DRAFT

Dominant thinking on international development:

What have the past 24 months told us about 5 issues?1

Lawrence Haddad2
October 13, 2010

1. Introduction

The past 24 months have been dominated by two of the largest global negative
externalities ever generated: climate change and the global financial crisis. They
followed on from other crises caused by a rapid rise in world food and fuel prices.
One crisis (climate change) is a slow burn, the other (the global financial crisis) a
forest fire. They were generated largely by the rich countries, and hit the
poorest countries hard. This paper asks what have these two crises have told us
about some dominant assumptions underlying mainstream ideas about
development? Inevitably the list of what we think of as “dominant” is coloured
by our own experiences and training. As an economist, I have focused on some
of the key assumptions underpinning the development economics belief system
although many of these assumptions are probably held by a sizeable proportion
of non-economists in the development field. The paper first asks, why reassess
these assumptions now? The next section highlights 5 key assumptions and
reviews the case for reassessment. The last section concludes with some
suggestions for ways forward.

2. Why ask whether current development thinking is fit for purpose?

So why reflect on assumptions now? Crises come and go—what is so different

about these two?

First, they originate in the richer countries and so those of us who live in these
countries have an obligation to reflect and question. Unlike the Asian financial
crisis of 1997-1998 or the oil price crises of the 1970s, or African famines of the
80s, these crises were clearly made in the West (Skidelsky 2009; Jackson 2009)3.

Second, they are systemic in their origin. The global financial crisis is the result
of weak regulation of international and national financial systems and climate
change is the result of rapid increases in growth and carbon emissions, which
technology cannot do enough to decouple (Jackson 2009).

Third, they are global in their impacts. They affect more people than other crises
and they have done so very quickly. It is true that Asia was hardly affected in
terms of GDP/capita (Figure 1), but there has been considerable variation within
the region (Dolphin and Chappell 2010)4. Figure 2 (Habib et. al. 2010)5 contrasts
the experience of Bangladesh (little impact on per capita consumption in the

1
This paper is written as a part of a project called “Reimagining Development”, funded
by IDS and DFID. A series of case studies at 34 places and spaces is available at
http://www.ids.ac.uk/go/research-teams/reimagining-development/reimagining-
development-research-sites.
2
I want to thank Naomi Hossein and Sara Walcott for comments on an earlier draft. All
errors of fact and logic are mine.
3
Skidelsky, Robert. 2009. Keynes. The Return of the Master. Penguin Books.; Tim.
Jackson. 2009. Prosperity Without Growth? Sustainable Development Commission. UK.
4
The Effect of the Global Financial Crisis on Emerging and Developing Economies. Tony
Dolphin and Laura Chappell. September 2010. Ippr. London.

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DRAFT

poorest groups) and the Philippines (the largest proportional impacts felt at the
bottom of the income scale). The CIS countries fared the worst, then the West,
and then Africa and the Middle East. But all were affected. The changes were
rapid. Global hunger numbers had remained static for the previous decade
between 800 and 900 million, but in just 2 years, they broke one billion and are
not yet back to pre-crisis levels (Figure 3, FAO 20106). Poverty in terms of the
number of people living below $1.25 or $2 a day will increase by 50-120 million
depending on the cut-off and year used (Ravallion 2009a)7.

Figure 1: Real GDP/capita growth in emerging and developing

economies (%)

Source: Dolphin and Chappell 2010.

Figure 2: Growth Incidence Curves: % change in per capita

income/consumption patterns between no-crisis and with-crisis
scenarios

5
The Impact of the Financial Crisis on Poverty and Income Distribution: Insights from
Simulations in Selected Countries Bilal Habib, Ambar Narayan, Sergio Olivieri, and
Carolina Sanchez. PREM. World Bank. 2010.
6
State of Food Insecurity in the World 2010. FAO. 2010. Rome.
7
Ravallion M (2009a) The Crisis and the World’s Poorest, Development Outreach
Washington DC: World Bank Institute
http://siteresources.worldbank.org/WBI/Resources/213798-
1259968479602/outreach_ravallion_dec09.pdf

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DRAFT

Source: Habib, Narayan, Olivieri and Sanchez. 2010.

