La gobernabilidad macroeconómica y financiera global. In R. Devlin, O. Echevarría, and J. L. Machinea (eds.), América Latina en una nueva era de globalización. Ensayos en honor de Enrique Iglesias. CAF. Palestini, S. (2020). Orchestrating regionalism: The Interamerican Development Bank and the Central American electric system. Review of Policy Research. Online first. https://​doi​.org/​10​.1111/​ropr​ .12389. Park, S. (2015). Assessing accountability in practice: The Asian Development Bank’s accountability mechanism. Global Policy, 6(4), 455–465. Park, S. (2017). Accountability as justice for the multilateral development banks? Borrower opposition and bank avoidance to US power and influence. Review of International Political Economy, 24(5), 776–801. Prebisch, R. (1963). Hacia una dinámica del desarrollo latinoamericano. Mexico City: Fondo de Cultura Económica. Rubio, V. (2015). From lending in the Andes to thriving in Latin America: CAF’s continuity, growth and long-term financing in the region. Doctoral Dissertation. Ontario. http://​scholars​.wlu​.ca/​etd. Shields, S. (2016). The European Bank for Reconstruction and Development as organic intellectual of neoliberal common sense in post-communist transition. In S. Park and J. R. Strand (eds.), Global Economic Governance and the Development Practices of the Multilateral Development Banks (pp. 167–186). Abingdon: Routledge. Soutar, L. (2007) Asian Development Bank-NGO encounters and the Theun Hinboun Dam, Laos. In B. Rugendyke (ed.), NGOs as Advocates for Development in a Globalizing World (pp. 200–223). London and New York: Routledge. Strand, J. R. (2003). Power relations in an embedded institution: The European Bank for Reconstruction and Development. European Integration, 25(2), 115–129. Strand, J. R. and Trevathan, M. (2016). Implications of accommodating rising powers for the regional development banks. In S. Park and J. Strand (eds.), Global Economic Governance and the Development Practices of the Multilateral Development Banks (pp. 121–142). Abingdon: Routledge. Sun, Y. S. (1922). The International Development of China. New York: G. P. Putnam’s Sons. Tussie, D. (1995). The Inter-America Development Bank. London: Lynne Rienner. Uhlin, A. (2011). National democratization theory and global governance: Civil society and the liberalization of the Asian Development Bank. Democratization, 18(3), 847–871. Vivares, E. (2013). Financing Regional Growth and the Inter-American Development Bank: The Case of Argentina. New York: Routledge. Wan, M. (2016). The Asian Infrastructure Investment Bank: The Construction of Power and the Struggle for the East Asian International Order. New York: Palgrave Macmillan. Wang, Y. (2018). The political economy of joining the AIIB. Chinese Journal of International Politics, 11(1), 105–130. White, J. (1970). Regional Development Banks: A Study of Institutional Style. London: Overseas Development Institute. Wihtol, R. (1988). The Asian Development Bank and Rural Development: Policy and Practice. New York: St. Martin’s Press. Yasutomo, D. T. (1983). Japan and the Asian Development Bank: Studies of the East Asian Institute, Columbia University. New York: Praeger. Zappile, T. (2016). Sub-regional development banks: Development as usual? In J. Strand and S. Park (eds.), Global Economic Governance and the Development Practices of the Multilateral Development Banks (pp. 80–98). Abingdon: Routledge.

29. The domestic and external conditions of the Chinese development path Alexandre Cesar Cunha Leite, Javier Vadell and Leonardo Ramos

INTRODUCTION This chapter aims to discuss the domestic and external conditions of Chinese development experience and its advances. Over the past three decades, China has achieved impressive results in terms of indicators of economic growth and international insertion (Lyrio, 2010; Tu and Mo, 2016). However, looking exclusively at its growth indicators tends to bias a more accurate analysis of Chinese development taken in isolation as well as from an integrated perspective of global development. In the same period, the country reached levels of development that includes the most diverse sectors of the economy, pointing to a huge structural transformation. More recently, in the second decade of the twenty-first century, the Chinese project is to change its profile, from global factory to global investor (Ding and Meng, 2018). Economic growth is a relevant component of development, but it is not enough (see Chapter 1 by Ocampo in this volume). In other words, in spite of the importance of economic growth, we must look to other components of Chinese development. After a long period of growth, it becomes relevant to observe whether (and how) it has generated the possibility of a qualitative leap. Qualitative leap is understood here as the shift from quantitative performance indicators, such as gross national product (GNP), to qualitative performance indicators that include the improvement in income distribution. In the case of China, the form of participation in international trade and capital flows may represent another relevant factor to analyze China’s path. The intensity of these flows allows China to be present in global markets, acting in global value chains and sustaining the capital accumulation necessary to maintain the pace of its growth and, consequently, its economic development. China is also a relevant actor in the global financial system, either through cooperation, financing development in emerging or less developed countries, or through direct participation in the financial system (Lin and Wang, 2017; Lima, 2019). Finally, there are social indicators and socio-economic planning efforts that can shed light on the development path. The aim of the chapter is to flesh out the close relationship of the domestic and external ambits in the Chinese development strategy. The strategy is rooted in domestic considerations that view its projection in the international scenario as a pillar for continuity. Therefore, it focuses on two questions that will guide the main argument: (i) what the current condition of Chinese development is, focused on an understanding of its regional development; and (ii) how the investment and foreign trade variables evolved to lead development dynamics. After these two topics, the text ends with some final remarks.

450

The domestic and external conditions of the Chinese development path  451

INTERNAL DEVELOPMENT AND INTEGRATED REGIONAL PLANNING: CHINA FROM INSIDE Despite significant industrial growth observed since 1990, China remains a country with a strong agrarian base. One of the central points in Deng Xiaoping’s national opening strategy initiated in 19781 recognized the importance of the countryside and sectoral growth given the tension between the magnitude of the rural population and relatively small share of arable land. The structural reforms promoted by Deng Xiaoping were carried out gradually and phased in stages. Investments in agricultural production associated with mechanization increased labor productivity in rural areas without causing unemployment or mobilizing the population to urban areas. Furthermore, the size of the population and rural production are of sufficient weight to compel the Chinese Communist Party (CCP) to pay attention to this large population group. The Chinese government was able to move away from an economic control over localities via operational decentralization without resorting to privatization. This decentralization process, however, does not extinguish economic planning, still commanded by the central government. Thus, while the central government maintained political and legal control, local governments obtained freedom to make decisions and make economic innovations. Although China was noted for industrial production of non-durable consumer goods as early as the 1980s, the country remains a significant producer of agricultural commodities, especially those that form the basis of its food basket. In the 2000s, China veered towards the infrastructure and technology which led to a change in the composition of production. The economic and social cost of the decision not to maintain agricultural production is high, with effects on employment, migration towards urban centers and the cost of training, providing education, housing, health, transport, etc. Policy planners understood that the growth of the industrial sector could not occur at the expense of rural sector production. Food security is of utmost priority. China, as an agrarian-based country, was successful in expanding its productive structure, attracting foreign direct investment (FDI) which enabled exports, once the global value chain was anchored whereby the industry does not find itself hostage exclusively to imports for domestic supply. Particularly, the accumulation resulting from commercial gains and the inflow of foreign investments creates a favorable mechanism for making investments aimed at domestic production. Foreign direct investment was greatly facilitated, and thus new productive sectors begin to emerge. The type of labor skills required for such nascent activities tended to change to a more qualified profile, generating improved income for workers. These transformations stimulated the change of people’s consumption pattern creating demand for other types of goods and services, promoting the domestic market. In sum, these are the two essential domestic bases to understand Chinese development. Development planning tried to make sure that the agricultural sector and industry maintain forward and backward linkages Such attention is directly related to the geography and climate features of the territory. China is divided into four big macro-regions. The main economic activities take place in the Eastern Coastal Region and Central Region. The main motivations for this concentration

1 The “Four Modernizations” started in 1978 under the leadership of Deng Xiaoping focused on agriculture, industry, science and technology and defense.

452  Handbook on the politics of international development are: (i) populational concentration; (ii) climate conditions; (iii) geographic conditions; and (iv) the localization of the two main political and economic poles (Beijing and Shanghai). Complementary aspects that help to explain the population concentration and the presence of more dynamic economic activities in these two regions are the fact that a large part of western China is unsuitable for agricultural activities and the north and far northeast regions contain restricted zones (of low economic condition, reduced volume of natural resources and unfavorable climatic and geographic conditions) and natural reserves (IGSNRR, 2015, 2016). However, there is a planning effort for the development of the west, north and extreme northeast regions. This planning goes through the Chinese Academy of Sciences, which consolidates information, data and expertise generated in its various constituent institutes. In general terms (and taking the three regions mentioned above), the actions directed to these regions are: (i) implanting and developing sectors of industry that can use the existing labor in the region and the available natural resources; (ii) maintaining the rational use of land for agricultural production, carrying out a process of industrialization and modernization of agricultural production; (iii) creating a basic transport infrastructure (railways and highways) connecting to the network of other regions (Liu et al., 2009; Dunford and Weidong, 2019); (iv) creating pilot projects through state-owned enterprises (SOEs) for structural transformation of integrating the agricultural sector; (v) elaborating policies to avoid desertification; (vi) stimulating the production of vehicles and machinery directed first to local production and subsequently for export; and (vii) providing basic social services to the local population, such as education, health, vocational and technical training. In this sense, the Belt and Road Initiative (BRI) is the strategic basis for planning an integrated development oriented towards Eurasia as a first step. In a speech in Kazakhstan in 2013, Xi Jinping presented the basis of what would come to be called BRI. The BRI is reinforced by a major re-orientation of Chinese foreign and economic policy, but it has been followed by large-scale actions and investments that seek – or purport to seek – to re-galvanize relations between Beijing and its neighbors in Asia. Liu and Dunford (2016) state that BRI consists of a kind of inclusive globalization, starting with Asian regional development and multiplying this initiative to other areas of the globe, from Europe to Africa and the Americas. In this direction, Dai (2016, p. 265) calls this process a “China-style including development strategy.” Despite the significant economic growth since the 1980s – the average growth rate of Chinese GDP between 1978 and 2013 was 9.9 percent – inequality between regions increased. It is interesting to note that over these three decades, household income grew by an average of 7.0 percent per year, resulting in a reduction in the number of inhabitants living in poverty. But this progress has not yet been sufficient to alleviate the concerns over the reality of regional disparity. Regional disparity after the late 1970s has experienced three sub-periods: a period of decline from 1978 to the early 1990s, a period of increase from the early 1990s to the early 2000s and a period of significant decline after the early 2000s. If we decompose China’s overall regional disparity into four components – disparity within the east; disparity within the center; disparity within the west; and disparity between the three regions – the first one and the fourth one dominated the change in China’s regional disparity in the past three decades. In the period after the early 2000s, both the decline of disparity between the three regions and the decline of disparity within the east have contributed to the significant decline of China’s overall regional disparity. This result implies that the recent adjustment in regional development strategy under the China-style inclusive development strategy, which has placed the less-developed inland provinces as the priority target region of public investment, has reduced the regional disparity in this huge country (Dai, 2016, p. 277)

The domestic and external conditions of the Chinese development path  453 There is also a significant disparity between rural and urban areas, regarding investment and income. As presented above, there is a set of priority planning and investment measures in specific regions in order to mitigate such inequalities. The government is concerned that if this unequal relationship between regions is maintained, it will lead to political and social tensions, mainly among the 56 ethnic minorities spread across these regions. Therefore, the government’s strategy is to make growth more regionally inclusive. In a speech delivered in 2005, then President Hu Jintao highlighted the importance of building a “harmonious society”: A harmonious society should feature democracy, the rule of law, equity, justice, sincerity, amity and vitality. Such a society will give full scope to people’s capacity and creativity, enable all the people to share the social wealth brought by reform and development, and forge an ever-closer relationship between the people and government. These things will thus result in China’s lasting stability and unity. (Hu, 2005)

The 11th Five Year Plan indicates that the “construction of a harmonious society” gave priority to this objective, while the 17th Congress of the CCP in 2007 elaborated the action plan based on such idea. The existence of regional disparities, in addition to causing significant income differentials results in more concrete and immediate problems such as migration to urban centers. Even the existence of the Hokou system of internal migration2 (and its flexibility in more recent periods) has not been sufficient to exercise control over labor mobility (Li, 2014) causing problems in urban areas, many of them with over 20 million inhabitants. Problems include the overcrowded dwellings in cities, poverty and misery, increasing the unemployment rates and pressuring the supply of public goods and services. Therefore, the objective of the government has been to put a trade and investment strategy in place.

INVESTMENT AND INTERNATIONAL TRADE: TWO KEY VARIABLES At the end of the 1980s, China established a legal framework to guarantee and encourage the entry of foreign capital (Mantzopoulos and Shen, 2011) via joint ventures. The so-called “joint capital ventures” (JCVs) constituted legal concessions for companies, individuals and/or large international corporations to operate in activities previously delimited by the government and in partnership. Once the government, in addition to being the regulatory institution, was an interested party in negotiation and acting as an economic agent, then formation of distinct joint ventures has been an important tool for converting and directing investment.3 2 The Hokou system consists of a system of labor control mobility. Its origin lies in the strategy from the old regimes, such as that of the Qing dynasty (1644–1911). With the 1949 Revolution, a similar system was established, then called (System) Houkou. The Hokou system had (in its creation) three main objectives: (1) to discourage the movement of the inhabitants of the countryside to the cities; (2) helping the government to allocate the workforce geographically; (3) facilitate control over criminals and enemies of the government – such as members of Kuomintang. 3 The first legislation on post-Mao management joint ventures is from 1979, discussed at the Second Session of the Fifth People’s Congress. This legislation went through several discussions and updates until the 18th Session of the Ninth People’s Congress in which it was established that for greater openness to foreign presence in the processes of economic cooperation and technology transfer,

454  Handbook on the politics of international development The initial inflow of foreign investments was concentrated in the manufacturing and civil construction sectors. The choice of destination is understandable. A country with pent-up demand for durable and non-durable consumer goods, whose industrial sector was yet to be established, associated with the priority objective of standardizing access to goods and services for the population would become attractive to foreign capital (and its expectations of return). The civil construction sector in addition is a labor-intensive one. Gradually, from the 1990s, capital began to flow into the service sector, mainly to communication, transportation and finance. According to Mantzopoulos and Shen (2011), China obtained multiple gains with the entry of foreign capital. The first was the modernization of industrial equipment, the second was the dissemination of new production techniques and, third, the improvement of a productive sector for the export of goods. This flow of investment stimulated (and complemented the efforts of the government) adoption of new technologies. The authors quoted suggest that investments made in research and development (R&D) were positively affected by the presence of foreign capital. Qu et al. (2017) also suggest that FDI promoted innovation more broadly in many other sectors. The result is a gradual change in the profile of production. The phrase “made in China,” which previously suggested a low-quality product, no longer does justice to what has been produced since then. In short, the next step in Chinese productive transformation is, according to Ding and Meng (2018) to move from “made in China” to “design in China.” In planning its development strategy, the government established priority axes for political intervention. Thus, with regard to the development policies of the post-1990 period we can point out four main axes: (1) Given the recognition of the strength of a global economy of increasing scale there was a commitment to growth in an intensive model in place of the extensive growth model of previous periods. Following this axis, Chinese participation in the global economy was seen as something essential to its own international insertion project, different from the liberal recommendation. (2) There was an understanding that the population should have greater purchasing power, as well as a better standard of living that would be the result of greater and more efficient production of goods, in addition to the admission of pragmatic principles of economic and social planning. (3) There was to be adherence to the CCP’s rules. (4) There was a commitment to adopt and nurture a peace diplomacy, in addition to seeking a peaceful international insertion. The rate of investment has traditionally been viewed as an engine to sustain development (see Chapter 1 by Ocampo, Chapter 3 by Gabusi, and Chapter 27 by Clifton and Díaz-Fuentes in this volume). However, there are particularities in the Chinese case. The first concerns those who organize and control the resources. The state apparatus creates, mobilizes and manages productive resources. It has had a key participation on the capital accumulation process, which also significantly influences the type of development obtained over years of economic growth. The reforms under the modernization project focused, simultaneously, on creating a domestic earnings network – inclusion and access to goods and services was essential – and on adapting

as well as stimulating the country’s economic development, the People’s Republic of China would allow companies, individuals and other foreign organizations to establish activities in the country. Also, foreign-owned companies could only establish themselves in the country, if and only if, their activities are beneficial to Chinese economic development, promoting the evolution of the industrial productive sector, the Chinese export industry and strengthening the generation and transfer of advanced technology (Mantzopoulos and Shen, 2011, pp. 62–63).

