Manuel Montes thinks we may be going about this development business all wrong.
Dr. Montes, a Stanford PhD in economics and formerly a professor at the University of the Philippines, these days is a senior adviser on finance and development at the South Centre, a Geneva-based think tank focusing on developing economies. Last week, in an opinion piece (which was based on a larger, formal study he is undertaking) published on the Inter Press Service website, hammered the ‘international system’ of development for “creating obstacles” that actually prevent more poor countries from progressing.
It is an unorthodox point of view—the near-violent dissent it elicited among a few people I bounced the idea off over the weekend confirmed that—but a correct one. Montes’ contention is that the ‘international system’ for development is simply a series of “development orthodoxies,” each one being a response to the shortcomings of the one that immediately preceded it.
The latest in the chain of terminologies that “litter the development literature” is ‘poverty reduction.’ Poverty reduction has largely been approached by pursuing the Millennium Development Goals (MDGs), which have been the focus of much of the development effort here in the Philippines over the past decade and are set to expire next year. Montes’ concern is that they will simply be replaced by another reactionary ‘terminology,’ which will have similarly disappointing results.
That ‘poverty reduction’ has largely been a failure is plainly obvious; poverty incidence in this country has not changed to a statistically significant degree through at least the last three Family and Income Expenditure Surveys (FIES) – spanning almost a decade – and is regularly anecdotally confirmed by the more frequent (but admittedly much less reliable) self-rated poverty surveys conducted by local survey firms. Where bigger gains have been claimed, they have been the result of statistical juggling, such as the reduction of the official poverty threshold by the current government, and the reduction of the average family size during the previous administration.
Montes put the problem and its essential solution in simple terms. “Poverty eradication is a desired outcome of development but its achievement is permanent only with the movement of a significant proportion of the population from traditional, subsistence jobs to productive, modern employment,” he wrote. “Development requires not just higher levels of income, nutrition, education, and health outcomes but in the first place involves higher levels of productivity and capabilities. Higher levels of productivity and capabilities are possible only with structural transformation of the economy.”
Montes was rather unkind in his assessment of how this has been handled by the developed world so far, stating that, “The association of development with poverty reduction created for the donor community the pride of place in economic policy in developing countries. But this place can be at the cost of reducing the responsibility of donor countries in helping to maintain an enabling international environment for development in trade, finance, human resource development and technology.”
The big question Montes presumably seeks to answer in his not yet completed study is whether the success of the relatively few successfully developing countries since the 1950s, countries like South Korea for example, depended on their ability to sidestep the obstacles raised by the unprogressive ‘international system.’
If that is the case, and it certainly seems to be, then that suggests two fundamentally different approaches to concepts like “inclusive growth” must be taken. First, on the part of ‘donor’ nations, development assistance must be made more systemic and continuous – something that Montes implies will be difficult, because of the volatility of aid brought on by changing political landscapes (essentially, development initiatives return to square one every time the government changes in either the donor or target country), and global economic conditions. Second, developing countries themselves must be willing to undertake longer-term initiatives aimed at creating structural shifts. Again, this is something that may prove to be an insurmountable challenge given the realities of nascent democracy in a place like the Philippines, where the political system is more conducive to short-term efforts.
As far as the Philippines is concerned, there is little the country can do to influence the approach of its would-be benefactors, but there is much it can do to improve the way it uses aid and how it defines and prioritizes “inclusive growth.” One would have to conclude that is a more important realm of inquiry than the price per square meter of specific buildings here and there, but maybe that’s just me.