Saturday, December 08, 2007

The Scorecard on Development: 25 Years of Diminished Progress

A while ago I wrote of Johann Norgberg's pro-globalisation ululating:

[Norberg writes:]

...During the last 30 years, chronic hunger and the extent of child labour in the developing countries have been cut in half. In the last half century, life expectancy has gone up from 46 to 64 years and infant mortality has been reduced from 18 to 8 per cent. These indicators are much better in the developing world today than they were in the richest countries a hundred years ago.

In a generation, the average income in developing countries has doubled. As the United Nations Development Programme has observed, in the last 50 years global poverty has declined more than in the 500 years before that.
The trouble with these numbers is that, with the arguable exception of of the figure of hunger and child labour (based over the past thirty years), he is talking about data from a period of time (past 50 years, half century, generation) that includes not only the current 'era of globalisation' (which started in the mid 1980s) but also the post WW2 years, which were characterised by the Bretton Woods exchange system, considerably less trade integration than prior to the great depression or at present, and state led development policies. And it was these post WW2 years which in many developing countries saw the most rapid improvements in wellbeing.

Norberg's welcome to argue the case for more rapid global integration but it would be nice if he didn't muster as evidence statistics that are due in part, at least, to progress made in a period of time when a completely different approach to development and trade was being followed.

This paper by Mark Weisbrot, Dean Baker and David Rosnick is a good illustration of exactly what is wrong with Norberg's argument:
Over the past 25 years, a number of economic reforms have taken place in low and middle-income countries. These reforms, as a group, have been given various labels: ‘liberalization’, ‘globalization’ or ‘free-market’2 are among the most common descriptions. Among the reforms widely implemented have been the reduction of restrictions on international trade and capital fl ows, large-scale privatizations of state-owned enterprises, tighter fiscal and monetary policies (higher interest rates), labour market reforms, and increasing accumulation of foreign reserve holdings. Many of these reforms have been implemented with the active support of multilateral lending institutions such as the International Monetary Fund (IMF) and the World Bank, as well as the G-7 governments, and have often been required in order for countries to have access to credit from these and other sources. But regardless of origin, labels or political perspectives, there is a general consensus that the majority of developing countries have benefi ted economically from the reforms, even if they have sometimes been accompanied by increasing inequality or other unintended consequences (De Rato, 2005).

This paper looks at the available data on economic growth and various social indicators—including health outcomes and education—and fi nds that, contrary to popular belief, the past 25 years have seen sharply slower rates of economic growth and reduced progress on social indicators for the vast majority of low and middle-income countries.

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