The domestic and external conditions of the Chinese development path  455 its structure to the market (domestic and external). The establishment of special economic zones (Ge, 1999), the directing of investments to strategic sectors and the association of the state with these integrated activities signal that control and, above all, centralized political and economic decision making are distinguishing features. Holding productive resources and the significant participation of the government in the movement of external resources allows it to operate in spaces where the peripheral western economies were once entrusted to private initiative (Furtado, 1974; Chang, 2004; Reinert, 2016). In terms of development, the government establishes the strategy, considers the existence of private initiatives, but uses the market to its advantage, according to its objectives. This behavior indicates a public management operation more suited to the proposal to grow and develop, overcoming the barriers of first entrants to the global market and obstacles posed by them. Chang (2004) points to Friedrich List, commonly known as the “father” of the “infant industry” argument, who applied history-based methods in analyzing the economic development of the UK and the USA during the nineteenth century. He showed that anyone who attains a position of strength tends to “kick away the ladder by which he climbed up,” as the saying goes, so as to deprive others of the chance. Chinese investments are not restricted to the domestic market. A significant portion of investment is focused on infrastructure, productive capacity, domestic logistics network and supply of essential goods to the population; however, another relevant variable relates to investments abroad. Asia, Africa and Latin America (Gallagher, 2016) regions have become the preferred destination for Chinese investments since 2001. Priorly, with a view to geo-economic regional integration since the 1990s, China had already expanded investments in its neighboring countries, with an intensification through the BRI stimulus. A consequence of this project is the strong Chinese presence in the Asia-Pacific and Central Asia region. The second significant international feature of the development path is related to international trade. China has been successful in upgrading its export structure. Initially imports consisted of ore, agricultural derivatives, foodstuffs and crude oil from different markets around the globe. Additionally, there was a demand for manufactured goods not produced domestically. This structure was meant to ensure domestic supply and prevent periods of famine Consequently, despite an initial phase of trade deficit, the sequence of events suggests that this initial result was part of a larger purpose (see Table 29.1 with the evolution of the structure of trade). These imported inputs have become the basis of the domestic production chain, therefore, essential for its production, modernization and growth. In a way, China ended up becoming a regular consumer of primary goods, mainly from Latin American and African countries (Lima, 2016; Vadell, 2013; Gallagher and Porzecansky, 2010; Jenkins, 2015). At the same time, China was seen as the major exporter of low-intensity manufactured products in innovation and technology. The improvement of its productive sector, supported by a policy of state intervention was crucial here. Hence, the Chinese government’s strategy envisaged establishing a hierarchy of sectors, labor mobility according to the production hubs, management of production costs, creation of productive infrastructure, among others established measures. The transformation of the trade structure dates from the early 1980s. In this period, it was clear to state decision-makers that reserves were badly need for growth. SOEs were then led by the government to allocate production to the foreign market. At the same time, from the years 1983 and 1984, the government allowed exporting companies to retain 50 percent of their earnings in the form of convertible currencies. Another relevant instrument in changing the export profile was the establishment of foreign trade agencies responsible to represent,

456  Handbook on the politics of international development Table 29.1 Trade Flow

Total Chinese trade flow (in US$ billion) 1992

1998

2001

2009

2015

2019

Imports

80.58

140.23

243.55

1,005.55

1,681.67

2,012.42

Exports

84.94

183.80

266.09

1,201.64

2,281.85

2,423.07

(total)

Source: UN Comtrade Database, 2020.

authorize and sign import and export agreements. An important function, however, was the operational decentralization related to foreign trade. At the end of the 1980s, it was possible to observe a change in trade related modus operandi. According to Mantzopoulos and Shen (2011), via the agencies, the government decentralized and facilitated trade financially. Furthermore, the government created a link between production and distribution phases, making the relationship between production and export more fluid and less bureaucratic. And, finally, it freed the central government from micro decisions, allowing it to concentrate, mainly, on the coordination and macro regulation of export activities. In 1988, foreign trade, under the management of Ministry of Foreign Economic Relations and Trade (MOFERT) – what would later be known as Ministry of Foreign Trade and Economic Cooperation (MOFTEC) – made the system of trade agencies universal, considering that the decentralization and universalization of the program would have a strong impact on trade flows. The evolution of trade flows can be seen in Table 29.1. The year 1992 is the turning point for the opening reforms implemented in the 1990s. By 1998 the crises in emerging countries hit China. The year 2001 marks the China’s entry into the WTO and shows the beginning of the spectacular hike in the growth of trade flows. The years 2009 and 2015 and 2019 were chosen for a comparative basis. The geographical distribution needs to be mentioned. China is currently the main trading partner in Asia. Its open door policy focused primarily on its neighbors. In a short period of time (approximately 10 years), China had become the main trading partner of Japan. In 2008, the share negotiated between China and the countries of the Asian continent reached 53.3 percent of the total of regional trade flow. In the same year, 40 percent of Chinese exports went to the Asian continent.4 In 2013 the share exported by China to this same market had already reached 43 percent. The same thing occurs in other markets. In 2013, China was responsible for 24 percent of total exports to the North American continent. The 2014 data indicate that the amount exported remained at 24 percent of the total. In November 2020, China became the top trading partner of the European Union. Special interest since accession to the WTO was granted to the African and Latin American continents.5 Chinese shares in these markets after 2001 follows the pattern aimed at raising its exports globally. However, it is interesting to return to a question raised at the beginning of this topic. The type of goods exported by China to these markets is relevant for the analysis of the level and structure of development achieved by the country. As a result of an investment Data taken from the Observatory of Economic Complexity: http://​atlas​.media​.mit​.edu/​en/​. In 2001, China exported to South America and Africa, respectively, 1.5% and 1.4% of its total exports. In 2008, these same regional players received, respectively, 3.3% and 3.1% of the amount exported by China to the world. In 2013 and 2014, 4.4% and 3.9% and 4.2% and 4.2%. Source: http://​ atlas​.media​.mit​.edu/​en/​visualize/​tree​_map/​hs92/​export/​chn/​show/​all/​2014/​. 4 5

The domestic and external conditions of the Chinese development path  457 policy strategically directed by governments over the past few decades, China is nowadays an exporter of higher value-added products. In other words, China has reduced the export of non-durable basic consumer goods and has started to produce and export capital-intensive goods with investment in technology. In sum, there was not just trade expansion, but diversification and an expansion of traded goods with added value. The project to expand and diversify its transport networks is not surprising. The BRI brings together the objectives of expanding and diversifying its transport and trade networks, with the aim of bringing development to specific regions of the country in tune with local development goals. An example is the western region of China, exemplified here by the city of Chongqing. With the completion of this project, in addition to the infrastructure projects aimed at Africa and Latin America, both with Chinese funding, the country has expanded its logistics and trade network and also guarantees investments in local internal infrastructure in the focus regions of domestic development projects. The design of the logistics networks shows the purpose for the distribution of goods that would serve the continental markets thus connected. Combined land and sea routes meet the objective of integrating and developing the western and extreme northwest regions6 to the dynamic center of Chinese development. At the same time, they would allow the transport of goods (and passengers) to the European (passing through Central Asia) and African markets. A similar project has been set up for the Latin American market. Examples are the projects of the railway network that crosses the continent and a channel for vessels that would replace the Panama Canal. Scholars have pointed out how relevant it is for the maintenance of the CCP in power and for political stability to maintain economic growth, social inclusion and access to goods and services. However, inclusion and access to consumption occurs with income growth which depends, among other sources, on exports and investments. These two variables, together, account significantly to the engine of development; both of which are the focus of the government’s participatory policy in the planning and coordination of public and private decisions and actions. The BRI can be understood as a logistical integration initiative, a kind of interconnectivity globalization, that seeks to connect Asia, especially China, to the productive and commercial spaces of Asia, Europe and Africa. It is an initiative to create the geography for the expansion of production and commercialization. Therefore, it is understood that the flows of trade and investments, initiated in Chinese territory, open up space for local, regional and global interconnected development. Such internal aspects, together with BRI strategy call attention to a geopolitical implication of Chinese development. Even more, the contemporary struggle and tensions between China and Unites States, and particularly their (political) economic feature had – and will have – a crucial importance for Chinese development. China is officially seen as a challenger to the United States (US Department of State, 2020), and this will have huge impacts on innovation policies, international trade and investment flows on both countries in the years to come. It is not our intent in this chapter to discuss about such “geopolitics of development”; however, it

6 The development and further integration of the northwest Chinese region still serves the objective of resolving territorial issues (including those of a separatist nature) and issues related to territorial security. Maritime routes, on the other hand, meet the goals of defending spaces that are now the scene of disputes with countries in the region. Examples are the Straits of Malacca and the artificial islands of the South China Sea (Cáceres, 2014; Hayton, 2014).

458  Handbook on the politics of international development will have huge consequences for the continuous adaptation of Chinese trade and investment policies – crucial variables in order the Chinese development path. We can see more clearly the connection between domestic development and international development prospects after the COVID-19 pandemic with the 14th PRC Five-Year Plan. The leitmotiv is the “dual circulation” development which aims to promote a virtuous dual circle between domestic and international economy.

FINAL CONSIDERATIONS We have focused on Chinese development in light of its domestic planning policies and the analysis of two key variables: the investment profile and the pattern of Chinese foreign trade. A key element of the strategy and action plan is to include backward areas of less dynamism and more distant from the concentration poles of industrial activities. The strategy involves improving agricultural activity through mechanization and/or industrialization of the agricultural production process. Developing rural areas is essential for the control of migration to large cities and for maintaining a portion of the population in rural areas with an improvement in their living conditions. Such a strategy also suggests that the government is well aware of regional inequality and income disparities. The instrument is making efficient use of the domestic savings foreign investment both for continued domestic and international investment. Here lies the international insertion process. At the heart of this insertion plan are the increase in trade flows, the structural change in the structure of exports together with investments in emerging markets, such as the African and Latin American continents. Even in times of the COVID-19 pandemic, China has managed to eradicate extreme poverty and aims to end poverty by 2030. For the next years, attention must be paid to: (1) the economic and geopolitical rivalry between China and United States: the trade and tech war are clear examples of this trend; (2) the growing importance of BRI as the most relevant international and transnational interconnectivity project, a sort of globalization with Chinese characteristic (Vadell and Staiano, 2020). The post pandemic landscape will have China as a leading engine of world development in a context of crisis of multilateralism (see Chapter 25 by Narlikar in this volume). The BRI will continue to be a tool to interconnect the Eurasian geographic area, Africa, Oceania and Latin American and Caribbean countries in an ambitious globalization project in order to improve participation in regional and global markets. Finally, as we stated, the objectives of the 14th PRC Five-Year Plan allow us to observe the confluence of the Chinese socialist model of development and economic expansion through its development targets: improving the trade by “dual circulation” in order connect the domestic market to the international market prioritizing ecological and sustainable development. The plan focuses on the domestic economy, nevertheless it does not mean a phase of fully inward growth or trade protectionism, but rather a mix. In other words, the “dual circulation” plan gives international economic and geopolitical sense to Chinese developmentalism aiming a jumpstart new stage of globalization with Chinese characteristics through investments in infrastructure and giving an alert (to United States and other developed countries) that the attempts of decoupling are destined to fail.

The domestic and external conditions of the Chinese development path  459

REFERENCES Cáceres, S. B. (2014). China’s Strategic Interests in the South China Sea: Power and Resources. New York: Routledge. Chang, H.-J. (2004). Chutando a escada: Estratégia de Desenvolvimento em Perspectiva Histórica. São Paulo: UNESP. Dai, E. (2016). ‘China’s inclusive development strategy and its effect on regional disparity,’ Journal of Chinese Economic and Business Studies, 14 (3), 263–278. Ding, X. and C. Meng (2018). From World Factory to Global Investor: A Multi-Perspective Analysis on China’s Outward Direct Investment. New York: Routledge. Dunford, M. and L. Weidong (2019). ‘Chinese perspectives on the Belt and Road Initiative,’ Cambridge Journal of Regions, Economy and Society, 1 (12), 145–165. Furtado, C. (1974). O Mito do Desenvolvimento Econômico. São Paulo: Círculo do Livro. Gallagher, K. (2016). The China Triangle: Latin America’s China Boom and the Fate of Washington Consensus. New York: Oxford University Press. Gallagher, K. and R. Porzecansky (2010). The Dragon in the Room: China and the Future of Latin America Industrialization. Stanford, CA: Stanford University Press. Ge, W. (1999). ‘Special economic zones and the opening of the Chinese economy: Some lessons for economic liberalization,’ World Development, 27 (7), 1267–1285. Hayton, B. (2014). The South China Sea: The Struggle for Power in Asia. New Haven, CT: Yale University Press. Hu, J. (2005). ‘Building harmonious society crucial for China’s progress,’ Xinhua, 26 June. http://​en​ .people​.cn/​200506/​27/​eng20050627​_192495​.html. Institute of Geographic Sciences and Natural Resources Research (IGSNRR). Chinese Academy of Sciences (CAS) (2015). http://​english​.igsnrr​.cas​.cn/​. Institute of Geographic Sciences and Natural Resources Research (IGSNRR). Chinese Academy of Sciences (CAS) (2016). http://​english​.igsnrr​.cas​.cn/​eocg/​moc/​. Jenkins, R. (2015). ‘Is Chinese competition causing deindustrialization in Brazil?,’ Latin America Perspective, 42 (6), 42–63. Li, K. (2014). ‘Inclusive development: A better world for all,’ speech by a premier of the State Council of the People’s Republic of China to British think tanks. http://​www​.fmprc​.gov​.cn/​mfa​_eng/​wjdt​ _665385/​zyjh​_665391/​t1167647​.shtml. Lima, M. C. (ed.) (2016). Perspectivas Asiáticas. Rio de Janeiro: Centro Celso Furtado/Folio Digital. Lima, M. C. (2019). ‘Impacts of Chinese economy and its global geopolitics: After the slowdown,’ Estudos Internacionais, 7 (2), 21–41. Lin, J. Y. and Y. Wang (2017). Going Beyond Aid. Cambridge Cambridge University Press. Liu, C., L. Zhang, R. Luo, and S. Rozelle (2009). ‘Infrastructure investment in rural China: Is quality being compromised during quantity expansion?,’ The China Journal, 61, 105–129. Liu, W. and M. Dunford (2016). ‘Inclusive globalization: Unpacking China’s Belt and Road Initiative,’ Area Development and Policy, 1, 323–340. Lyrio, M. C. (2010). A ascensão da China como potência: fundamentos políticos internos. Brasília: FUNAG. Mantzopoulos, V. and R. Shen (2011). The Political Economy of China’s System Transformation. New York: Palgrave Macmillan. Qu, Y., Y. Wei, T. Jiang, and N. Zheng (2017). ‘Linking R&D strategy, national innovation system and FDI to firm performance,’ Journal of Chinese Economic and Business Studies, 15 (1), 41–58. Reinert, E. S. (2016). Como os Países Ricos Ficaram Ricos … E Por Que os Países Pobres Continuam Pobres. Rio de Janeiro: Contraponto. The Observatory of Economic Complexity (2017). https://​atlas​.media​.mit​.edu/​en/​. Tu, X. and H. Mo (2016). ‘China’s developing country identity – challenges and future prospects,’ in C. Freman (ed.), Handbook on China and Developing Countries. Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, pp. 89–108. UN Comtrade Database (2017). https://​comtrade​.un​.org/​.

460  Handbook on the politics of international development US Department of State (2020). The Elements of the China Challenge. November (Revised December, 2020). https://​www​.state​.gov/​wp​-content/​uploads/​2020/​11/​20​-02832​-Elements​-of​-China​-Challenge​ -508​.pdf. Vadell, J. (2013). ‘The North of the South: The geopolitical implications of Pacific consensus in South America and the Brazilian dilemma,’ Latin American Policy, 4 (1), 36–56. Vadell, J. and M. F. Staiano (2020). ‘China en los intersticios de la crisis del multilateralismo y la globalización neoliberal: La Franja y la Ruta en Europa y el caso italiano,’ Araucaria, 22 (45), 433–455.

30. Private foundations and the politics of international development Elham Seyedsayamdost

INTRODUCTION In February 2020, shortly before the world was engulfed in the coronavirus pandemic, Jeff Bezos, Amazon’s founder and the world’s richest man, pledged US$10 billion to address climate change. Considering his lacking engagement with philanthropic endeavors in the past, the unveiling of the Bezos Earth Fund and his announcement that “Climate change is the biggest threat to our planet” took many by surprise (Weise, 2020). The irony of Bezos sitting on an empire whose exponential growth has relied on excessive use of natural resources while harming the environment did not escape his critics. Yet, Bezos’s newly-found interest in the environment is only exemplary of a broader trend observed among the world’s billionaires, who increasingly view climate change as a worthy cause in need of their attention. Over the past few years, billions of dollars have been committed to climate change by a variety of philanthropists – from Michael Bloomberg’s US$500 million to close coal plants to the US$459 million committed by nine foundations at the 2018 Global Climate Action Summit in San Francisco to contribute to the protection of forests and indigenous people’s land rights.1 Even the Bill & Melinda Gates Foundation – to date the largest private foundation with an endowment of $47 billion – announced in early 2020 that climate change would become a priority in their work going forward. While the increasing attention philanthropists have been paying to climate change is of note and raises its own questions, the rapid rise in philanthropic engagement in international development while addressing global challenges is even more significant. According to the Foundation Center, the number of US foundations grew by 33 percent from around 65,000 in 2002 to more than 86,000 in 2015. Total giving within the same time period more than doubled from $30 billion to nearly $63 billion. Further, data retrieved from IRS indicates the latest number of private foundations to be close to 120,000 in the US with assets totaling over US$1.1 trillion (Candid, 2020). While the vast majority of private foundations are located in the US, a similar increase in foundations and their activities is noted in other parts of the world, in particular in Europe. For example, of Germany’s over 23,000 foundations, 7 percent have an endowment over Euro 10 million while 28 percent bring in between Euro 1 million and 10 million of capital (Bundesverband deutscher Stiftungen, 2020). In 2020, the top ten German foundations reported assets over Euro 42 million. Similarly, in the UK, there are an estimated

1 These include ClimateWorks Foundation, David and Lucile Packard Foundation, Doris Duke Charitable Foundation, Ford Foundation, Gordon and Betty Moore Foundation, John D. and Catherine T. MacArthur Foundation, Mulago Foundation, Rockefeller Foundation and Margaret A. Cargill Philanthropies. See Philanthropy News Digest (12 September 2018), “Nine foundations commit $459 million to global climate action.”

461

462  Handbook on the politics of international development 10,000 foundations, the top ten of which reported assets in the amount of over 46 billion pounds in 2018 (Association of Charitable Foundations, 2019). As the European Foundation Center (EFC) has indicated, international giving has become an integral part of the activities of many European foundations such that 64 percent of its 198 members work internationally while 84 percent state that “the global context makes working internationally more important” (EFC, 2019b; see also EFC, 2019a). It may not come as a surprise that both the EFC and its members support the adoption of and align their activities with the United Nations Sustainable Development Goals (SDGs). The increasing trend in foundations’ giving to international development is not limited to Europe. In fact, various studies offer evidence of a global movement by private foundations over the past two decades to make greater contributions to international development. According to the Association of Charitable Foundations (2019), philanthropy’s financial contribution to development increased tenfold within a decade, from US$3 billion in 2003 to US$29.37 billion in 2013. A more focused study by OECD (2020b) shows that 33 of the largest philanthropic foundations active in international development contributed US$7.8 billion in 2018 while playing a key role in financing social sectors, in particular health and education. Accordingly, the Bill & Melinda Gates Foundation remains the largest philanthropic provider in development with BBVA Microfinance Foundation coming second. These 33 foundations’ commitments indicate their focus on SDGs 3 (Good Health and Well-being), 11 (Sustainable Cities and Communities), 5 (Gender Equality), 8 (Decent Work and Economic Growth) and 2 (Zero Hunger), in that order. Several questions arise from this observation. What explains this increasing engagement of philanthropies in global issues? Have foundations always been an active partner in the fight against various international challenges? How has international development framed the issues and agendas philanthropies work on? And what does the rise of private foundations and their increased involvement tell us about the field of international development? This chapter will first scrutinize actors in international development in order to illustrate their proliferation in this field. While states and their international organizations served as primary loci of financial and technical assistance during the twentieth century, there was a shift to incorporating into development practice an increasing number of civil society actors – non-governmental organizations in the 1990s and private sector actors by the end of the millennium. Focus here will be on the growing numbers of private foundations over the past two decades and the interest philanthropists have taken in global challenges. A brief historical review of foundations will follow, which indicates the relatively nascent existence of these entities (despite the precedence of different forms of charities for millennia) and how they have evolved over the past century. Focus here will be on the new organizational structures these foundations have come to take in the recent past, the types of modalities they use, and the primary areas in which they invest. The following section examines what this burgeoning engagement of philanthropy means for the achievement of development goals. Are we witnessing a paradigm shift, as some have argued, whereby the SDGs and the new actors of international development will be able solve global challenges of poverty, inequality, hunger, climate change, and so on? Or is this development simply a function of growing inequalities over the past decades and an attempt by wielders of capital to contribute without a deeper treatment of the root causes of the global challenges they purport to resolve? As this chapter aims to show, evidence suggests that the increasing role of philanthropy in development is

Private foundations and the politics of international development  463 potentially more in the interest of the elite philanthropists and their justification of their wealth than to the benefit of humanity. The advent of the SDGs along with the pronouncement that the realization of this interconnected global agenda requires the collaboration of all actors in society, has led to a growing engagement of philanthropic foundations with international organizations seeking to achieve the SDGs. Shifting power relations among international actors have shaped ideas about development both in terms of its objectives as well as in terms of the actors required to achieve those objectives. Philanthropic foundations have come to take on an important position in the relationship between the public and private sectors with the aim to deploy private wealth for public good. In the public sphere, foundations occupy an interesting space as they act independently. They are neither accountable to citizens, as state officials are, nor are they accountable to clients or shareholders, as private enterprise is. This “dual independence” (Anheier and Toepler, 1999) allows them to fund initiatives without regard for budget constraints or profit incentives. And yet, the particularities of the current discourse and practice – shrouded in results-based management and evidence-based policy making – influence the operations of philanthropists and the areas in which they invest. In the twenty-first century, and in light of a growing number of billionaires and billionaire corporations generating their own foundations, their focus has expanded to international causes. At the same time, the global development agendas agreed at the UN have influenced the ways in which philanthropy invests its capital. As the analysis below indicates, foundations have been aligning their work with the SDGs but their performance-oriented and outcome-based approach has led them to innovate modalities of engagement that aim to both benefit public good and their own interests. Although the SDG framework has generated activity around the goals, there is no certainty as to the successful achievement of the 2030 Agenda. In fact, despite hopes that the SDGs would generate a paradigm shift, we have been witnessing a continuation of business as usual, except that now the discourse and terminology around corporate social responsibility, social entrepreneurship and impact investment have been softening the maxims of business self-interest and profitability.