Third, the crises will have lasting impacts. The global financial crisis will have a
generational legacy through its impacts on infant development. Using data
collected over a 35 year period in Guatemala, Hoddinott et al (2010)8
demonstrate that individuals stunted at age 36 months attained 3.8 fewer
grades of schooling by age 18, earned 62 percent lower wages as adults and
were 31 percentage points more likely to live in a poor household. Girls who
were not stunted at age 36 months scored between 0.8 and 1.4 standard
deviations higher as adult women on tests of cognitive ability, had two fewer
pregnancies in adulthood and were 33 percentage points more likely to have an
independent source of income through own business activities. Temporary
impacts of the crisis will be transmitted across decades via infant undernutrition.
Climate change is a long wave ongoing uncertainty that we are going to have to
get used to living with—in one form or another--for the next few decades at
least.9

Figure 3: Trends in Undernourshment

8
Hoddinott, J., J. Maluccio, J. Behrman, R. Martorell, P. Melgar, A. Quisumbing, M.
Ramirez-Zea, A. D. Stein, and K. Yount. 2010. The impact of malnutrition over the life
course. International Food Policy Research Institute, Washington, D.C. Photocopy.
9
See Weitzman 2007 for an interesting critique of the Stern Review in terms of the
different uncertainties involved. Journal of Economic Literature. Vol. XLV (September
2007), pp. 703–724. A Review of The Stern Review on the Economics of Climate Change.
Martin L. Weitzman.

3
DRAFT

Source: State of Food Insecurity in the World. FAO. 2010.

Fourth, we did not foresee the impacts of the crises very clearly. The British
Academy, in its letter10 to the Queen in July 2009 about the global financial crisis
puts it well: “Many people did foresee the crisis. However, the exact form that it
would take and the timing of its onset and ferocity were foreseen by nobody.”
There were macro warnings, but the will or ability to act was absent. The micro
warnings were diffuse and late in being picked up. Perhaps this will change with
the establishment of initiatives such as the UN’s Global Pulse11. For climate
change, the debate continues about whether global temperatures are rising,
whether they are caused by humans, their impacts, and what to do about them.
Those who advocate insurance-first (act now, even if there is a small cost to
prevent the chance of a much bigger one later on—essentially the Stern Review
approach) are branded as alarmists, those who are worried about whether the
uncertainties are forcing too many concessions to growth are branded deniers.
The warning signals are weak and they are obscured by squabbles (see Lewis
2010)12.

Fifth, it is not clear that we are any less vulnerable to future global systemic
shocks. The world food system might be a little more resilient to oil price
induced shocks given the learning from biofuels (Rosegrant 200813), but the
population and income increases of the next 40 years combined with the need
for agriculture to reduce emissions means that there will be very few ways to
achieve food production is productive, equitable and sustainable (Godfray et. al.
201014). The anti-hunger capacity of the food system can become more resilient
but not in the near term. While the economists seem to have reached a
10
http://media.ft.com/cms/3e3b6ca8-7a08-11de-b86f-00144feabdc0.pdf
11
http://www.unglobalpulse.org/
12
http://thegwpf.org/ipcc-news/1670-hal-lewis-my-resignation-from-the-american-
physical-society.html
13
Biofuels and Grain Prices: Impacts and Policy Responses. Mark W. Rosegrant.
International Food Policy Research Institute. Testimony for the U.S. Senate Committee on
Homeland Security and Governmental Affairs. May 7, 2008

4
DRAFT

consensus on what needs to be done to avert the global financial crisis (Evans
2010; Turner et. al. 2010)15 , the political power of the banking industry means
that it is very uncertain that options to increase financial resilience will be
implemented (Persaud 2010).16 Against this backdrop of uncertainty and
volatility, Kanbur (2009)17 has claimed that crises are the “new normal”.

Finally, there does seem to be some political space for the discussion. The
Washington Consensus has been pronounced dead more times than the famous
parrot (although the fundamentals are probably faring much better, see
Williamson 200918). There is the Sarkozy Commission (Stiglitz et. al. 200919) and
others (Layard 201020) arguing for better ways of assessing the progress of
nations. Most governments see the need to reduce the energy intensity of
growth, even if they don’t accept the need to use less energy overall. So there
does seem to be some political space for change even if it is not too far away
from current orthodoxies. Questioning underlying assumptions is part of good
research and vigorous policy processes, but the current time period—while new
ideas jockey for position in a relatively open field--makes deliberate reflection
particularly important.

3. What are the assumptions underlying dominant development

thinking and how well did they emerge from the 24 month stress
test?