AID ARCHITECTURE IN THE TWENTY-FIRST CENTURY The primary infrastructure underpinning international development is foreign aid. Throughout the Cold War, the ideological competition between the US and USSR was seen as the primary motivation for aid. The end of the Cold War removed that motivation, and there was an anticipation that a decrease in military expenditure would free up resources for aid. However, this so-called “peace dividend” did not materialize for a variety of reasons, including budgetary constraints in the US and Europe along with a perception of aid’s ineffectiveness. And so, contrary to expectations, throughout the 1990s aid declined. What is of significance to this study is not only the volume of aid but also the primary actors in the aid landscape. These included bilateral donors from the OECD; international financial institutions such as the World Bank, IMF and other multilateral development banks; and emerging civil society actors in the form of NGOs as well as grassroots groups. Most importantly, in the 1990s, OECD DAC donors accounted for 95 percent of all international aid. Two decades later, during the 2010s, the aid architecture had diversified. The highly inclusive and participatory process that gave rise to the SDGs came at a time of rising economic

464  Handbook on the politics of international development growth and unequal distribution of wealth as a result of the dominance of the market. This, in turn, led to the proliferation of donors, including newly emerging bilateral donors, corporate investors and philanthropists. In terms of philanthropy, the last two decades have witnessed a rapid rise in both number and volume of donations coming from family and individual foundations. This concentration of wealth has been further exacerbated during the COVID-19 pandemic, as billionaires have seen a tremendous increase in their fortunes. According to the World Economic Forum, “the combined wealth of US billionaires increased by over $637 billion to a total of $3.6 trillion, which is considerably more than the entire wealth of the 54 countries on the African continent” (Golding and Muggah, 2020). In addition to the increasing number and contribution of philanthropy to social causes, the past two decades have witnessed growing interest by private foundations in global issues. A primary benefactor of this surge has been the global health sector, although other issues have been added to the priorities of these foundations, including gender equality and climate change. With the proliferation of donors in the aid landscape, private flows of funds across borders have also increased. Based on the Global Philanthropy Tracker 2020, all private flows, including philanthropy, remittances and capital investment, totaled US$658 billion in 2018 in contrast to US$175 billion in official development assistance (ODA).2 Not only were private sources of funding nearly four times the amount of ODA; when disaggregated, of the US$833 billion flowing across borders, remittances composed 58 percent, private capital investment 13 percent, and philanthropy 8 percent. Thus, private donors have come to play a more significant role in international development with time series data indicating that while ODA has increased over the course of the twenty-first century, it has been far surpassed by private sources of funding (OECD, 2016). The incorporation of private sector – business and philanthropy – in aid has come in tandem with three developments: first, concentration of wealth among the elite; second, the introduction of the global development agendas – first the MDGs in 2000 and then the SDGs in 2015; and third, the increasing acceptance of market efficiency in light of dwindling state budgets and growing national budget deficits. The concentration of wealth has been the outcome of a changing global economy, in which a shift to finance, technology, and venture capitalism has created wealth inequalities as the top of the income distribution has grown exponentially faster. As far as the framing of global development agendas is concerned, given the context of “globalization and its discontents” that gave rise to the MDGs, efforts were made to increase private sector involvement in international development through corporate social responsibility (CSR). The United Nations Global Compact (UNGC) was the voluntary mechanism that was created to encourage more transparency and alignment with international values and principles in corporate behavior. Conceptually, CSR indicated that it was possible for corporations to concurrently make a profit and help society. Critics argued that CSR merely put a human face on corporations, whose loyalty is to their shareholders for whom the bottom line is the only indicator of good performance. CSR, mollifying the public during a time when disparities in wealth continued to increase, further perpetuated the centrality of the market.

2 They focused on 47 economies: “Twenty economies (43 percent) are European countries. Twenty-six (out of 30, including the European Union) are members of the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC). Also included are 14 emerging economies and four frontier markets, as defined by Morgan Stanley Capital International (MSCI).” See Lilly Family School of Philanthropy (2020, p. 12).

Private foundations and the politics of international development  465 By 2013 when the SDGs were being negotiated, rising inequality was on top of the list of global challenges (see Chapter 20 by Currie Alder in this volume). Thomas Piketty’s Capital published around this time offered ample evidence of this rise in inequality showing that capital had grown faster than the overall economy while income from capital had been distributed less evenly than labor income. As the object of international development came to encompass 17 complex goals across all countries – including SDG 10 on inequality – the monumental task at hand generated advocacy around the SDGs and the need for all actors in society to contribute. Private sector actors, including private foundations were called upon to become more deeply involved in measuring progress against the goals and promoting different modes of funding for their achievement. For example, since the launch of the Sustainable Development Agenda in 2015, the German foundation Bertelsmann Stiftung has been collaborating with the Sustainable Development Solutions Network to produce annual Sustainable Development Reports, which present an SDG index and a dashboard displaying the performance of all UN member states with regards to achieving the SDGs.3 Beyond monitoring and reporting, private sector actors are also directly involved in funding projects and programs that address a variety of SDGs. For example, 2018 OECD data show that 33 private foundations were the third largest contributors to projects and programs in health and reproductive health in all developing countries, having spent US$3.2 billion, following the United States (US$8.8 billion) and the Global Fund (US$3.8 billion). The same private foundations’ contributions to the education sector in Africa ranked them fifth after the World Bank, US, France, Germany and the UK. There are three reasons for the increasing significance of philanthropy in the field of international development. First, there has been a sudden increase of these private entities within a short period of time. Since the mid-1990s, the number of billionaires in the US has more than doubled, accompanying a doubling in the number of foundations (Horvath and Powell, 2020, p. 87). Similar to the US, which has seen a tremendous rise in its billionaires and their foundations, the volume and activity of foundations has increased in other countries as well. By the turn of the twenty-first century, “there were more foundations holding more assets in more countries than ever before” (Anheier and Leat, 2013, p. 449). The translation of that kind of wealth into private power has meant a greater infusion of resources into different causes, in the interest of public good, at national or international level. Second, the growth of private wealth has meant changes in practice and modalities of philanthropy. As such, philanthropy has come to engage in the public sphere through different means while embodying different visions of development. Most importantly, philanthropy’s giving has become much more results-oriented, which has had implications for the types of initiatives that are promoted since metrics and data rule the selection of projects. Third, the growth in philanthropies has come at a time when the public perception of private wealth and its contribution to social causes has not only been praised but actively encouraged by the international community. This sentiment has taken place in a particular global historical context in which international challenges have been framed to be too complex and interrelated to be solved by public funding alone, and in which private investors have come to be associated with innovation and risk-taking. Hence, this most recent conceptualization of international development as a complex web of social, economic



3

For more information, see https://​www​.sdgindex​.org.

466  Handbook on the politics of international development and environmental goals with an enormous price tag has created additional set of actors and financing modalities in response to the 17 SDGs and their associated 169 targets. While the particular composition of the 2030 Agenda and the constitution of the interrelated SDGs has emphasized private sector and philanthropy as stakeholders, the latter have in turn come to play a greater role in international development. A short historical review of philanthropy is instructive for an understanding of these entities’ status in society today and the modalities they use for their donations. That is the focus of this next section.

A SHORT HISTORY OF PHILANTHROPIES Philanthropy can be sourced back thousands of years either to religious origins that promoted the virtue of charity or to Greek and Roman models of beneficence propagating the virtue of the arts and learning. Modern philanthropy in the form of grantmaking foundations, however, is a creation of leading American financiers dating back to the nineteenth century, and includes Andrew Carnegie and John D. Rockefeller among its pioneers. Based on this history, and due to the concentration of philanthropists in the US (which has also been more extensively studied than other parts of the world), this section will primarily focus on American philanthropy. Gilded Age Philanthropy The concentration of wealth in the late nineteenth and early twentieth centuries created a new rank of American millionaires. At the time, 8 percent of Americans controlled over 75 percent of US property. The accrual of this massive wealth had been possible because of aggressive strategies to keep production costs down while keeping competition at bay. These so called “Gilded Age” philanthropists made large donations that targeted local and national initiatives to advance the collection of arts, building of museums, universities, and so on. As this wealthy elite donated some of its fortune, “[c]ritics worried about philanthropy’s power to whitewash corporate depredation, and college presidents and charity officials grappled with the legitimacy of accepting ‘tainted money’” (Soskis, 2020, p. 41). As Soskis (2020) has elaborately captured in his historiographies, in an effort to divert from this type of scrutiny, which couldn’t reconcile the means through which wealth had been amassed with its distribution, the elite reformulated antiquated ideas of charity and responsibility of the rich. This was captured in Andrew Carnegie’s The Gospel of Wealth in 1889, in which he argued that the main aim of philanthropy was to provide “ladders upon which the aspiring can rise.” This way, he tried to differentiate philanthropy from charity in terms of providing resources that would help the poor help themselves – a means rather than an end to their needs. Inequality, the gap between rich and poor people, was viewed as a good thing, even necessary for progress but the rich had a responsibility to enable those who aspired to rise. With this reasoning, the concentration of wealth was legitimized while the donors of that wealth were suggested to serve – in the words of Andrew Carnegie – as “a trustee for the poor, intrusted for a reason with a great part of the increased wealth of the community, but administered it for the community far better than it could or would have done for itself” (Soskis, 2020, p. 41). What is of note in this historiography of American foundations is the initial public suspicion of the power of philanthropy. At the time, there was a sentiment that philanthropists with all their wealth might be too influential of players in society. Some even feared that elite founda-

Private foundations and the politics of international development  467 tions would compete with the state as they took over some of the functions originally associated with the state. Indeed, as subsequent studies have illustrated, seeding and funding some of the now well-known universities, such as Harvard, Johns Hopkins, Stanford and University of Chicago, enabled philanthropists to go as far as intervening in educational policy as well as recruitment decisions. The suspicions and fear of philanthropy to interfere in public policy and to tip the scale in favor of elite’s preferences was real and reviled. Nevertheless, Carnegie’s The Gospel of Wealth and Rockefeller’s “scientific giving”4 paved the way for the creation and gradual acceptance of foundations, which focused their giving on medical and scientific research while putting emphasis on education. For most of the twentieth century, giving was geared toward supporting government interventions; however, towards the end of 1970s, foundation activism expanded its funding targets. As free market ideology took over American government, its tenets were infused through IMF and World Bank policies into economies of “developing” countries, resulting in a rolling back of state. Philanthropy was used to create conservative think tanks and foundations, which promoted the work of conservative and libertarian intellectuals, such as Milton Friedman, who promoted free market economics and a limited government (Horvath and Powell, 2020). By the end of the 1990s, with the rise of philanthropy emanating from technology and finance, the business sector model of how to run an organization had taken over. Management ideas from venture capitalism, encapsulating concepts such as “social return on capital” and “performance metrics” took hold of foundations seeking organizational effectiveness. This turn to professionalizing private foundations shifted public perceptions, such that while before “state-centric critiques of philanthropy shaped philanthropic visions, now, philanthropic ideas increasingly shaped critiques of the state” (Horvath and Powell, 2020, p. 114). New Gilded Age Philanthropy In the twenty-first century, scholars have documented the emergence of a “New Gilded Age,” in which the wealthiest members of global society have amassed colossal fortunes concurrent with stagnant or decreasing incomes in the rest of society (Reckhow, 2020; Soskis, 2020). This concentration of income and wealth has created never-before-seen inequalities. According to an Oxfam report (2020), the number of billionaires doubled over the past decade as the world’s richest 1 percent came to own more than twice as much wealth as 6.9 billion people. Those who have amassed their wealth within the last two decades are relatively young and actively engaged in philanthropy during their lifetime (Soskis and Katz, 2016). While Bill and Melinda Gates might be the most visible exemplars of this new breed of philanthropists, there are many others along with Warren Buffet, George Soros, Marc Zuckerberg, Laurene Powell Jobs and Pierre Omidyar. In fact, the Giving Pledge, which was initiated by the Gates duo and Warren Buffett in 2010 with a call to wealthy people to donate half of their wealth, has to date been signed by 217 people in 23 countries (Osorio Andrade, 2020; Collins et al., 2020).5

4 The notion of “scientific giving” is associated with Frederick T. Gates, who worked with John D. Rockefeller to convert his ad hoc charity to large-scale philanthropy. Gates captured this in his biography, stating “I gradually developed and introduced into all his charities the principle of scientific giving, and he found himself in no long time laying aside retail giving almost wholly, and entering safely and pleasurably into the field of wholesale philanthropy” (Gates, 1977, p. 161). 5 For more information see https://​givingpledge​.org.

468  Handbook on the politics of international development Similar to the previous era, contemporary philanthropists have initiated the building of new foundations and engaged in philanthropic giving that dwarfs donations by their century-old predecessors. However, while their fortunes have their roots in an interconnected global economy underpinned by neoliberal policies, which has enabled a small minority to amass tremendous wealth, society’s suspicious perception has been replaced with one of awe and gratitude. With this wealth and given the global context within which this wealth is accrued and donated, philanthropists have expanded their field of vision beyond their own countries to address social, economic and environmental issues in other countries. In fact, next to a domestic focus on health, education and environment, international development has become a prominent target of the New Gilded Age philanthropists. In the new millennium, international giving by US private foundations has steadily grown, reaching a record of US$9.3 billion in 2015, up from US$2.1 billion in 2002 (Council on Foundations, 2018). During the same time, foundations have indicated that international development is an important part of their mission. This is visible in a survey conducted by the Foundation Center in 2004, in which over half of the foundations highlighted a “greater urgency to address global issues” as a primary reason for continuing to fund international development initiatives. Interestingly, 80 percent identified the MDGs to align with their giving objectives intimating that there was a general consensus in the international community and among foundations pertaining to critical development issues. The top three issues cited by foundations were MDGs 7 (ensure environmental sustainability), 6 (combat HIV/AIDS, malaria and other diseases) and 3 (promote gender equality and empower women). The trend of giving to international development has been fortified with the SDGs. Shortly after the SDGs were agreed at the UN, there was a flurry of activity around the financing needs to achieve these goals. The call to contribute to international development projects was reinforced as various entities, including philanthropies, highlighted the necessity of ratcheting up funding to achieve the SDGs by 2030. For example, Jane Wales, founder of the Global Philanthropy Forum, wrote an op-ed arguing, “Philanthropic organizations have the agility, creativity and audacity to be the risk takers of development financing” (Wales, 2016). Citing the Foundation Center’s finding that foundations had contributed grants in the amount of US$30.5 billion towards achieving the MDGs between 2002 and 2012, Wales argued that in order to be able to finance the SDGs, philanthropic foundations needed to come up with innovative mechanisms and financial instruments. In fact, this is what the newer foundations had already started to do, as the examples of Omidyar Network and Chan and Zuckerberg Initiative illustrate below. Contemporary foundations work within the confines of highly structured and professionalized organizations. Results-based and metric-centered, initiatives are funded based on business models that set out targets and deliverables while taking into consideration investment and impact. The forerunner of this type of philanthropy is Bill Gates, whose measurement approach has not only shaped the Gates Foundation but also the operations of other foundations (Horvath and Powell, 2020). At the same time, there is a general marketization of this sector, as foundations promote social good through investments that ultimately bring them a profit. This movement under the banner of philanthrocapitalism believes in the market as the most powerful force – not only to efficiently allocate resources but also to promote social good (Bishop and Green, 2008). At the heart of foundations’ initiatives are public–private partnerships – in and of themselves not a new concept – however, there is novelty in their deployment of philanthropic

Private foundations and the politics of international development  469 capital. While some praise these partnerships for stepping in when funds are missing to contribute to worthy social causes, others critique such partnerships for enabling private donors to exert influence in policy. One example is the global vaccine alliance Gavi, which was financed mainly by the Bill & Melinda Gates Foundation. While Gavi has been seen as a successful example of a public–private partnership, and as an organization that contrary to WHO, is more nimble, innovative, effective and less bureaucratic, it has also been critiqued for giving too much power to private donors. Having observer status at the World Health Assembly gives Gavi access to policy debates, which would not be problematic, were it not for the conflict of interest created by the inclusion of vaccine companies on its governing board. And yet, at a time when budgets are tight and governments are overwhelmed with multiple challenges, it seems almost blasphemous to criticize Gavi rather than thank Bill and Melinda Gates for their generosity. This positive perception of and open reception to the “New Gilded Age” philanthropists is in contradistinction to their forerunners a century ago. Now, the concentration of wealth raises eyebrows but giving that wealth away is met with approval. Yet, questions remain as to the political influence foundations’ wealth can buy them. As long as foundations’ activity was limited by the amount they could give (5 percent of their endowment annually) and the requirement to report how that money had been dispensed, they seemed to operate within a framework of accountability and transparency. In the US, there are debates about the government rules that offer foundations favorable tax advantages and how that might be denying the state resources that could be spent on public services. That is a very valid concern that some scholars have examined in detail while pondering its repercussions on democratic governance (Reich, 2019). But since the mid-2000s, donors have created different structures for their philanthropic giving raising concerns among those wary of the power of private actors. This is particularly evident in the establishment of alternative structures – such as limited liability corporations and donor-advised funds – that shroud donor giving in less transparency (Reckhow, 2020). The first philanthropist to create a hybrid between a limited liability corporation (LLC) and a nonprofit charitable fund was eBay founder Pierre Omidyar, whose Omidyar Network “issues grants through its tax-exempt foundation and invests through its LLC” (Horvath and Powell, 2020, p. 116). This way, Omidyar Network benefits on two fronts: when it donates funds it receives tax exemption, and when it invests capital it reaps profits. Other philanthropists have entirely forgone the traditional foundation for an LLC. The Chan and Zuckerberg Initiative belongs to this group, which avoids regulations imposed on foundations while enjoying greater privacy and control than the grant-making foundations offered. In fact, as research increasingly shows, creation of these new types of foundations enables philanthropists to be less transparent about their giving. This also enables them to more directly engage in political campaigning and lobbying as they strategize their investments with a view to pursuing policy priorities that speak to their values (Reckhow, 2020; Horvath and Powell, 2020). While creating different outfits that house their philanthropic initiatives, these new private donors have been relying on various modalities of giving that focus on impact investment, social entrepreneurship and venture philanthropy. What all of these different forms of financial giving have in common is philanthropists’ subscription to the market as the most efficient allocator of resources while putting investment tools to philanthropic use. These modalities enable donors to seek financial returns while investing in social and environmental projects. An indicator of this surge in philanthrocapitalism is the growth in social impact bonds (SIBs)

470  Handbook on the politics of international development over the past years. Interestingly, the Addis Ababa Action Agenda makes a reference to these arguing, “blended finance, which combines concessional public finance with non-concessional private finance and expertise from the public and private sector” enables greater involvement by private sector as they lower their investment risk (United Nations, 2015, para. 48). As such, SIBs constitute a financial mechanism for public–private partnerships through which private investors provide funding for social programs, and government pays back these private investors both their principal and a return on their investment, if the program is successful. This tool is very much in line with the results-oriented approach that contemporary foundations have been applying to their philanthropic giving. In essence, the transfer of risk from public agencies to private actors is the hallmark of these types of investments. But private actors’ risk taking does not come free; to the contrary, the higher the risk is, the higher will be the required financial return on investment. By making private investment available to social programs, SIBs are expected to generate innovation, more funding, and better outcomes for society. However, as the analysis below indicates, private investors are more risk-averse and possibly not as innovative as is commonly thought. Despite being hailed as an innovative investment tool, it is noteworthy that since their creation in 2010, only around 130 SIBs had been implemented globally and 34 completed by the end of 2019 (Rania et al., 2020). However, studies that vouch for the effectiveness of SIBs are few and far in between. Based on a 2019 documentary about social impact bonds, The Invisible Heart, which followed the unrolling of two SIBs, the disadvantages seem to outweigh the benefits. Accordingly, rather than being innovative, private capital invests in programs that have a proven track record. This is an intuitive finding considering private investors – irrespective of how empathetic they are to social causes – have one aim: to increase financial returns on their investment. As such, tried and true interventions in the fields of education and health appear to be favored over uncharted territories such as sustainable consumption and production. In addition, since SIBs make return on investment dependent on outcome achievement, this creates different incentive structures and means of measuring outcome. While comprehensive evaluation methods to ensure program effectiveness and sustainability should ideally be implemented, simpler metrics are used to trigger swift payments. For example, a SIB program to prevent hypertension in Canada pays its investors 6.7 percent return, if two targets are achieved: enrollment numbers and maintenance of blood pressure. The success of a similar program in Europe is assessed additionally based on cholesterol, weight, and healthy lifestyle changes. Thus, SIBs shortchange the participants while forgoing rigorous evaluation by using fewer metrics, which are more easily achieved in a shorter period of time.6 As such, this “unorthodox marriage between capitalism and charity” (Pequeneza, 2019) with the intention to raise private capital to pay for public social services might not necessarily make the kind of impact anticipated. However, as Reich (2019) argues, it could be good publicity stunt for politicians, who can get private actors to foot the bill for initiatives, which in turn raise their profile. Others argue, “SIBs exemplify the financialization and privatization of social and public policy; they reduce the rights of citizens as service users and as a polity” (Roy et al., 2018). Citizens are essentially reduced to commodities as the profit incentive changes the relationship between the service provider and user while infusing market principles even into politics. 6 This was part of the study that ultimately led to the creation of the documentary on SIBs. For more information see Pequeneza (2019).

Private foundations and the politics of international development  471 An analysis of the Giving Pledge offers similar insights. Goss (2016) analyzed the letters written by – at the time – 187 billionaire pledgers and made a couple of interesting observations. First, their areas of interest were primarily in education, environment and health. These are clearly areas that have much in common with the SDGs but also areas that easily lend themselves to metrics and quantitative measurement of outcomes. Second, the language used indicated philanthropists’ veneration of markets as well as their frustration with government. Their view of government as slow and inadequate is mostly accompanied by a perception that philanthropists can better and more efficiently respond to challenges, thereby legitimizing their interventions in policy making. Third, private donors’ belief that the market can better allocate resources and more appropriately resolve societal and environmental challenges has fed into the creation of market mechanisms such as social entrepreneurship and impact investment, which not only enable philanthropists to “do good” but also to get a return on their investment. Hence, today’s philanthropists not only sit on massive amounts of wealth that they can direct towards areas they deem of importance; by doing so, they also actively set agendas and intervene in policy making. While involved in finding “transformative” solutions to global challenges, philanthropists do not seem to be spending much time to consider how their own existence might be a signal of the structural problems that create the need for ambitious development agendas such as the SDGs. Their giving then seems to be “minor tweaks to the existing system instead of overhauling it to create a truly sustainable society” (Marx, 2020).

PARADIGM SHIFT OR CEMENTING ORTHODOXY? As this chapter has demonstrated, international development is increasingly pursued by private actors, including philanthropic foundations. This trend already started around the turn of the century but became more pronounced with the birth of the MDGs and SDGs. In fact, what is interesting about these goal-setting international development agendas is the ways in which they identify targets, which can be associated with a series of indicators, thus facilitating measurement, monitoring and evaluation strategies that lend themselves to outcome-based policy making. The MDGs were more contained both due to their limited number (8 goals and 21 targets) and also because they had been set by donors as an accountability mechanism for recipients of aid. As such, the architects of the millennium agenda included primarily UN member states and international organizations, in particular the UN system agencies. Coming on the heels of the 1990s, during which ODA volumes had fallen, the MDGs mobilized governments to increase development finance. Increased funding by states accompanied growing involvement of private sector actors from donor countries in aid-receiving countries. This is evident in OECD DAC data, which indicate that while private sector investment by DAC countries in developing countries was around US$100 billion in 2002, it had quadrupled to over US$400 billion by 2007. This had partially to do with the introduction of CSR and related ideas about involving corporations in international development. In fact, former UN Secretary-General Kofi Annan argued that international development “created and expanded consumer markets, which [could] be tapped to extend the boundaries of enterprise” (Annan, 2012, p. 24). It was this sentiment along with Annan’s acknowledgment that increased private sector engagement had to take place within an accountability framework that led to his launching of the UN Global Compact in July of 2000. The establishment of the UN Global Compact

472  Handbook on the politics of international development was the first formal acknowledgment of the corporate sector’s assigned roles and responsibilities in achieving development goals. With the 2030 Agenda, the deliberation process was extended to a much larger group that was inclusive of not only states and international organizations but also NGOs and private sector actors. This expansion of stakeholders meant the incorporation of goals that catered to various agendas within different sectors while legitimizing the participation of the private sector. As the costing of SDGs indicated that trillions of dollars would be required on a yearly basis to achieve the goals, greater emphasis was placed on the role of the corporate sector and philanthropy. No matter what the incentive structures of these varying entities, as long as they could contribute funds to achieve the SDGs, they were welcome to engage. Moreover, concepts such as social entrepreneurship, impact investment and venture philanthropy intimated the possibility of a union between corporate profits and social benefits giving rise to the term “social returns on investment.” The founders and owners of global corporations created their philanthropic institutions, where the terminology similarly revolved around risk-taking, innovation, efficiency and scaling-up of initiatives that would complement the role of the government. Thus, private investment in international development continued to rise throughout the 2010s, at times reaching over US$500 billion in a given year (OECD, 2020a). And indeed, five years after the launch of the 2030 Agenda for Sustainable Development, data indicated that philanthropic foundations had already invested US$217 billion in the SDGs (SDG Philanthropy Platform, 2021). This increasing participation by a variety of actors to create the SDGs was perceived and interpreted differently. Some argued that the SDGs constituted a paradigm shift by virtue of their consultative and participatory process, which for the first time included a diversity of stakeholders on the public–private sector continuum (Kamau et al., 2018). Others lamented the sheer size and complexity of the goals, which in addition to being vague also failed to establish mechanisms that would enforce compliance (Kanie and Biermann, 2017). Yet, what transpired soon after their launch was the creation of different reports and monitoring mechanisms that illustrated not only states’ alignment with the 2030 Agenda but also the private sector’s desire to become a more active partner in achieving the SDGs. Thus, as corporations and philanthropies started to reference the SDGs in their work, it soon became common practice for these actors to report on their activities’ alignment with these goals. One forum that has been influential in this process is the World Business Council for Sustainable Development – a consortium of over 200 international corporations – which has been reviewing corporate governance in the realm of social and environmental development. Their latest report analyzed the sustainability reports of 159 companies in 34 countries and found that while almost all of them recognized the SDGs in some way, only 6 percent aligned their key performance indicators with the SDG targets. Crucially, the most referenced goals were SDG 13 (Climate Action) and SDG 12 (Responsible Consumption and Production) while SDG 1 (No Poverty), SDG 10 (Reduced Inequalities) and SDG 16 (Peace, Justice and Strong Institutions) were the least referenced (WBCSD, 2019). Similarly, a 2019 analysis by Harvard Business Review examined a variety of sustainability documents of some of the 100 largest global companies to gauge their alignment with the SDGs. While trying to assess whether corporations advanced serious solutions to the SDGs, the authors instead found most of the companies’ commitments to be “merely cosmetic” indicating that they had only embarked “on a massive global public relations charade” (Kramer et al., 2019). In fact, stories of companies whose core business contradicts their alleged commitments to and alignment with SDGs are more common than not

Private foundations and the politics of international development  473 – a practice Reich (2019) refers to as “reputation laundering.” The giant tobacco corporation Philip Morris claiming to advance SDG 3 on health or ExxonMobil’s commitment to SDG 7 on affordable and clean energy are examples of this (Kramer et al., 2019). Analyses of philanthropic foundations similarly indicate an attempt to align their initiatives with the SDGs. Some have argued that philanthropic foundations are increasingly targeting their funds toward large-scale social problems such as creating employment or eradicating poverty (Dolan, 2016). The literature highlights the focus of private foundations on health and education as primary areas of giving, although as previously mentioned, more recently climate change has taken a more central role. The previously referenced analysis of the Giving Pledge signatories’ letters highlights health and education as their top priorities. But what is perhaps more noteworthy are the issues that are not referenced in these letters, including reducing inequalities and responsible consumption and production. This may not be so surprising considering inequality is a function of the rapid increase of wealth in few hands but also the justification for philanthropy. While altruism is propagated as the main motivation leading philanthropists to give, there are a variety of other reasons that could encourage their generosity such as seeking status, optimizing their taxes, and even laundering their reputations. Ultimately, as Reich (2019) convincingly argues, philanthropy is an exercise of power that converts private capital into public influence without any form of accountability while taking advantage of its tax benefits. Underpinning philanthropic activity without serious public scrutiny are government rules and regulations that have created the framework that in turn empowers philanthropic activity. At the international level, a similar framing of the issues and rules has encouraged the increasing activity of private entities, including philanthropic foundations, and their contributions to solving global challenges. The universality and indivisibility of the SDGs have created a platform on which private foundations can devise their programs. Thus, they facilitate a mapping of activities to various SDGs but the extent to which in practice each of these goals is being advanced is a question that is difficult to answer. According to the OECD (2018), over time the share of international giving targeting issues categorized as international development increased from 11.6 percent in 2001 to 29 percent in 2010. In terms of volume, philanthropic flows increased from US$7.2 billion in 2011 to US$9.3 billion in 2015 while totaling close to US$24 billion over 2013–2015. Of this amount, over half supported initiatives in the health and reproductive health sector – a primary area in which private foundations have come to play a significant role (with the Bill & Melinda Gates Foundation contributing a major portion of the funds allocated to this sector). The vast majority (97 percent) of private contributions are channeled through intermediary organizations while only one-third targets the poorest countries. This indicates not only the concentration of philanthropy in a particular sector but also private donors’ risk-averse attitude, as they mostly invest in middle-income countries and through intermediary organizations such as the UN and other international organizations. Thus, the sustainable development agenda has created a metric system that identifies a series of issues and related targets for measuring how we might be able to overcome them. As usual, such an agenda calls for a costing exercise where the focus is on how much the achievement of the goals will cost. From there, discussions are held as to how the trillions required can be collected so they can address the identified challenges. What the SDGs don’t do – even in their goal on inequality – is to seriously assess the inequitable structures that are responsible for global poverty and hunger. Yet, what is required is a systemic change in the institutions, rules and norms that have created the global disparities in wealth and income.

474  Handbook on the politics of international development While on the face of it, the 2030 Agenda for Sustainable Development is a noble endeavor in search of poverty eradication, it is rather a continuation of development orthodoxy. The SDGs have expanded the field of international development to include the private sector as active participants whose resources are required in order to realize the hope of achieving sustainable development. In that process, entities with very different incentive structures have been brought together to work on a common goal. Thus, what is witnessed here is the creation of a forum wherein the creators of capital are both trying to make a profit by jumping on the SDG wagon while also washing their hands of their core business activities, some of which are responsible for the global challenges the international community faces. Once again, the opportunity is lost to consider a reformation of the international system, in which unfair global rules have bestowed a few with fortunes at the cost of massive poverty and inequality for the many. Instead, the development agendas of this century – rather than systematically addressing the structural causes of global challenges – have incrementally integrated market principles into public policy solutions while creating a justification for the participation and deep engagement of private sector actors in international development.

REFERENCES Anheier, Helmut K. and Diana Leat (2013). ‘Philanthropic foundations: What rationales?’ Social Research, 80 (2), 449–472. Anheier, Helmut K. and Stefan Toepler (1999). ‘Why study foundations?’ in Helmut K. Anheier et al. (eds.), Private Funds, Public Purpose. New York: Springer Science and Business Media. Annan, Kofi (2012). Interventions: A Life in War and Peace. New York: Penguin. Association of Charitable Foundations (2019). Foundation Giving Trends 2019. https://​www​.acf​.org​.uk/​ downloads/​publications/​ACF​_Foundation​_Giving​_Trends​_2019​.pdf. Bishop, Matthew and Michael Green (2008). Philanthrocapitalism: How the Rich Can Save the World. New York: Bloomsbury Press. Bundesverband deutscher Stiftungen, Berlin (2020). https://​www​.stiftungen​.org/​stiftungen/​zahlen​-und​ -daten/​grafiken​-zum​-download​.html. Candid (2020). Key Facts on US Nonprofits and Foundations. http://​candid​.org. Collins, Chuck et al. (2020). The Giving Pledge at 10: Top Heavy Philanthropy in Action. Washington, DC: Institute for Policy Studies. Council on Foundations (2018). The State of Global Giving by US Foundations, 2011–2015. New York: Foundation Center. Dolan, Kerry A. (2016). ‘Big bet philanthropy: How more givers are spending big and taking risks to solve society’s problems,’ Forbes. https://​www​.forbes​.com/​sites/​kerryadolan/​2016/​11/​30/​big​-bet​ -philanthropy​-solving​-social​-problems/​?sh​=​4b5941c379c5. EFC (2019a). Annual Review 2019. Belgium: European Foundation Center. https://​www​.efc​.be/​about​ -the​-efc/​annual​-reports/​. EFC (2019b). Key Facts about European Philanthropy Working Internationally. Belgium: European Foundation Center. https://​efc​.issuelab​.org/​resource/​key​-facts​-about​-european​-philanthropy​-working​ -internationally​.html. Foundation Center (2004). International Grantmaking III: An Update on US Foundation Trends. New York: Foundation Center. http://​foundationcenter​.org/​gainknowledge/​research/​pdf/​intlhlts​.pdf. Gates, Frederick T. (1977). Chapters in My Life. New York: Free Press. Golding, Ian and Robert Muggah (2020). ‘COVID-19 is increasing multiple kinds of inequality. Here’s what we can do about it,’ World Economic Forum, 9 October. https://​www​.weforum​.org/​agenda/​ 2020/​10/​covid​-19​-is​-increasing​-multiple​-kinds​-of​-inequality​-here​-s​-what​-we​-can​-do​-about​-it/​. Goss, Kristin A. (2016). ‘Policy plutocrats: How America’s wealthy seek to influence governance,’ American Political Science Association, July. doi:​10​.1017/​S1049096516000676.

Private foundations and the politics of international development  475 Horvath, Aaron and Walter W. Powell (2020). ‘Seeing like a philanthropist,’ in Walter W. Powell and Patricia Bromley (eds.), The Nonprofit Sector: A Research Handbook, 3rd edition. Stanford, CA: Stanford University Press, pp. 81–122. Kamau, Macharia, Pamela Chasek, and David O’Connor (2018). Transforming Multilateral Diplomacy: The Inside Story of the Sustainable Development Goals. London and New York: Routledge. Kanie, Norichika and Frank Biermann (eds.) (2017). Sustainable Development Goals as Governance Innovation. Cambridge, MA: MIT Press. Kramer, Mark R., Rishi Agarwal, and Aditi Srinivas (2019). ‘Business as usual will not save the planet,’ Harvard Business Review. https://​hbr​.org/​2019/​06/​business​-as​-usual​-will​-not​-save​-the​-planet. Lilly Family School of Philanthropy (2020). Global Philanthropy Tracker 2020. Indianapolis, IN: Indiana University. Marx, Paris (2020). ‘Jeff Bezos’ climate change philanthropy has quite a few (hidden) strings attached,’ NBC News, 27 February. https://​www​.nbcnews​.com/​think/​opinion/​jeff​-bezos​-climate​-change​ -philanthropy​-has​-quite​-few​-hidden​-strings​-ncna1143791. OECD (2016). ‘Detailed aid statistics: Official and private flows (Edition 2016).’ OECD International Development Statistics (database). Paris: OECD. https://​doi​.org/​10​.1787/​d8b3361c​-en. OECD (2018). Private Philanthropy for Development. Paris: OECD. OECD (2020a). Development Co-operation Report 2020: Learning from Crises, Building Resilience. Paris: OECD. http://​www​.oecd​.org/​dac/​development​-co​-operation​-report​-20747721​.htm. OECD (2020b). Private Philanthropy for the SDGs: Insights from the Latest OECD DAC Statistics. Paris: OECD. Osorio Andrade, Maria Lucila (2020). ‘A sneak peek into contemporary philanthropy: The case of the Giving Pledge,’ Ciencias Administrativas Teoria y Praxis, 1 (16), 141–155. Oxfam (2020). Time to Care. Oxfam Briefing Paper, January. Oxford: Oxfam International. https://​ oxfamilibrary​. openrepository​. com/​b itstream/​h andle/​1 0546/​6 20928/​b p​- time​- to​- care​- inequality​ -200120​-en​.pdf. Pequeneza, Nadine (2019). ‘The downside of social impact bonds,’ Stanford Social Innovation Review. https://​ssir​.org/​articles/​entry/​the​_downside​_of​_social​_impact​_bonds. Rania, Francesco et al. (2020). ‘Social uncertainty evaluation of social impact bonds: A model and practical application,’ Sustainability, May. doi.10.3390/su12093854. Reckhow, Sarah (2020). ‘Politics, philanthropy, and inequality,’ in Walter W. Powell and Patricia Bromley (eds.), The Nonprofit Sector: A Research Handbook, 3rd edition. Stanford, CA: Stanford University Press, pp. 208–226. Reich, Bob (2019). Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better. Princeton, NJ: Princeton University Press. Roy, Michael J., Neil McHugh, and Stephen Sinclair (2018). ‘A critical reflection on social impact bonds,’ Stanford Social Innovation Review. SDG Philanthropy Platform (2021). SDG Funders. https://​www​.sdgphilanthropy​.org/​system/​files/​2021​ -07/​SDG​%20foundation​%20giving​%20estimates​%20by​%20UNDP​%20​%26​%20WINGS​.pdf. Soskis, Benjamin (2020). ‘A history of associational life and the nonprofit sector in the United States,’ in Walter W. Powell and Patricia Bromley (eds.), The Nonprofit Sector: A Research Handbook, 3rd edition. Stanford, CA: Stanford University Press, pp. 23–80. Soskis, Benjamin and Stanley Katz (2016). Looking Back at 50 Years of US Philanthropy. Menlo Park, CA: The William and Flora Hewlett Foundation. United Nations (2015). Addis Ababa Action Agenda of the Third International Conference on Financing for Development. New York: United Nations. https://​su​stainabled​evelopment​.un​.org/​ content/​documents/​2051AAAA​_Outcome​.pdf. Wales, Jane (2016). ‘Philanthropists can’t eradicate global poverty, but we can make a start,’ The Guardian, 12 May. https://​www​.theguardian​.com/​global​-development​-professionals​-network/​2016/​ may/​12/​philanthropy​-global​-poverty​-development​-finance​-sdgs. Weise, Karen (2020). ‘Jeff Bezos commits $10 billion to address climate change,’ New York Times, 17 February. https://​www​.nytimes​.com/​2020/​02/​17/​technology/​jeff​-bezos​-climate​-change​-earth​-fund​ .html.