It is getting more difficult to put labels on sets of development ideas. More

countries are finding their own meanings and ways of developing. Even
mainstream economists argue that the ingredients for development are well
known, but that there is no standard recipe (Rodrik 2008)21. So it is futile to
scrutinise a particular label. It is the underlying assumptions that may feed into
many “idea tribes” which need to be examined. There are many assumptions
that could have been selected for review in this paper, and indeed the
Reimagining Development initiative is a multi-sited inquiry into just what those
assumptions are across a range of contexts. This version of the paper reflects
my own preoccupations but the next version will be updated by case-studies
from other sites as they reinforce or contradict points made here.
14
H.C.J. Godfray, J. R. Beddington, I. R. Crute, L. Haddad, D. Lawrence, J. F. Muir, J. Pretty,
S. Robinson, S. M. Thomas and C. Toulmin, ‘Food Security: The Challenge of Feeding 9
Billion People’ Science 12 Feb. 2010 327, pp 812-818
15
Some Perspectives on Regulatory Reform Proposals Remarks at the Institute of
Regulation & Risk North Asia March 30, 2010 Hong Kong, China Charles L. Evans
President and Chief Executive Officer Federal Reserve Bank of Chicago; The Future of
Finance. 2010. The LSE Report. Adair Turner, Andrew Haldane, Paul Woolley, Sushil
Wadhwani, Charles Goodhart, Andrew Smithers, Andrew Large, John Kay, Martin Wolf,
Peter Boone, Simon Johnson and Richard Layard.
16
The Empire strikes back. Avinash Persaud. 14 September 2010. Chairman,
Intelligence Capital Limited and the 2010 President of the British Academy
(Economics Section). http://www.voxeu.org/index.php?q=node/5510
17
The Crisis, Economic Development Thinking, and Protecting the Poor. Presentation to
the World Bank Executive Board. July 7, 2009 Ravi Kanbur. www.kanbur.aem.cornell.edu
18
For a post-G20 London conversation with the coiner of the term Washington
Consensus, John Williamson, see here: http://www.washingtonpost.com/wp-
dyn/content/article/2009/04/09/AR2009040903241.html
19
J. Stiglitz et al., Report by the Commission on the Measurement of Economic
Performance and Social Progress, September 2009 (www.stiglitz-sen-fi toussi.fr).
20
Richard Layard. Measuring Subjective Well-Being. 29 Jan 2010. Vol. 327 Science.
21
Rodrik, D. 2008. One Economics, Many Recipes. Princeton Press.

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DRAFT

Assumption 1: economic growth is typically a good thing for long term

poverty reduction

When I was trained as an economist the view that “growth is necessary but not
sufficient for long term poverty reduction” was seen as wishy-washy22. For
development, growth was sufficient. Today the “necessary but not sufficient”
position is a mainstream economics position (even Joe Stiglitz used it in his
powerpoints for the 2010 Chronic Poverty Conference23). Collier’s Bottom Billion
(2007) “growth is not a cure-all, but lack of growth is a kill-all" is a restatement
of that sentiment. Growth is good, or at worst, a missed opportunity. Sustained
poverty reduction cannot occur without it. Do these statements still convey too
much optimism about growth?

For Brazil between 1985 and 2004 there was little growth to talk about, but
significant poverty reduction occurred through macro stability and social
programmes (Ravallion 2009b)24. Does this invalidate the statement that “lack
of growth is a kill all”? Probably not. Brazil’s income is higher than most of
Collier’s Bottom Billion and to have social programmes one has to have a
substantial tax base and for a substantial tax base one has to have a stable
middle income level, even if it is not growing. But recent research has confirmed
the highly variable nature of growth on poverty.

First, the source of growth matters for poverty reduction. Cross-country

econometric work (Ligon and Sadoulet, 200825) reported in the 2008 World
Development Report shows that a 1% gain in GDP originating in agriculture
generates a 6 % increase in overall expenditures for the poorest 10% of the
population. This compares with a 4% increase in overall expenditures for the
next poorest, and 3% for the subsequent decile. In stark contrast, GDP growth
originating in non-agriculture sectors generates zero growth for the poorest 10%
of the population, a 1% increase in expenditures for the next 10% and a 2%
increase thereafter. A more recent empirical study by Christiansen et al. (2010)
26
comes to similar conclusions. Using cross country econometric evidence they
report “Irrespective of the setting, a one percent increase in agricultural per
capita GDP was found to reduce the total $1-day poverty gap squared by at least
5 times more than a one percent increase in GDP per capita outside agriculture.”
P 30. In contrast (Ferreira et. al. 200627) found growth in the service industries
most poverty reducing in Brazil for the 1985-2004 period. For a large set of
22
See for example, this quote from one of my Professors at Stanford, Robert Lucas. “By
the problem of economic development I mean simply the problem of accounting for the
observed pattern, across countries and across time, in levels and rates of growth of per
capita income.” P.3. On the Mechanics of Economic Development. Journal of Monetary
Economics. 22 (1988) 3-42.
23
Reducing Poverty: Some Lessons from the Last Quarter Century. Joseph E. Stiglitz.
Manchester. September 8, 2010.
http://www.chronicpoverty.org/uploads/assets/files/stiglitz_manchesterdevelopment_final
.pdf
24
Ravallion, M. 2009b. A Comparative Perspective on Poverty Reduction in Brazil, China
and India. The World Bank. WPS5080 Policy Research Working Paper 5080
25
Background Paper for the World Development Report 2008-Estimating the Effects of
Aggregate Agricultural Growth on the Distribution of Expenditures E Ligon, E Sadoulet -
Washington DC, World Bank, 2007
26
WIDER Working Paper No. 2010/36. The (Evolving) Role of Agriculture in Poverty
Reduction An Empirical Perspective Luc Christiaensen, Lionel Demery, and Jesper Kuhl
April 2010