476  Handbook on the politics of international development World Business Council for Sustainable Development (WBCSD) (2019). Reporting Matters: Navigating the Landscape: A Path Forward for Sustainability Reporting. Geneva and London: WBCSD. https://​ www​.wbcsd​.org/​contentwbc/​download/​7639/​121488/​1.

Index

Abbott, K. W. 92, 100 abortion 263–4 absence of corruption 126 absence of violence 39 accountability 7, 39, 97–8, 126, 127, 189, 190, 290, 361, 439, 444, 469, 471 Acharya, A. 76, 169 added worker effect 265 Addis Ababa Action Agenda 96, 470 Adhikary, B. K. 39 Afghanistan 264 Africa 9, 103, 144, 226, 245, 249, 412 abortion 264 Aid for Trade 352 Chinese investment and trade 455, 456 developmental regionalism 83, 84, 86 gender 257, 261–2, 265, 270 health 286, 287, 289, 295, 296 impossibility theorem 56–7 Indian developmental assistance 208, 209 industrialization 20 and the OECD 417, 428 trade 354 see also Central Africa; individual countries; MENA region; sub-Saharan Africa; West Africa African Development Bank (AfDB) 435, 436, 437, 441, 443, 445 African Union Agenda (2063) 320 Afro-Asian Conference of Bandung (1955) 168–9, 201 agency 7–8 Agency for International Development 1 Agenda for Sustainable Development (2030) 96, 97, 315, 318, 319, 320, 321, 322, 323, 324, 325, 336, 472, 474 see also sustainable development goals (SDGs) agendas 1, 2, 9, 10 Aghion, P. 200 agri-food systems 246, 247, 248, 249–50, 250–53, 254 agricultural workers 302, 306 agriculture 204, 233, 237, 271, 322, 330, 334, 338–41, 406, 451 agro-chemicals 229 Ahlquist, J. S. 35 aid architecture 463–6 aid effectiveness agenda 169

aid programmes, failure 192 Aid for Trade (AfT) 103, 346–56 challenges 351–3 differing perspectives regarding implementation 349–51 origins of concept and development in WTO 347–9 Akyüs, Y. 223 ALBA (Bolivarian Alliance for the Americas) 87, 160, 226 Ali, F. A. 36 Aliber, R. 25 Alliance for Progress 437 Alma-Ata Declaration (1978) 288, 289, 292, 298 Alter, K. J. 100 alternative regionalism 86–7, 87 alternatives to development 67, 68, 69, 70, 71, 72, 175, 186 Americanization of economic thought 365–6 Amin, S. 172–3 Amsden, A. 21, 50 anaemia 249 Andean Financial Corporation 226 Angola 200, 264 Annan, K. 127, 258, 471 anocracies 32 anomie 121 Anthropocene 234, 326 anthropocentrism 62, 67–8, 70–71 anti-colonialism 3, 9, 10, 20, 408, 412 anti-export bias 21 anti-imperialism 411, 412 appropriation 63 Argentina 6, 51, 81, 96, 123, 141, 157, 158, 159, 259–60, 264, 330, 338, 340, 428, 430 Aristotelian Moment of Social Solidarity 111 Arndt, H. W. 407 Arrighi, G. 135 Arrow-Debreu model, complete markets 221 Articles of Agreement (RDBs) 438, 440 ASEAN 80, 82, 83, 85, 86 ASEAN community project (2003) 86 ASEAN Connectivity Master Plans (2010 and 2025) 83, 446 ASEAN Free Trade Area (AFTA) 82 ASEAN Plus Three 81, 163 Asia 30, 84, 208, 245, 249, 264, 287, 352, 412, 417, 428, 455 see also East Asia; Southeast Asia

477

478  Handbook on the politics of international development Asia Pacific Economic Cooperation (APEC) 81 Asian Development Bank (ADB) 83, 123, 236, 435, 436, 437, 440, 441, 443, 445, 446 Asian Financial Crisis (1997) 16, 56, 86, 95, 124, 162, 163, 293, 439 Asian Infrastructure Investment Bank (AIIB) 10, 91, 102, 103, 160, 354, 371, 435, 436, 439, 440, 441, 442, 443, 444, 445, 446 Asian tigers 5, 21, 47, 57, 125 see also Hong Kong; Singapore; South Korea; Taiwan Asiedu, E. 35 Association of Charitable Foundations 462 Association of Southeast Asian Nations see ASEAN asymmetries access to credit 138 center-periphery system 17 early and late developers 3 income elasticity of demand 25 see also power asymmetries audience costs 39 austerity policies 25, 101 Australia 1, 81, 96, 235, 306, 380, 421, 440 authoritarianism 32, 33, 34, 36, 50 authority ranking 112 authority relations 152 autonomy 155, 169, 173–4, 190 Aziz, R. 396 bacteriology 287 Bailey, N. 42 Baker Plan 380 balance of payments crises, IMF role in preventing 377 ‘balance of payments dominance’ 24 balanced growth 20 Banco del Sur 226 Banerjee, A. V. 200 Bangladesh 208, 272, 273 Bank of England 151, 152, 225 Barro, R. J. 200 barter-trade 204 basic needs 16, 114 Bastiaens, I. 34 Battle of Seattle (1999) 6, 7 Bebbington, A. J. 189 Beeson, M. 420 Bell, S. 420 Belt and Road Initiative (BRI) 85, 103, 354, 439, 452, 457, 458 Ben-Artzi, R. 438 Berger, A. 37 Bernanke, B. 155 Berruezo, J. C. de S. 246

Best Alternative to Negotiated Agreement (BATNA) 397, 398 best practice(s) 4, 140, 237, 307, 367, 425, 426, 431, 432 Bezos, J. 461 Bhutan 205 Biber-Freudenberger, L. 332, 334 ‘big push’ theory 20, 49 Biglaiser, G. 36, 42 bilateral currency swap agreements 159, 162 Bilateral Investment Treaties (BITs) 34, 36–7, 40 bilateral trade agreements 151 Bill & Melinda Gates Foundation 290, 294, 297, 461, 462, 468, 469 billionaires 2, 464, 465, 467 bioeconomy 329–42 as an alternative development strategy 331–3 Latin America 333, 336, 338–41 promotion and regulation 336–7 and the SDGs 329–30, 333–6, 337, 339 biofuel 338–9 biomass 329, 330, 332, 333, 334, 335, 336, 338, 341 biomedical technologies 288, 290, 291 Black, E. 369, 370 black women 268 Blanton, R. G. and S. L. 38 blended finance 470 Bloomberg, M. 461 BNDES 226 Board of Governors (IMF) 378–9 Bøås, M. 445 bodies, development’s access to 66, 68 Boli, J. 407 Bolivia 340 Bollyky, T. J. 295 bondholders 153, 440, 443, 444, 446 bonds 156, 221, 360, 369, 440, 443, 446, 469–70 boom-bust cycles 5, 16, 25, 27 bottom-up approaches 1, 10, 55, 175, 189, 295 Bourdieu, P. 176 Bradford, C. I. 96–7 Brady Plan 381 brain drain/brain gain 304 Braudel, F. 246 Brazil 9, 51, 56, 81, 96, 97, 157, 158, 159, 225, 226, 247, 264, 316, 320, 330, 338, 385, 397, 428, 430 Bretton Woods Agreement 151, 154 Bretton Woods institutions 3, 5, 372, 394 see also International Monetary Fund (IMF); World Bank (WB) BRICS Bank see New Development Bank (NDB) British liberalism 152 Broad, R. 366

Index  479 Brundtland Report (1987) 93, 316 Bruno, M. 200 Brussels Programme of Action 199 Buchanan, J. 419 buen vivir 67, 68, 175 Bull, B. 445 Bunge, A. 410 bureaucracy 46, 47, 49, 50, 52, 289, 382–3, 385 business 86, 323, 367–8 Business and Industry Advisory Committee (OECD) 422 business-friendly environment 5, 6, 123 Busse, M. 38–9 Büthe, T. 36 Büyüm, A. M. 296, 298 Cáceres, B. 66, 70 Cairo Declaration 411–12 Campbell, D. 260 Campbell, R. 259 Canada 95, 235, 264, 306, 421, 470 Cancun Ministerial Conference (2003) 348–9, 396, 398 capacity 57, 133, 135 capacity building 84, 199, 206–7, 319, 348, 393, 397 Caparrós, M. 247 Capital 465 capital account liberalization 26, 383, 425 capital account volatility 16, 25, 26 capital accumulation 120, 172, 222, 226, 234, 240, 253, 450, 451, 454 capital controls 26, 27, 50, 223, 226, 378, 381, 385 capital flows 5, 16, 25, 26, 223, 371, 378, 384, 408, 450 capitalism 123, 135, 247, 252 see also crony capitalism; global capitalism; philanthrocapitalism; Sino-capitalism; state capitalism Carling, J. 304 Carnegie, A. 466, 467 Carothers, T. 126 Castro, J. de 247 Center of Reproductive Rights 264 center–periphery system 17, 85, 164, 410, 411, 414 Central Africa 268, 320 Central America 6, 123, 275, 446 Central American Bank for Economic Integration 446 Central Asia 7, 124 Central and Eastern Europe (CEE) 6, 7, 15, 32, 37, 42, 123, 124, 426, 438 centralized bureaucratic agencies 54

Centre for Cooperation with European Transition Economies 427 Centre for Cooperation with Non-Members (OECD) 430–31 Cernat, L. 354 Chan and Zuckerberg Initiative 469 Chang, H.-J. 213, 425, 455 Chang Shu 161 Chaturvedi, S. 202, 206 Chenery, H. 20–21 Chernomyrdin, V. 429 Chesnais, F. 245 Chey, H. 150 Chi, X. 306 Chiang Kai-shek 54 Chiang Mai Initiative (CMI) 162–3 childcare, gendered division of 267 Chile 25, 56, 80, 124, 264, 338, 427, 429, 435 China 9, 96, 235, 264 Aid for Trade 354, 355 development assistance 201 developmental state 5, 49, 51–2, 53, 54, 55, 57 economic growth 7, 18, 47, 57, 97, 450, 452, 454, 457 economic policy 97 extractivism 226 global health 290, 293 GVC approach 141 and the IMF 379, 385–6 and the OECD 9, 428, 430 public goods regionalism 85 and RDBs 10, 102, 438, 439–40, 443 regional disparity 452, 453 remittances 306 trade and investment 8, 21, 204 and the WTO 397 see also renminbi; US-China ‘cold war’; yuan Chinese Academy of Sciences 452 Chinese Communist Party (CCP) 52, 53, 54, 451, 453, 454, 457 Chinese Debt Trap 159 Chinese development 450–58 development as solidarity 107–116 internal 451–3 investment and international trade 453–8 strategy 450, 455, 458 Choi, S.-W. 35, 39 Chwieroth, J. 383 circular migration 304, 305 civil liberties 38, 42, 270 civil society 1, 183–93 agendas and contestation 6, 7, 10, 86–7, 188–90, 193

480  Handbook on the politics of international development from intermediaries to implementing actors 190–92, 193 hope for a more human world 192–3 ideological and political context 184–8, 193 and the IMF 186, 187, 381–2 and the UN 10, 185 and the WB 6, 183, 186, 187, 366–7 and the WTO 398 civitas homini 10–11, 112–15, 116 clan-consanguinity 112 Clarke, G. 185 classical development economics 15, 22, 25 climate change 2, 7, 223, 231–40, 247 bioeconomy and 334 managing 235–9 philanthropic interest 461 production of 233–5, 249 scale of challenge 232–3 SDGs 94, 321, 339 climate smart agriculture (CSA) 237, 250 closed regionalism 85 club goods 418, 419 club multilateralism 419–20 Clusters Mechanism 185 co-optation 235–6 coal power 232–3 coalitional view of ID 7, 9 coalitions, developing countries 169, 398, 400 Cohen, B. J. 150, 155, 160, 161 Cohrs, P. O. 152 Cold War 3, 5, 6, 51, 78, 119–22, 149, 369, 419 collaboration 141 collective action 55, 76, 262, 272, 273, 277, 396 Collective Action Clauses 153 collective co-production 133, 134, 135 Collins, B. 98 Colombia 4, 125, 264, 271, 316, 429 Colombo Plan for Economic Development and Economic Cooperation in South and South-East Asia 207 colonial difference 63 colonialism 9, 122, 175, 234, 244, 246–7, 287 coloniality 72 see also modern/colonial divide; modernity/ coloniality and decoloniality (MCD) Cols, G. 39 commodity markets 224–5 agreements 24 commodity booms 18, 224, 226–7 financialization 224, 226, 228 price fluctuations 19, 21, 24, 335 ‘common but differentiated responsibilities’ 317, 318 communal sharing 112 communal solidarity 111, 113

comparative advantages 48, 50, 52, 78, 365 competitive advantages 50 complementarities 20, 22, 37, 108 Comprehensive Refugee Response Framework (CRRF) 308 concessional lending 442, 443 conditionalities AIIB 444 Development Compact 202, 204 International Monetary Fund 5, 377–8, 384, 385–6 World Bank 5, 101, 361, 363, 364 Conference of European Economic Cooperation (CEEC) 409, 411 Conference on Problems of Developing Countries 411–12 Confucianism, human relations 112–13, 116 connectivity 83, 84, 85, 102, 103 consensus building 95, 101, 397, 411 consumers 49, 71, 99 consumption-based emissions 235 contestations civil society and 86–7, 188–90, 193 of developmental regionalism 76, 85–7 contextual practices 69, 70 contraception 262–3 contracting parties (GATT) 347, 394 contractual solidarity 110 control of corruption 39 convergence 21, 440, 441 Cooper, R. 149 cooperation between NGOs and local stakeholders 191 between voluntary sustainability standards 99 between WB and civil society 187 bioeconomy and need for 337 integration into GVCs 134 international migration 301 power and intra-local 133 UN and non-state actors 10, 185 see also development cooperation; economic cooperation; ‘enhanced engagement’ programme; financial cooperation; social cooperation coordination 99, 121, 141, 192, 337 COPINH 66, 70 core-periphery relations 172 Coronel-Ferrer, M. 270 corporate liberalism 152 corporate sector 472 corporate social responsibility (CSR) 463, 464, 471 Corporation of Foreign Bondholders 153 corporatist state structure 55, 56

Index  481 corruption 39, 55, 118, 124 cosmopolitical economy 48 Costa Rica 9, 141, 240, 264, 429 Council for Economic Planning and Development (Taiwan) 50 Council for Mutual Economic Assistance (COMECON) 409, 411, 421 counter-counterrevolution 200 counter-hegemonic block, SSC as 173 countercyclical policies 5, 25, 26, 27 Country Partnership Framework 372 Country Policy and Institutional Assessment (CPIA) 372 COVID-19 7, 8, 16, 57, 223, 228 Aid for Trade 355 global health 286, 290, 291, 293, 298 and the IMF 386 and inequalities 1, 302 migration and development 305, 306, 308, 311 neoliberalism 220, 372 North–South divide 401 politics of food 253–4 poverty and hunger 245, 254 problem of underpaid tax 2–3 and RDBs 446–7 trade contraction 8, 23 wealth concentration 464 Cox, R. W. 173 credibility 37, 39, 42, 353 credit ratings, RDBs 443 crime, law and development 6–7, 8, 118–28 during the Cold War era 119–22 in the human development era 125–8 in the neoliberal era 122–5 significance in development agenda 118 crime–development nexus 118 critical feminism 66, 68 critical IPE 173, 176 crony capitalism 124 Cross-Border Interbank System (CIPS) 158–9 currency power blocks 153–4 Cuypers, D. 99 cycle theory, RDBs 441, 444 Czech Republic 427 Dai, E. 452 Daude, C. 39 DDT 288 De Paula, L. F. 149 de-politicization 236, 237 debt relief, for HIPCs 381–2 debt trap 159 Decade for Development (UN) 4 Decent Work Agenda (ILO) 7, 94, 140, 309

Decent Work for Domestic Workers (ILO) 309 decentralization 100, 451, 456 decision-making at the OECD 422 club multilateralism 419 development governance 96, 100 female 271, 273 and the GATT 393 International Monetary Fund 378–9, 382–3, 387 migration and development 311 power and authority in 223, 414 RDBs 441–2 World Bank 364 World Trade Organization 397 Declaration of Contracting Parties (1961) 347 Declaration on the Promotion of Trade of Less Developed Countries 347 decolonial feminism 66, 68, 70 decolonial politics 2 decolonial theories 175 decoloniality 67 see also modernity/coloniality and decoloniality (MCD) decolonization 20, 49, 78, 168, 171, 186, 193, 296, 298, 408, 411 decolonizing development 62–72 decolonial analysis 69–72 decolonial method of research 67–9 decolonial thinking 62, 64–7, 71 defiant bureaucrats 405, 407, 408, 412, 414, 415 deglobalization 179 democracy 6, 32–3, 47, 84, 413 inward FDI 6, 34–5, 36, 37, 38, 39 liberalism and neoliberalism 219 NGOs as promoters of 189–90 rule of law and 126 Deng Xiaoping 51, 52, 451 Denmark 424 Department of Economic Affairs (DEA) 408 Department for International Development (UK) 1 dependency(ies) 18, 138, 226, 252, 335 dependency currencies 156 dependency theory 79, 119, 122, 171, 172–3, 175, 177, 288 dependent development 51 deregulation 46, 78, 80, 101 DeRouen, K. R. 36 Derrida, J. 176 Desbordes, R. 37 Designs for the Pluriverse 67 Destruction massive: Géopolitique de la faim 247 devaluation (currency) 155, 377 developing countries

482  Handbook on the politics of international development capital account volatility 25 coalitions 169 economic growth 7, 21, 26 empowerment 205 export manufactures 15–16, 18, 20–21, 22 and the GATT 393, 394 health interventions 291 and the IMF 385 industrial take-off 49 innovations 22 negative discrimination 347–8 overuse of development narrative 400 pro-cyclical fiscal policies 25–6 role in ITO negotiations 392 share of exports 350 state capitalism 78 and the WTO 395–6, 397, 398, 400, 401 see also Least Developed Countries (LDCs) development concept 16, 75, 406, 407 dialectics of 107–110, 116 finance see finance governance see governance and the international economic order 77–8 RDBs’ understanding of 435–6 as rooted in material progress/improvement 75 as solidarity 10, 110–11 and UN see United Nations see also decolonizing development; economic development; human development; international development; post-development; social development; underdevelopment development agencies 370, 436 Development Assistance Committee (DAC) 169, 175, 199, 205, 348, 355, 471 Development Bank of Latin America 435, 443, 446 Development Compact 197–214 development cooperation actors in 94, 94–9, 187, 188, 304–5 new forms of 355 regional 84, 85 see also Development Compact; South– South cooperation Development Cooperation Forum (DCF) 169 development economics 15, 16, 17, 22, 25, 214, 366, 369, 370, 406 Development Finance Corporation (US) 1 Development Partnership Administration (India) 1 Development Policy Loans 372 developmental regionalism 4, 8, 56, 75–87

Aid for Trade 354 conceptualizing 75–7 contestation 76, 85–7 four variants of 79–85 developmental state(s) 5, 46–57 conceptual elements 52–5 East Asia 49–52 importance 46–8 intellectual origins 48–9 replicability and rehabilitation in the West 56–7 diabetes 248 dialectics of development 107–110, 116 Diao, X. 21 diaspora actors 304, 305 Díaz, F. 71 diet(s) 247, 251, 253 Dietz, T. 332 Dijsselbloem, J. 376 Ding, X. 454 direction of development 52 Directorate-General for Development (EC) 1 disciplinary neoliberalism 236 discipline and consensus 139, 140, 141, 142 discursive power 237–8 disease(s) campaigns to curb spread of 287 evidence-based approach to 291 and stability 292–3 threats, 1990s 289 undernutrition and 248–9 see also COVID-19; Ebola; HIV/AIDS; non-communicable diseases (NCDs) dispossession 234, 245 division(s) of labour 15, 17–18, 110, 111, 172, 244 Dobson, A. 238 Doha Development Round 1, 348, 350, 351, 353, 354, 396, 399, 400, 401 dollar (US) 148–9, 149–50, 151–2, 153, 154, 155–6, 159, 161 Domar, E. D. 200 domestic policies, and IMF programs 384 domestic savings availability 25 domestic stabilization funds 24–5 dominant discourses 2 donor–recipient relationship 168, 176 Dowbor, L. 245 Dry, S. 295 ‘dual circulation’ plan 458 dual independence 10, 463 Duflo, E. 200, 258 Dunford, M. 452 Durkheim, E. 110, 111, 112, 114, 116, 121 Durmaz, N. 38

Index  483 ‘Dutch disease’ effects 18, 21 Duty Free Tariff Preference (DFTP) 210–13 duty-free quota-free (DFQF) 396 dynamic efficiency 22 Eagleton-Pierce, M. 311 Earth 62, 63, 65, 66, 67, 68, 69, 70, 71, 72, 113 earthlessness 68, 71, 72 EASIS 276 East Asia 49–52, 81, 84–5, 86 Easterly, W. 200 Ebola 290, 293 Economic Commission for Europe (ECE) 405, 409, 411, 412 Economic Commission for Latin America and the Caribbean (ECLAC/CEPAL) 79, 119, 131, 141, 172, 333, 404, 409, 410, 411, 412, 414 Economic Community of West African States (ECOWAS) 83 economic cooperation 4, 96, 201, 317 economic development 47, 49, 53, 57, 100, 101, 121, 222, 258–9, 392, 393 Economic Development Institute (EDI) 370 economic globalization 77, 163, 174 economic growth 6, 238, 240 bioeconomy and 338 China 7, 18, 47, 57, 97, 450, 452, 454, 457 climate change and 231 crime as an obstacle to 124 developing countries 7, 21, 26 development governance 103 disease and 293 East Asia 53, 54–5 foreign direct investment 31, 82 foreign exchange availability 25 health and 291 as horizon for the good life 67 impact of IMF programs 383–4 income redistribution 204 industrial development and long-term 20 linked to savings, capital output and population growth 200 models 222 OECD way to 424 property rights protection and 36 SDGs 7, 322, 350 sustainable 21, 97, 225 trade liberalization and 5 US foreign aid and 51 Economic Intelligence Service (EIS) 408 economic nationalism 48, 53, 82–3 economic participation 265–7 economic policies 5, 97, 131, 370, 409 economic power 10, 91, 102, 239, 385, 436, 439

economic reconstruction (post-conflict) 271 economic reform, IMF programs and 384 economic self-reliance 169 Economic and Social Council (ECOSOC) 121, 185, 187, 408, 410 Economic Survey (1948) 409 Economic Vulnerability Index 200 economics WB research 365–6 see also development economics; neoclassical economics; new economics of labour migration (NELM); new institutional economics economism of health 294–5 Ecuador 160 education and training 4 gender 259, 260, 262, 263, 267–9, 274, 277 health workers, Africa 297 IMF staff 383 philanthropic intervention in 467, 470 SDGs 324 egalitarian values 413 Egypt 153, 201, 264, 306 Einstein, A. 240 El Hambre 247 El-Chichakli, B. 335 elderly population, rural China 109, 110 Elver, H. 248 embedded liberalism 139, 152, 395, 397 emerging donors 175, 355 Emissions Gap (UNEP) 232 employment 127, 204, 262, 265–6 empowerment 186–7, 189, 205, 298, 401 see also female empowerment empty-timelessness 72 Enabling Clause 347, 394 enfleshlessness 71, 72 Engel, C. L. E. 251 ‘enhanced engagement’ programme (OECD) 9, 417, 430 Enhanced Integrated Framework (EIF) 349–50, 350 environment bioeconomy and 336 and SDGs 325, 326 environmental movements 11, 113 environmental policy 316 ‘epistemology of the South’ 175 equality 201, 302, 316, 318, 320, 405, 408, 440 see also gender equality; inequality(ies) equality matching 112 Escobar, A. 64, 67, 68, 69 Estonia 429 Ethiopia 261, 264 Eurasia 42, 209, 244, 445

484  Handbook on the politics of international development euro 159, 161, 162 Eurocentrism 62, 70, 71, 175, 297 Europe 103, 244, 245, 252, 265, 287, 301, 306, 369, 406, 411 see also Central and Eastern Europe (CEE); individual countries European Bank for Reconstruction and Development (EBRD) 427, 435, 436, 438, 439, 441, 442, 443, 445 European Commission 1, 324, 438 European Foundation Center (EFC) 462 European Investment Bank 236, 238 European Union (EU) 96, 329, 332–3, 340, 397, 425, 456 evidence-based medicine 290, 291 evidence-based policy-making 311, 463 evolutionary theories, technical change 23 ex ante and ex post conditionalities 363 exchange rates 18, 26, 27, 377 Executive Board (IMF) 379, 380, 382 EXIM Bank 208 exorbitant privilege 154–6 Expert Committee 198 export development 4, 15–16, 18, 20–21, 22 export orientation 52, 80, 109 export performance 21 export strategies 25 expropriation of FDI 34, 36, 37 external shocks 24 extractivism 225–6, 248 factorial terms of trade 17 fair cooperation 115, 191 faith-based NGOs 186 family planning 262–3 FARC 270, 271 Farmer, P. 290 fast policies 139, 140, 141 Federal Reserve 155, 156, 223, 225 female empowerment agricultural 271 education 277 information and access to healthcare 258, 260–65 political 259–60, 269–70 through microfinance 273 femicides 275 feminists/feminism 2, 66, 68, 70, 259, 265, 274 Field, G. C. 111 finance 5, 218–28 demand for, and development of RDBs 439 GVC approach 138 key concepts in GPE approach 220–21 neoliberal 221–4 neostructuralism 224–7

see also blended finance; international monetary relations; investment; lines of credit (LOCs); loans financial casino 226 financial cooperation 148, 153, 156, 163, 164, 377 financial cycle 223 financial globalization 221, 222–3, 228 financial liberalization 26, 31, 37, 80, 82, 128, 371, 383, 425 financial power 226 financialization 5, 137–8, 224, 225, 226, 227, 228, 232, 438, 446, 470 Findlay, R. 18 Fine, B. 365 Finland 264, 421 Fiorini, M. 98 firms, GVC research focus on 135, 136 first generation reforms 364 first nations’ peoples 66, 70 first-generation RDBs 437–8, 439, 440, 442 fiscal policies 25–6, 27 Fiske, A. P. 112, 113 Five Year Plan 453, 458 Flandreau, M. 150, 153 FONPLATA 446 food 243–54 competition between non-food crops and 338 COVID-19 pandemic and politics of 253–4 nutrition insecurity and development 243–50 production, distribution and power 250–53 Food and Agriculture Organization (FAO) 237, 243, 245, 248, 249, 333, 337, 339 food aid 244 food consumption 251, 253 food insecurity 245, 248 food security 199, 226, 240, 320, 332, 334, 339, 451 food sovereignty 338, 339 foreign direct investment (FDI) 20, 25, 31, 82, 225 see also inward FDI; outward FDI foreign exchange availability 5, 25 foreign exchange reserve management 26, 27 Foreign Policy Analysis (FPA) 176–7 Forging a Global South 174 forums (OECD) 425 Fossil Capital 234 fossil fuels 234, 236, 239–40, 332 Foster, J. B. 251 Foucault, M. 176 Foundation Center survey (22004) 468 fragmented society 109 frames/framing 397–8 framework approach, to cooperation 205

Index  485 Framework for Strong, Sustainable and Balanced Growth 96, 97 France 95, 110, 240, 379, 380, 409, 423, 424, 438 Frank, A. G. 288 Frankel, J. A. 150 Frankel, M. 200 free market(s) 46, 123, 125, 413 free trade 5, 48–9, 350, 426 freedom 107–8, 114, 116, 127 see also civil liberties; political liberty Freire, P. 246 French franc 48, 149, 153, 154 Frente Sandinista de Liberación Nacional (FSLN) 270 Friedman, M. 222, 467 Fromm, E. 108, 116 frontier markets 25 fumuguan 112 funding climate change crisis 232 health sector 8, 290, 294–5, 296–7, 297 migration 308 see also subsidies FutureEarth 324 G6 95 G7 3, 9, 95, 96, 97, 101, 316, 337 G8 95, 96 G20 9, 95–6, 96–7, 97–8, 101, 232, 337, 417, 420, 428, 430 G77 169, 201, 316, 412 Gamble, A. 75 Gates, F. T. 467 Gavi 469 GDP 47, 124–5, 249, 443 Gelb, A. 200 gender discrimination 248, 268 gender equality 257, 258, 259, 260, 265, 267, 270, 271, 276, 297, 351 gender inequality 258, 259, 260, 266, 273, 274 gender parity 267 General Agreement on Tariffs and Trade (GATT) 4, 185, 346, 347–8, 392, 393–5, 397 general budget support (GBS) 200 general capital 360 ‘generalisation of abstract managerialism’ 311 Generalized System of Preferences (GSP) 394, 411 genetically modified organisms (GMOs) 237, 336, 338 geo-economics 85, 132, 455 geopolitics 3, 5, 84, 175, 235, 407, 408, 409, 412–13, 414, 457 Georgescu-Roegen, N. 331 Georgieva, K. 376

Geothermal Development Company (GDC) 236 Gereffi, G. 134, 136, 138 Germany 48–9, 95, 379, 380, 423, 438, 461 Gerschenkron, A. 19 ‘getting prices wrong’ 50 Ghana 296–7, 320 gilded age philanthropy 466–7 Gill, S. 173 girls 262, 275, 277 Giscard d’Estaing, V. 154–5 Giving Pledge 471, 473 Global Campaign for Education 268 global capitalism 122, 135, 175, 373 Global Center for Pluralism 323 Global Challenge Research Fund 324 Global Compact for Refugees (GCR) 301, 307, 308, 309 Global Compact for Safe, Orderly Migration (GCM) 301, 307–8, 309, 311 global economy 23, 235, 337 ASEAN participation 80 Chinese participation in 454 integration 5, 16, 78, 101, 354 monetary statecraft 152 OECD membership share 428 wealth concentration 464 global financial crisis see North Atlantic financial crises (2008–09) Global Forum for Health Research 295 Global Forum on Migration and Development (GFMD) 305, 308 global gender agenda 2, 11, 257–77 Global Gender Gap Index 257, 258, 259 Global Gender Gap Report 257, 259 global governance 4, 91–104 bioeconomy 337 defined 92–3 of development changing nature of development regime 99–103 expansion of development agenda 93–4 finance see finance new actors in the development regime 94–9 economic see International Monetary Fund (IMF) of health 297 of migration 307–310 multilateral 420 global health 286–98 absence of agency in politics of 8 an agenda for change 9, 296–7 competing norms 291–6 history of 286–91 ineffectiveness of IOs 8

486  Handbook on the politics of international development institutions 297, 298 scholarship critique 296 global level of analysis 2 global multilateralism 420 Global North 2, 7, 9, 128, 186, 244, 245, 247, 316, 318, 325 see also North–South divide Global Partnership for Effective Development Cooperation (GPEDC) 169 Global Philanthropy Tracker 2020 464 global political networks 139, 142 Global Production Network approach 133 global public goods 365, 420 Global Relations Programme (OECD) 430 Global South 9, 122, 244, 247 crime and violence 6–7, 124 developmental regionalism 79–85 global health leadership 297 GVC approach 134, 137, 141, 142, 144 ID as a mediation between Global North and 2 powerless narrative 399, 400 role in UN General Assembly 186 and SDGs 316, 317, 318 studies 175, 177 term 174 and the WTO 396, 397, 398, 401 see also North–South dialogue; North–South divide; South–South cooperation Global Standardized Institutions (GSIs) 213 global syndemic 247 Global System of Trade Preferences (GSTP) 353 global value chain (GVC) approach 131–44 assimilation process within the IOs 138–42 limitations 132–8 global value chains 6, 56, 98, 451 global warming 232, 233, 234, 240 globalization 5, 7, 10, 16, 77–8, 122–3, 125, 173, 221, 235, 244, 452 see also deglobalization; economic globalization; hyperglobalization; Washington Consensus gold standard 151 Gold Star Families for Peace 269 good governance 7, 39, 47, 78, 84, 86, 118, 126, 187, 439 good life 67 The Gospel of Wealth 466, 467 Goss, K. A. 471 Gough, B. 151 governance and FDI 39–42 of the IMF 378–82 OECD concepts 425 WB definition 47

see also global governance; good governance; network governance; regional governance; soil governance Governance and the Law development report 47 Grabel, I. 425 Gramsci, A. 176, 220, 235 Granovetter, M. 133 grants 209–210 ‘great acceleration’ of the economy 234–5 Great Depression (1930s) 19–20, 224 Greater Mekong Sub-region (GMS) 84, 85, 446 The Great Transformation 151, 245 Greece 198, 421 green revolution 250, 370 greenhouse gas emissions 232, 234, 235 Grilli, E. R. 19 Grossman, G. M. 200 Gudynas, E. 175 Guerin, S. S. 35 gunboat diplomacy 153 Haberler Report (1958) 394 Habermas, J. 115 Haggard, S. 56 Hallaert, J. J. 351 Hamilton, A. 48 Hansjürgens, B. 341 hard law 92 harmonious society 453 Harrod, R. F. 200 Harvard Business Review 472 Hausmann, R. 22 Havana Charter 392, 394 Hayek, F. von 123 healing 70, 72 health bioeconomy and 332, 334 definitions 288, 292 impact of agro-chemicals 339 philanthropic intervention 470, 473 research funding 294–5 see also global health health inequalities 292, 294, 295, 384 health interventions 291 health systems 228, 286, 288, 289, 290, 296–7, 298 healthcare 260–65, 289, 294, 320 Heath, O. 259 Heavily Indebted Poor Countries (HIPCs) 381–2 Heede, R. 234 hegemony and agricultural development 254 challenges to neoliberal 86 international monetary relations 151–2, 164 and RDBs 437–8, 439, 446

Index  487 United States 421–2 Heimann, T. 335 Helleiner, E. 150, 155 Helpman, E. 200 Henning, C. R. 152 high-income countries 198, 291, 295, 382 high-performance economy 123 high-skilled migrant workers 306 Hirschman, A. O. 20 HIV/AIDS 261–2, 289, 293 Hokou system 453 homo economicus 66, 68, 70 homo sociologicus 108, 113 Hong Kong 47, 53, 149 Hong Kong Ministerial Conference (2005) 349, 396 Howitt, P. 200 Hu Jintao 453 Hühne, P. 352 Human Assets Index 200 human capital 124, 200, 222, 273, 303, 320 human development 16, 118, 125–8, 199, 200, 325 Human Development Index (HDI) 198 Human Development Reports (UNDP) 202, 293–4 human needs 113, 114 human relations 112–13, 114 human rights 84, 232, 413 FDI 37–8, 40 food and 243, 244, 254 gender 264 global health 291, 292, 294 migrants/migration 305–6, 309, 311 human-centred regionalism 86 humanitarian assistance 209–210 humanitarian-development nexus 308–9 Humphrey, C. 440, 442 Hungary 307, 427 hunger 243, 244, 245, 247, 248, 249, 251, 252, 254, 320, 322, 326 hyperglobalization 54, 174 ideal social situation 111 idealized notion of development 175 Illich, I. 68 impact investment 463, 469–70, 471, 472 imperialism 4, 173, 252, 406, 437 implementation of SDGs 320 implementing actors 191–2, 193 import substitution industrialization (ISI) 4, 16, 20, 21, 51, 52, 79, 80, 82, 119–20, 171 imported technologies 15, 20, 50 impossibility theorem 56–7 In Larger Freedom 127

income food expenditure as a proportion of 251 manufacturing and 20 and partner violence 274 as sole measure of development 197–201 income elasticity of demand 17, 18, 25 income inequality 384, 386 income redistribution 204, 249 independent development promoters, NGO’s role as 188, 189 India 1, 9, 56, 96, 97, 102, 235, 306, 385 Development Compact 9, 201, 202–213 and gender 260, 264, 268, 273 and New Development Bank 439, 440 and the OECD 428, 430 and the WTO 397, 400–401 India-Africa Forum Summit (2015) 207 Indian Chairs 207 Indian Council of Cultural Relations (ICCR) 207 Indian Technical and Economic Cooperation (ITEC) 207 Indian Theology 70 individual rights 107, 114, 115 Indonesia 9, 96, 97, 206, 264, 428, 430 industrial policies 16, 21, 22, 23, 50, 53, 54, 56, 57, 78, 80 industrialization 15, 19–21, 49, 51, 80, 121, 135, 250, 406, 409–410 see also import substitution industrialization (ISI); premature de-industrialization Industrialization Consensus 3, 15 inequality(ies) 193, 234, 273, 296, 311 bioeconomy and 332, 334 COVID-19 1, 302 crime, poverty and 7, 124 IMF focus/programs 378, 386 SDGs 318 see also gender inequality; health inequalities; income inequality infant mortality 248, 258, 261, 277 infectious diseases 294, 295 inferiority (racial) 246, 247 informal employment 266 information and access, female empowerment 260–65 information and communication technologies (ICT) 23, 398 infrastructure connectivity 84 ingredient approach 206 Initiative for ASEAN Integration (IAI) 83 Initiative for the Integration of the Regional Infrastructure of South America (IIRSA) 83 innovation(s) 22, 23, 134 instability 193

488  Handbook on the politics of international development Institute of Development Studies (Suffolk University) 134 institutional architecture, global health 291 institutional features, developmental states 53–4 institutionalization defiant bureaucracy 410 of development concept 407 of diaspora engagement, labour migration 304, 305 of East Asian regionalism 81 of GVC approach 132 of international development 4 of neoliberal market reforms 5, 78 of US visions of global economy 368 insurance industry 36 integrated development planning (China) 451–3 Inter-Agency Working Party on Statistics for Social Programmes 198 Inter-American Development Bank (IADB) 123, 131, 140, 160, 226, 435, 436, 437, 442, 443, 445, 446 Interamerican Institute for Cooperation in Agriculture (IICA) 333 interdependence 115, 149, 326, 353, 413 intergovernmental organizations (IGOs) 94, 95–8, 192, 193, 378, 435 Intergovernmental Panel on Climate Change (IPCC) 232, 233 intermediaries, NGOs as 190–93 International Bank for Reconstruction and Development (IBRD) 1, 91, 100–101, 360, 361, 363, 369 International Conference on Population and Development (ICPD) 264 International Covenant on Economic, Social and Cultural Rights (UN) 244 international currency 148–50, 160–62 International Development Association (IDA) 100, 101, 198, 360, 361, 363 international development (ID) complexity of process 2 cooperation see development cooperation in debate 3–11 historical context 15–27 International Monetary Fund (IMF) 385–6 intersectional agendas 2 politics of 2–3 significance of philanthropy 465–6 strategies 2 struggles over 1 international division of labor 15, 17–18, 172, 244 international economic order 77–8 see also New International Economic Order (NIEO)

international financial institutions (IFIs) 185, 187, 224, 438 International Health Board (Rockefeller) 287 international insertion 219, 220, 224, 332, 450, 454, 458 International Institute for Sustainable Development 322 International Labour Organization (ILO) 7, 16, 94, 131, 140, 258, 266 International Monetary Fund (IMF) 46, 57, 64, 78, 152, 169, 198–9, 231, 376–87, 420, 427 Aid for Trade 349 brief history 377–8 capital account management 26 and civil society 186, 187, 381–2 conditionalities 5, 377–8, 384, 385–6 consequences of actions 383–4 counter-cyclical role 5 decision-making 378–9, 382–3, 387 development governance 91, 94, 101 governance 378–82 international development 385–6 report on fossil fuel subsidies 236 and SDGs 7 standardization policies 46 international monetary relations 148–64 difficulties of not having a top currency 156–63 exorbitant privilege 154–6 hegemony 151–2 international currency 148–50 politics 152–4 international order, revisioning 79–80 International Organization for Migration (IOM) 8, 307, 308 international organizations (IOs) bioeconomy governance 337 and development 3, 8, 94, 119 global health 288, 290 globalization project 5 incorporation of GVC approach in 140–42 ineffectiveness 8 legitimacy 3, 6 world culture 407 international political economy (IPE) development finance 218–28 neoliberalism 46 South–South relations 173, 176 international relations 76, 325, 382 International Relations in Latin America (RIAL) 174 International Science Council 324 international specialization 21 international trade 8, 23, 163

Index  489 China 450, 455–6 expansion 18, 20 integration in 4–5, 21 International Trade Organization (ITO) 392–3, 410 intersectional agendas 2 intersubjective recognition 115 intimate partner violence 274 intraregional trade 354 investment see foreign direct investment (FDI); impact investment investment liberalization 80, 82 investor-state collusion 34 invisible hand 46, 48, 57 The Invisible Heart 470 inward FDI 226 China 53, 451, 453–4 political determinants 31, 35–42 political regimes 6, 31, 34–5, 38, 42 Taiwan 50 Iran 264 Ireland 198 Irurzun-Lopez, M. 297 Israel 198, 307, 429 issue areas, migration 308 Istanbul Programme of Action (IPoA) 199, 350 Italy 95, 423 Ito, T. 149, 150, 156, 160 Jaguaribe, H. 173 Japan 81, 95, 163, 456 and the ADB 437 developmental state 5, 47, 48, 49–50, 51, 53, 54, 55 and the IMF 379, 380 and the OECD 421, 423, 424, 429 see also yen Jensen, N. M. 34, 36, 39 Jha, P. 247 jiatianxia 112 Jobst, C. 150 Johnson, C. 49, 50 Johnston, N. P. 39 joint capital ventures (JCVs) 53, 453 Joint Studies Program 174 Jubilee 2000 campaign 382, 398 judicial independence 123, 126 Juerges, N. 341 justice 9, 316, 318, 321 juvenile delinquency 121–2 Kahneman, D. 397 Kaldor, N. 200 Kamath, K. V. 440 Kaminsky, G. L. 26

Kant, I. 113 Kaul, I. 419, 420 Kautsky, K. 250 Kawai, M. 150, 160 Kay, J. 228 Kellerman, M. 441, 444 Kenner, D. 234 Kenya 121, 236, 260, 261, 320 Keohane, R. O. 100, 419 Kerner, A. 37 Kindlberger, C. P. 25 Knafo, S. 151, 311 Knoerich, J. 440 knowledge 419 geopolitics of 175 inequalities in access to 296 neutrality of 365 see also technical knowledge; Western knowledge knowledge bank (WB) 361, 364–6 knowledge hub (SDG) 322 knowledge-based bioeconomy 332–4 Krueger, A. O. 21 Krugman, P. 82, 200, 214 Kuznets, S. 20 labour control 234, 453 gender quotas 266 migration 302, 305–7, 309, 311, 453 participation 258, 265–6 rights 38–9, 99, 309, 310 surplus 17–18 see also employment; wage labour Lagarde, C. 376 Lall, S. 22 The Lancet 247 land, bioeconomy and 330, 333, 334, 335, 336, 338, 339, 340, 341 land property relations 250 late/late-late industrialization 19, 49, 50 Latin America 15, 144 Aid for Trade 352 bioeconomy 333, 336, 338–41 Chinese trade and investment 226, 455, 456 crime and violence 7, 124 debt crisis 5, 16, 80 developmental regionalism 79–80, 80–81, 83, 86, 87 financial architecture 159–60 food insecurity 248 and gender 264, 265, 269, 275 and the IMF 377, 384 malnutrition 245 neoliberalism 47

490  Handbook on the politics of international development and the OECD 417, 428 premature de-industrialization 21 protectionism 19, 56 and RDBs 439, 446 rule of law and FDI 42 support from India 209 trade 354, 456 and the UN 410, 412 and the US 6, 123, 224, 437 see also individual countries Latvia 429 law see crime, law and development; hard law; legal imperialism; restrictive laws; rule of law; soft law law reform 6, 120, 123, 125, 126 Leach, M. 295 leadership 260, 297 League of Nations Health Organisation 286, 287, 288 League of Nations (LN) 406, 407, 408, 409 learning 134 Least Developed Countries (LDCs) 199, 210–13, 347, 350, 352, 353, 354, 394, 396, 412 Lechini, G. 174 Lee, J. W. 200 Lee, K. 291 legal imperialism 4, 122 legitimacy of G7 and G20 97 of IMF 385 of IOs 3, 6 of life goals 108 of RDBs 445 voluntary sustainability standards 98 of WB 365 Leibbrandt, E. 266 Lesser, L. I. 294 Lewis, W. A. 17 Li, Q. 35, 36 liberalism 152, 219 see also embedded liberalism; neoliberalism; universalist liberal ethos liberalization 9, 47, 52, 78 see also financial liberalization; market(s), liberalization; trade liberalization Lien, D. 35 life goals 108 Lim, W. 205 lines of credit (LOCs) 207–9 linkages 20, 134 List, F. 48, 54, 406, 410, 455 Lithuania 429 Liu, W. 452 Liu, Y. 109 ‘live and let live’ 115

Livni, T. 270 loans 153, 225 India’s Development Compact 209–210 regional development banks 435, 436, 442–4 World Bank 360, 361, 363, 368–9, 371 see also microfinance local currency payments mechanism (Mercosur) 156–8 logistics networks (Chinese) 457 London Stock Exchange (LSE) 153 long-term growth 20, 26, 50, 204, 225 loose coupling 371 low- and middle-income countries (LMICs) 21, 198, 199, 208, 294, 296, 297, 298, 304, 317, 352, 380, 397 lower-skilled migrant workers 306 Lucas, R. E. Jr. 200 McCloy, J. 368 McDowell, D. 162 McInnes, C. 291, 293 McMichael, P. 253 McNally, C. 55 McNamara, R. 361, 370, 371 macroeconomic conditionalities 363, 364 macroeconomic policies 24–7 Macroeconomic Research Office (Singapore) 163 Madani, S. 38 Maher, H. 263 maize 246, 339 Make Poverty History 398 Malabo declaration 320 malaria 289 Malassis, L. 251 Malaysia 162 Mallaby, S. 150 Malm, A. 234 malnutrition 245, 248–9 Malthus, T. 251 Mamani, F. H. 67 ‘management of migration’ 304, 305 Manoilescu, M. 410 Mantzopoulos, V. 454 Manzocchi, S. 35 Mao Zedong 54 Maputo Corridor 84 market(s) liberalization 56, 186, 372, 413 neoliberal discourse 221–2 and philanthropy 464, 471 pricing 112 reaction to IMF programs 384 reforms 5–6, 15, 78 see also commodity markets; free market(s); frontier markets

Index  491 market power 2 market-led regionalization 80 Marshall Plan 154, 168, 369, 407, 421, 424 Martin, P. 306 Marx, A. 98, 99 Marx, K. 244, 245 Mass Action for Peace 269 master currencies 148, 149, 154, 156, 161 material power 236 materiality of development 63 maternal and child undernutrition 248–9 maternal mortality 261, 277 Matsuyama, K. 150 Mauss, M. 176 Mawdsley, E. 176 Meade, J. 200 mechanical solidarity 110 mediation, decolonial approach to development 62, 63 Memedovic, O. 136 MENA region 258, 259, 266 Meng, C. 454 Mengistu, A. A. 39 Mercosur 80, 81, 82, 156–8 Merton, R. 121 Meunier, S. 100 Mexico 81, 96, 141, 246, 264, 275, 306, 427, 429 micro-practices (neoliberal) 139 microfinance 272–4 middle-income countries see low- and middle-income countries; upper middle-income countries (UMCs) Mignolo, W. 64 migration 2, 8, 16, 301–312 and disease 293 global governance 307–310 see also labour migration; urban migration ‘migration and development nexus’ 301–2, 303–5 Migration Multi-Partner Trust Fund (MMPTF) 8, 307, 311 Míguez, M. C. 174 Milani, C. 176 Millennium Development Goals (MDGs) 93, 96, 126, 127, 187, 316, 317, 349, 468, 471 Milner, H. 36 Ministry of Foreign Economic Relations and Trade (MOFERT) 456 Minsky, H. P. 25 mission approach 205–6, 213 MITI 49–50, 54 modern/colonial divide 2, 62, 63, 67–9 modernity 62, 68, 70–71, 120 modernity/coloniality and decoloniality (MCD) 64–7 modernization 4, 78, 120, 122, 413, 454

modernization theory 78, 79, 118, 119, 121, 122, 124, 170, 171, 172 Mohamad, M. 162 monetary policies 25, 27, 225 monetary power 155 monopolies of dependency 172–3 moral hazard 377 Morlino, L. 32 mortality 248, 264, 290 see also infant mortality; maternal mortality Most Favoured Nation status 394 Moyo, S. 250 Mujeres por la Paz 270–71 multi-drug resistant TB 289 Multi-Partner Trust Fund 101–2 Multi-Year Action Plan on Development 96 multidisciplinarity 176 multilateral development banks (MDBs) 102, 236, 435 multilateral organizations, WB relations with 368 multilateralism 76, 317, 347, 348, 349, 350, 352, 354, 355, 356, 411, 418, 419–20 multinational enterprises (MNEs) 6, 34, 35–6, 37, 38, 39, 42 multiple modernities 85 Mutual Assessment Process (MAP) 97 mutual recognition 99, 115 mutuality of obligation 202 Myrdal, G. 409, 412, 413, 414 narrative(s) distinguished from frames 397 of the GATT 394 misappropriation 399–401, 402 of powerlessness 397, 400 national development banks 26 national innovation systems 22 national sovereignty 121, 201, 307, 315, 317, 319–20, 326 national trajectories, omission in GVC research 135–7 Nationally-Determined Contributions (NDCs) 232, 318 nations, migration and compartmentalization of 303 natural attributes 114 natural resources 18, 35, 39, 222, 226, 330, 334, 338, 341 natural world 108 nature 68 negative discrimination 347–8 negotiated currency 149 negotiations, first-issue orders 400–401 neo-developmentalism 219, 220, 226 neo-extractivism 248

492  Handbook on the politics of international development neo-Marxism 304 neo-quinchotomy of human relations 113 neoclassical economics 3, 20, 46, 49, 220, 304, 366, 370, 383 neocolonialism 4, 175, 296 neoliberalism 5–6, 46–7, 54, 68, 80, 169, 238 challenges to hegemony 86 COVID-19 220, 372 crime, law and development 118, 122–5 democracy 219 development finance 221–4 development strategy reform 186 global political networks 139 healthcare 289 institutionalization 78 and the OECD 425, 426 and RDBs 438 regionalism 81 World Bank and 371–2 see also deregulation; disciplinary neoliberalism; open regionalism; privatization neostructuralism 223, 224–7 Nepal 205, 261, 271, 274 Nepal Aid Group 201 Nesadurai, H. E. S. 5, 82 Netherlands 323, 424, 430 network concepts, GVC approach 133 network governance 431 networking 184, 190, 192, 193, 201, 258, 277 neutral currency 154 neutrality of knowledge 365 New Development Bank (NDB) 10, 102, 160, 354, 371, 436, 439, 440, 441, 443 new economics of labour migration (NELM) 304 new gilded age philanthropy 467–71 new institutional economics 47, 123 New International Economic Order (NIEO) 4, 75, 79, 169, 397, 411 New Partnership for Africa Development (NEPAD) 84 new regionalism 75 New York Declaration on Refugees and Migrants 307, 308 New Zealand 240, 421, 440 new-generation RDBs 439–40, 444, 447 Nicaragua 153, 159, 264, 270 Nieman, M. D. 36 Nkrumah, K. 4 Nobakht, M. 38 Non-Aligned Movement (NAM) 169, 201, 316 non-communicable diseases (NCDs) 294, 295 non-democratic regimes 32 non-governmental organizations (NGOs) 10, 94, 183–4, 407

differing types 94–5 involvement in health 288, 289 RDBs 444 see also civil society non-ideal conception 111 non-interference 85, 169 non-partner sexual violence 274–5 non-reciprocity 394 non-state actors cooperation between 10 and the IMF 381–2 involvement in global health 297 and the UN 10, 185 see also business; civil society; non-governmental organizations (NGOs) North American Free Trade Agreement (NAFTA) 427 North Atlantic financial crises (2008–09) 8, 16, 23, 24, 97, 439 North, D. 123 North–South cooperation 202 North–South dialogue 412 North–South divide 69, 135, 169, 172, 316–17, 336, 340, 348, 401 North–South models 18 Norwegian oil fund 25 Nurkse, R. 20 nutrition insecurity 243–50 Nye, J. 419 Obama, B. 399, 430 obesity 245, 247, 248, 249, 295 obsolescing bargain 36 Obstfeld, M. 150 Ocampo, J. A. 3 Official Development Assistance (ODA) 168, 199, 352, 355, 464 old regionalism 75 Olney, W. W. 38 Omidyar Network 469 one-dollar-one-vote system 435, 441 open door policy 456 Open Method of Coordination 425 open regionalism 5, 80–82, 85–6 economic nationalist variants 82–3 orchestrators, RDBs as 446 Ordinary Capital Resources (OCR) 442, 443 organic solidarity 110, 111, 112, 114, 115 Organisation for Economic Co-operation and Development (OECD) 1, 9, 131, 168, 200, 316, 417–32 adoption of GVC concepts 141 Aid for Trade 349, 351 bioeconomy 329, 333, 337, 340

Index  493 club inheritance 420–26 club versus global goods multilateralism 419–20 membership 421–2, 426–7 official development assistance 355 philanthropy studies 462, 465, 473 reform 418, 420, 426–31, 432 services and projects 424–6 staff/workforce 422–4, 427, 429, 430–31, 432 see also Development Assistance Committee (DAC) Organisation for European Economic Cooperation (OEEC) 417, 421, 424, 425 Organization of American States (OAS) 333, 411 Organization of Petroleum Exporting Countries (OPEC) 24 orthodox development economics 16 other/othering 62, 63, 65, 70, 71, 115, 311 Ottawa Agreement (1932) 151, 153 outward FDI 50, 225, 455 ownership, evolution of first to second generation reforms 364 Oxfam 2, 467 Ozeki, Y. 150 P-S Hypothesis 17, 19 Packard, R. M. 289, 290 Pakistan 54, 264, 272 Palpacuer, F. 137 Pan African Health Conferences 286, 287 Panaik, U. 252 paradigm crisis, Western civilization project 64 Paraguay 158, 264, 338, 340 Paris Agreement (2015) 94, 97, 232, 236, 239, 318, 320, 321 Paris Programme of Action 199 Park Chung-hee 50, 54 Parker, C. 268 parliamentary democracies 35 Parsons, T. 120 Partners in Transition 427 partnerships 84, 169, 205, 305, 308, 372 see also public–private partnerships Pasinetti, L. L. 200 passive currency 149 patriarchy 234, 258, 273, 274, 275 Patrick, S. 290 Pax Americana 151, 152 Pax Britannica 151 Paye, J.-C. 424, 430 Payer, C. 159 Payne, A. 75 peer review/pressure 425 people, focus of SDGs 6, 316, 317, 318, 329

People’s Bank of China (PBoC) 150, 161, 162 Pérez, C. 18 perfect markets 221–2 pesticides 288, 339 philanthrocapitalism 468–71 philanthropy 2, 10, 323, 461–74 short history 466–71 significance in ID 465–6 Philippines 264, 306 physical capital 222, 226 Piketty, T. 465 pilot agencies 50, 52 Pinheiro, L. 176 Pinochet, A. 56, 80 Piper, N. 309–310 Pittsburgh Summit (2009) 96 plan-ideological system 50, 52 plan-rational system 49–50 planet, focus of SDGs 6, 316, 317, 318, 329 Planet Under Pressure conference (2012) 316 ‘plant of civilization’ 246 pluralism 75, 85, 323 Point Four (Truman’s speech) 407 Poku, N. 297 Poland 264, 269, 307, 427 Polanyi, K. 51, 151, 173, 245 policy, dominance of migration in 301, 302, 303–4, 305, 307, 309 policy evaluation, OECD benchmarks 425 policy ideas, and RDBs 438 policy reforms, IMF lending 377–8 political currency 149 political determinants, and inward FDI 35, 35–42 political economy see international political economy (ITE) political economy residual claimant 52 political empowerment 259–60, 269 political liberty 124, 126, 439 political participation 38, 42, 259–60 political power 32, 78, 148, 223, 235 political regimes, and inward FDI 31, 34–5, 38, 42 political restrictions on becoming an international currency 160–62 political risk 36, 39 political stability 33, 38, 39, 43, 289, 293, 457 politics of ID 1, 2–3, 8 polluter elite 234 polycentric governance 100 positionality 69, 70 post-conflict women’s movements 269–71 post-development 64, 67, 69, 71, 170, 175 post-socialist developmental state (PSDS) 52 post-Washington Consensus 47, 125 postcolonialism 169, 171, 175, 193, 437

494  Handbook on the politics of international development poststructuralism 171, 175 pound sterling 148, 149, 151, 153, 154, 161, 162 Pournourakis, M. 38 poverty 7, 53, 124, 127, 193, 233, 248, 273, 395–8 poverty index 322 poverty narrative 399–401, 402 poverty reduction 101, 204, 258, 259, 316, 320, 346, 350, 370, 395 bioeconomy and 334, 335, 338 China 458 commitment to 96 microfinance and 273 novel approach to 6 Poverty Reduction Growth Facility 382 Poverty Reduction and Growth Trust (PRGT) 199 power coloniality of 65, 175 of development 66, 69, 71 development finance and 225, 226 distribution, World Bank 360 food production and distribution 250–53 GVC framework and conceptualization of 133–5 of the IMF 385 and migration 302 neoliberalism and neglect of 223 of NGOs 193 philanthropy and 466–7, 473 United States 411, 442 see also discursive power; economic power; hegemony; market power; material power; political power; rising powers power asymmetries 47, 48, 134, 138, 173, 311 power politics 2, 155, 439, 440, 446 power relations 10, 122, 224, 239, 245, 246, 254, 258, 463 power-seeking (male) 260 Prebisch, R. 17, 79, 171, 409, 410, 411, 412, 414, 438 premature de-industrialization 16, 21 presidential democracies 35 preventive services 263 Priefer, C. 333 primitive accumulation 245, 252 private foundations 8, 461–74 private international finance 5 privatization 9, 46, 78, 101, 124, 429, 470 pro-cyclical fiscal policies 25–6 Production Gap (UNEP) 232, 233 production structures 22 productive capabilities 75 productive specialization 252, 253 productivism 369 professional corporations 111, 112, 114

Program of Action (ICPD) 264 Programmes of Action 199, 350 project-based activities 189 property rights 35–6, 40, 47, 119, 120, 123, 126, 271, 341, 371, 419 protectionism 3, 4, 5, 19–20, 21, 48, 56, 82 public goods 95, 365, 418, 419, 420 public goods regionalism 5, 83–5, 86 public policy, SSC as 176–7 public–private partnerships 91, 92, 290, 294, 372, 468–9, 470 Puig, J. C. 173, 174 Qu, Y. 454 quadchotomy of civitas homini 112 of human relations 112, 113 Qualified Majority Voting mechanism 429 qualitative leap 450 quality of exports 22 quality of political institutions, and inward FDI 38 quality of political relations, and inward FDI 37 Quandt, H. 323 quinchotomy of human relations 112–13 quotas, political gender agenda 259–60 racialization 65 racism theses 246, 247 rational legal order 120 rationality 113, 114 rationalization 122, 250 Raustiala, K. 100 Rawls, J. 111 re-governmentalization of aid 187 Reagan, R. 186, 422 reasonableness 113 reciprocal control mechanism 21 reciprocity 395, 396 reciprocity of conditionality 202 Redish, A. 151 refuge currencies 149, 154 refugees, labour rights 310 regime complexity, development governance 100, 102 Regional Consultative Processes (RCPs) 308 regional development banks (RDBs) 1, 10, 435–47 and civil society 186, 187 counter-cyclical role 5 design of old and new 436–41 development governance 94 public goods provision 5, 83 regionalism and regional governance 445–6

Index  495 voting, lending and accountability 435, 441–4 regional governance 445–6 regional industrial planning 4, 79–80 regional integration 23, 77, 84, 86, 354–5, 410, 414, 415, 445, 446, 455 regionalism 75, 163, 445 see also developmental regionalism regulatory quality 39 Rehn, O. 376 Reich, B. 470, 473 Reinhart, C. 25 remittances 304, 306 renminbi 156, 159, 161, 162, 163, 385 rentierism 18 Report on International Definition and Measurement of Standards and Levels of Living 197–8 representation, decolonial approach to development 63 reproductive rights 264, 265, 318 reputation laundering 473 res publica latium 112 research (WB) 364–6 resistance to change 54 Resnick, A. 35, 36 resource curse 39 Responsible Leaders 323 restrictive abortion laws 264, 265 results-based philanthropy 463, 468 rich man’s club see Organisation for Economic Co-operation and Development (OECD) Rio+20 Conference (2012) 6, 315–16, 318 rising powers 235, 355, 385, 397, 400, 447 risk reduction, and inward FDI 36 Robinson, J. 200 Rockefeller Foundation 286, 287, 288, 370, 467 Rockefeller, J. D. 466 Rodríguez-Pose, A. 39 Rodrik, D. 200, 425 Roger, C. B. 95 Rogoff, K. 25 Romer, P. M. 200 Rosenau, J. 92 Rosenstein-Rodan, P. N. 20, 49 Rostow, W. 119, 120 rouble (Soviet) 149 Royce, J. 108 Rubinsten, A. Z. 409, 412 Ruggie, J. G. 76, 152, 395, 438 Rüland, J. 84 rule of law 7, 35, 39, 42, 47, 118, 120, 126, 318, 320, 439 rural China 109 rural women 272–4

Russia 46–7, 95, 97, 163, 260, 379, 380, 385, 397, 428, 429, 438 Rwanda 270 Sachs, J. D. 296, 297 Sala-i-Martin, X. 200 Salacuse, J. W. 37 Samuelson, P. 419, 420 Samy, Y. 35, 39 Santos, A. 246 Saudi Arabia 96, 264, 379, 428 Save Motherhood Initiative 261 Scholte, J. A. 76 Schwab, S. 401 scientific community, SDGs in 323–4 SDG index 465 Seattle Ministerial Conference (1999) 6, 7, 395–6 second generation reforms 364 security 121, 127, 289, 291, 292–4, 320 seigniorage 155 self-help 293 self-interest 308, 352, 463 semi-periphery, as analytical unit 172–3 Sen, A. 107, 108, 116, 125, 127, 243 Senegal 320 Sengupta, A. 202 Seoul Action Plan/Seoul Development Consensus 96 service providers, NGOs as 188–9 services 23, 188, 204 sex workers 261–2 sexual harassment 276 sexual and reproductive health services 261–2 sexual violence 258, 274–6 Seybolt, T. B. 192 Seyedsayamdost, E. 10 shared responsibility 202 shareholders (IFIs) 364, 379, 380, 385 Shen, R. 454 Shifting Wealth (OECD) 428 Shiraishi, T. 163 Silicon Valley 57 Simpson, G. 268 Singapore 47, 198, 396, 430 Singer, H. W. 17, 18, 410 Singh, M. 440 single undertaking 348, 396 Sino-capitalism 55 Sirleaf, E. J. 269–70 Sistema de Interconexión Eléctrica de los Países de Centroamérica (SIEPAC) 446 Skeldon, N. 303 skilled health personnel 261 Slovenia 429

496  Handbook on the politics of international development small and medium-sized enterprises (SMEs) 138, 140, 141 Snidal, D. 95 social capital 110, 124, 258, 272 social cooperation 115 social crisis, climate change as a 234 Social Defence Section (UN) 121–2, 124 social development 6, 9, 31, 86, 87, 107, 110, 121, 199, 221, 243 social entrepreneurship 463, 469, 471, 472 social impact bonds (SIBs) 469–70 social justice 115, 232, 249, 254, 291, 292, 298, 324, 398 social labour, division of 111 social legitimate purpose, of RDBs 438 social norms 108, 121, 263 social policies, IMF programs and 384 social returns on investment 472 social solidarity 111, 112, 114, 116 social structures 76 social unrest 6–7, 53, 78, 384 social world 108 sociology of development 107 soft law 92 soil governance 341 solidarity 10, 110–11, 121, 201, 272, 273, 411 Solow, R. M. 200, 222 Soskis, B. 466 Sousa Santos, B. de 175 South Africa 9, 56, 96, 97, 198, 385, 397, 401, 428, 430, 432, 439 South America see Latin America South Commission 169 South Korea 5, 47, 50, 51, 53, 54, 96, 163, 427 Southeast Asia 80, 86 see also ASEAN Southern African Development Community (SADC) 83, 87 South–South cooperation (SSC) 9, 168–79, 197, 317, 370 development compact 201–6 gain in relevance of 353 international development 171 opportunities for trade 354 post-development 174–6 South–South relations 171–4 theorization 169–71, 174, 177–9 sovereignty see national sovereignty sovereign–subject relation 112 Soviet Union 5, 32, 369, 409, 410, 411, 412, 438 soybean production 339 Spain 198, 421 Spanish Survey on Violence against Women (2015) 275 Special Committee on Decolonization 408

Special Commonwealth African Assistance Programme (SCAAP) 207 Special and Differential Treatment (S&DT) 346, 347, 348, 395, 396 Special Drawing Rights (SDR) basket 161, 162, 385 special economic zones (SEZs) 52, 53, 455 Staats, J. L. 42 standardized policies 46 state(s) and bioeconomy 336–7 influence on IMF 378–81 (re-)assertion in development 78 state capitalism 77, 78, 81–2, 85 state intervention 5, 16, 19, 22, 47, 50, 56, 77, 78, 82, 337, 455 state-led development 81, 86 state-led regionalism see developmental regionalism state-owned enterprises (SOEs) 52, 81, 120, 429, 455 The State of Food Security and Nutrition in the World 2019 248 state–society relations, developmental states 55 Stein, E. 39 Stiglitz, J. 47, 125 Stokey, N. L. 200 Stoltenberg, T. 202 Strange, S. 148, 149, 154, 173 strategic trade theory 82 Strauss-Khan, D. 382 structural adjustment 7, 46, 101, 122, 123, 124, 125, 198, 202, 363, 368, 371, 380, 385–6, 439 Structural Adjustment Facility 199 structural biases 3 structural change 22 structural diversification 25 structural reforms (China) 451 structuralism 79, 85, 119, 170, 171, 172, 175, 177, 204 sub-RDBs 435, 436, 443, 444, 447 sub-regional developmentalism 84 sub-Saharan Africa 39, 233, 261, 262, 268, 289, 293, 297 subsidies 56, 236, 239 Subsidy Account 198–9 Substantial New Programme of Action (SNPA) 199 SUCRE 160 suicide 110–11 Sullivan, N. P. 37 suma qamaña/sumak kawsay 67, 68 Summit of the Americas (1994) 81 Sun, Y.-S. 406, 438

Index  497 surveillance 163, 289, 378 sustainable bioeconomy 333 sustainable development 16, 93, 98, 99, 127, 249, 316, 317 see also bioeconomy sustainable development goals (SDGs) 1, 7, 10, 16, 71, 91, 93–4, 240, 315–26 Aid for Trade 350, 351 bioeconomy 329–30, 333–6, 337, 339 certification schemes 98 climate change 94, 321, 339 crime, law and development 118, 126, 127 food and development 245–6 goal setting 8, 315–19 health 296 and the IMF 386 implications for ID 324–6 inequality 465 interpreting 319–21 and IOs 9 labour rights 309 looking forward 326 migration 301, 303 philanthropic engagement 462, 463, 468, 472–3 pursuing 321–4 reproductive rights 264 South–South cooperation 353 see also Rio+20 Conference (2012) Sustainable Development Reports 465 Svampa, M. 248 Sweden 306, 421 Swinburn, B. 247, 249 Swiss Franc 149, 154 Switzerland 380 Syria 56, 268, 270, 301 Taiwan 5, 47, 50–51, 53, 54, 55 Tanner Mossell, S. 268 tariff barriers 171 Task Force on Aid for Trade 349, 354 Task Force on Justice (2019) 321 Task Team on South–South Cooperation 205 Tavlas, G. S. 150 Taylor, L. 18 teachers (female) 269 technical assistance 4, 8, 121, 288, 319, 347, 348, 349, 361, 363, 397, 407, 409 Technical Cooperation among Developing Countries (TCDC) 201 technical knowledge 23, 51, 235, 352, 365, 370, 446 technocracy(ies) 5, 84, 139, 237, 287, 296, 445–6 technological change 15, 17, 18, 23, 27, 297, 318 technological development 252

technological opportunities 18 technological proficiency 23 technology 204, 222, 338 see also biomedical technologies; imported technologies; information and communication technologies (ICT) technology sharing 213 temporary labour migration 305–7 terms of trade 15, 17–18, 19 Thailand Central Bank 162 Thatcher, M. 122, 422 ‘there is no alternative’ (TINA) mentality 64 Thies, C. G. 36 Third World 119, 120–21, 168, 412 see also Global South Thirwall, A. P. 25 Thomas, M. 407 three-gap model 200 Thurborn, E. 75 Tickner, J. A. 172 Tintin, C. 38 Tokyo Round 347 top currencies 148, 149, 150, 151, 155, 156–63, 164 Touchton, M. 42 Toye, J. 406, 410 Toye, R. 392, 406, 410 trade blurring distinction between development and 103 contraction 8, 23 facilitation 349, 351, 456 Indian support to Southern partners 210–13 liberalization 5, 21, 23, 35, 80, 86, 101, 395, 425 see also Aid for Trade (AfT); free trade; international trade; protectionism; terms of trade trade agreements 81, 151, 153, 204, 349, 350, 355, 427 see also General Agreement on Tariffs and Trade (GATT) Trade Union Advisory Committee (OECD) 422 Trade-Related Technical Assistance and Capacity Building (TRTA/CB) 346, 348, 350, 351 training see education and training transformation pathways (TP) 332, 337 transformative projects, economic 53 transformative systemic change 233 transformismo or transformation, climate crisis and 235–9 transition economies 31, 32, 37, 38 transitioning society (Chinese) 111 transitions (energy) 238, 332

498  Handbook on the politics of international development transnational corporations (TNCs) 123, 134, 135, 137, 138, 142, 224, 407, 446 transparency 7, 37, 97, 126, 127, 293, 361, 397, 444, 469 transport connectivity 83, 84, 103 Triffin, R. 149, 154 TRIPS 401 Truman, H. S. 78, 234, 407 Trump, D. 399–400, 401, 446 Trust Fund 199 Turkey 1, 9, 38, 56, 96, 97 Tussie, D. 173, 329 Tversky, A. 397 twin crises (financial) 25 two-gap theory 200 Uganda 260, 270 underdevelopment 123, 172, 243, 248, 249, 288, 292, 410, 413 underpaid tax 2–3 unemployment 266, 273, 274, 346, 453 UNESCO 267 UNICEF 10, 185 United Kingdom 1, 48, 95, 151, 169, 264, 324, 365, 368, 379, 380, 409, 423, 461 see also Bank of England; British liberalism; London Stock Exchange (LSE); pound sterling United Nations 3, 4, 16, 141, 184–5, 199, 405–15 and civil society 10, 185, 187 debating development 413–14 development governance 91, 93, 94 double nature of agencies 408, 415 General Assembly 101, 169, 186, 188, 244, 307, 411 High-Level Meeting on Addressing Large Movements of Refugees and Migrants 308 institutional production of ‘development’ 408–411 Migration Agency 8, 307 politics of development 411–13 Secretary General 126, 315 Security Council 293 Social Defence Section 121–2, 124 Summit on Refugees and Migrants 307 universalist liberal ethos 408 uptake of ‘development’ 406–7 value chain development group 141 and WB 368 World Food Conference 243 United Nations Conference on the Least Developed Countries 199

United Nations Conference on Technical Cooperation among Developing Countries (UNTCDC) 169 United Nations Conference on Trade and Development (UNCTAD) 1, 96, 119, 131, 169, 199, 201, 337, 394, 410–11, 412, 414 Aid for Trade 349, 350, 351, 352, 354 developmental regionalism 83–4 United Nations Development Programme (UNDP) 1, 16, 96, 118, 125, 174, 185, 198, 200 United Nations Environment Programme (UNEP) 10, 185, 232 United Nations Forum on Sustainability Standards (UNFSS) 98 United Nations Framework Convention on Climate Change (UNFCCC) 318 United Nations Fund for Science and Technology for Development (UNFSTD) 201 United Nations Global Compact (UNGC) 464, 471–2 United Nations High Commissioner for Refugees (UNHCR) 308, 309 United Nations Industrial Development Organization (UNIDO) 131, 140 United Nations Office on Drug and Crime (UNODC) 7, 8, 118, 124–5, 126, 127 United States 1, 24, 95, 169, 224, 235, 290, 409 appropriation of poverty narrative 399–400 billionaires 465 development projects 6 foreign aid 5, 51, 53 green revolution 250 hegemonic crisis 421–2 hegemony 151–2 and the IMF 380, 381 law and development 120, 123 migration and development 306, 307 and the OECD 417, 423, 424, 429 philanthropy 461, 468, 469 post-war foreign policy 369 power 411, 442 protectionism 48 and RDBs 437–8 tensions with China 457, 458 and the WB 101, 362, 365–6, 367 and the WTO 397 see also dollar (US); Federal Reserve; US-China ‘cold war’; USAID United States Trade Representative (USTR) 400 universal community identification 113 universal health coverage (UHC) 263 universalist liberal ethos 3, 408 unsafe abortion 263, 264 upgrading 134

Index  499 upper middle-income countries (UMCs) 38, 291, 298 urban criminality 121 urban migration 453 Urdinez, F. 440 Uruguay 158, 264, 330, 338, 340 Uruguay Round 81, 346, 348, 395 US-China ‘cold war’ 81 USAID 6, 120, 123 Vabulas, F. 95 value chains 22, 332 see also global value chains value pluralization 109 values 108 Van der Pijl, K. 173 Van Waeyenberge, E. 365 Vanuatu 200 Varsakelis, N. 38 Vecci, J. 266 Venezuela 39, 153, 159, 160, 198, 226, 435 Vernon, R. 36 veto players 39 Vicard, V. 37 Victor, D. G. 100 Vietnam 80, 264, 320 violence 6–7, 118, 124, 127, 248 see also absence of violence; sexual violence voluntary sustainability standards 98–9 voting, function of RDBs 441–2 voting shares, IMF 379–80 Wade, R. H. 21, 54 wage gap (gender) 266 wage labour 244, 245 Wales, J. 468 Wallerstein, I. M. 172 Washington Consensus 6, 16, 46, 53, 54, 78, 101, 122, 124, 125, 131, 140 wealth concentration 464, 466, 469 wealth creation 222 Weber, M. 113, 120 Weiss, L. 75 Weiss, T. 92 welfare economies 413 welfare state 228 West Africa 384 Western development 78 Western knowledge 288 Wethington, O. 150 wheat 246 Williamson, O. E. 123 win-win games 142 win-win strategies 141 Wolbrecht, C. 260

Wolfensohn, J. 125, 365 women economic participation 265–7 hunger and malnutrition 248–9 representation 259–60, 266, 270 see also female empowerment; rural women women’s movements, post-conflict 269–71 World Bank (WB) 4, 64, 131, 169, 224, 249, 420 adoption of GVC concepts 140, 141 and business 367–8 and civil society 6, 183, 186, 187, 366–8 climate change 231, 232, 237, 239 conditionalities 5, 101, 361, 363, 364 crime law and development 118, 121, 123, 124, 126 current debates 371–2 decline of remittances 306 definition of governance 47 development governance 91, 94, 96, 101–2, 102 development project 78 energy finance 236 history 368–71 institutions and activities 360–62, 373, 408–9 knowledge bank 364–6 neoliberal development 222 P–S Hypothesis 19 recognition of state role in development 47 relations with member states 362–4, 373 report on Belt and Road Initiative 103 report on political economy of adjustment 7 report on universal health coverage 263 scrutiny of governance structure 101 and SDGs 7 standardization policies 46 see also International Bank for Reconstruction and Development (IBRD); International Development Association (IDA); World Development Reports World Business Council for Sustainable Development 323, 472 world culture 407 World Development Indicators (WDI) 198 World Development Reports 127, 232, 372 World Economic Forum (WEF) 257, 464 World Economic Report 408 World Food Programme (WFP) 10, 185 World Health Organization (WHO) 8, 10, 185, 249, 260, 262, 263, 274, 288, 289–90, 294 World Social Forum (2001) 7, 398 World Trade Organization (WTO) 1, 7, 52, 56, 96, 185, 199, 231, 239, 427 adoption of GVC concepts 141 Aid for Trade 346, 348, 349, 350, 355

500  Handbook on the politics of international development bioeconomy 337 loss of credibility and management challenges 353 peer review 425 politics of development 392–402 World-System Theory/Analysis (WST/WSA) 133, 135, 171, 172 worldlessness 71, 72 Worldwide Governance Indicators (WGI) 39–42 Wouters, J. 99 Wright, C. 306 Wynter, S. 297

Xi Jinping 103, 452 Yanagihara, T. 205 Yang, M. C. 19 yen 150, 156, 161, 162 Yeros, P. 247 Yu, Y. 150 yuan 150, 158, 161, 162, 164 Yuan Diplomacy 159 Zero Hunger 245–6 Zetter, R. 308 Ziegler, J. 247