6
DRAFT

countries within a cross-country regression framework, Loayza and Raddatz

(2009)28 found that growth in labour intensive sectors was the most poverty
reducing. Datt and Ravallion (2010)29 found that pre 1991, rural growth was
more poverty reducing than urban growth, but for the post 1991 period the
reverse held true. Finally, we know that increases in GDP/capita from natural
resources, if managed badly, can lead to negative consequences for poverty
(Wick and Bulte 2009)30.

Second, we know that growth has a weaker impact on poverty the more unequal
a society. Evidence is very consistent at the country, regional and global levels
(see Geda 2009 et. al.31 for Ethiopia, Fosu 200932 for several countries in sub-
Saharan Africa and Ferreira and Ravallion 200833 more generally). Third, certain
types of growth are more damaging to the environment than others. We know
energy production is the most carbon emitting activity (Collier 201034). And we
know that a wide range of Human Develop Index values are observed with
relatively small per capita ecological footprints and that a wide range of per
capita ecological footprints are observed at high levels of HDI (Comim 200835),
although there are no estimates as far as I can tell about the impacts different
types of growth on environmental footprints. We also do not know how the
poverty-growth elasticity varies by the “greenness” of growth (Urban 201036).

Fourth, growth does not necessarily drive down the kinds of relative poverty that
richer societies care about and some types of growth may even increase it.
Jackson (2009) argues that the rich countries are “hooked on growth” and need a
prosperity that can do without growth “and may eventually be able to replace it.”

The good news about growth is that there are choices we can make to shape the
kind of growth we want (Chang 2010). For example, choices about which goods
and services are covered by the market and which are not, who can enter and
who cannot, the conditions of trade, and the regulation of prices.
27
Ferreira, Francisco H. G. & Leite, Phillippe G. & Litchfield, Julie A., 2006. "The rise and
fall of Brazilian inequality, 1981-2004," Policy Research Working Paper Series 3867, The
World Bank
28
The composition of growth matters for poverty alleviation. Norman V. Loayza Claudio
Raddatz The World Bank The World Bank March 2009
29
Shining for the Poor Too? Gaurav Datt, Martin Ravallion, February 13, 2010 vol xlv no 7
EPW Economic and Political Weekly
30
Katharina Wick and Erwin Bulte. The Curse of Natural Resources. Annual Review of
Resource Economics. Vol. 1: 139-156 (Volume publication date May 2009). First
published online as a Review in Advance on May 12, 2009
31
Growth, poverty and inequality in Ethiopia: which way for pro-poor growth? Alemayehu
Geda, Abebe Shimeles And John Weeks. Journal of International Development. 21, 947–
970 (2009)
32
A. K. Fosu. 2009. Inequality and the Impact of Growth on Poverty: Comparative
Evidence for Sub-Saharan Africa . Journal of Development Studies, Volume 45, Issue 5
May 2009 , pages 726 – 745 and
33
Francisco H.G. Ferreira and Martin Ravallion. Global Poverty and Inequality: A Review
of the Evidence. Policy Research Working Paper 4623. The World Bank. May 2008.
WPS4623
34
Plundered Planet. 2010. Paul Collier. Allen Lane.
35
Poverty and Environment Indicators Prepared. Prepared for UNDP-UNEP Poverty and
Environment Initiative. March 2008. St Edmund’s College, Cambridge. Prepared by Flavio
Comim. Research Team Pushpam Kumar, Nicolas Sirven,
Ely Mattos, Monica Concha, Esmeralda Correa, Carla da Silva, and Philipe Berman.
36
The MDGs and Beyond: Can Low Carbon Development be Pro-poor? F Urban - IDS
Bulletin, 2010

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DRAFT

In sum, we need to see “growth” much as we see technology: something that

can be a force for good or a force for bad. It depends on who developed it, who
assessed it, who regulates it and who can access it. In other words, the type of
growth we get is the outcome of political choices.

Assumption 2: the West is the starting point for thinking about

international development

It may seem strange to claim that the West is the starting point for so much
thinking on international development when there are so few people who work
both on domestic and international public policy. But ideas and movements that
gained traction first in the West have been powerful forces—good and bad—in
development37. Few who work in international development hold this position
(i.e. that the West is a starting point) openly or knowingly but it is inevitable that
the values that shape us and the policy solutions that we see around us as we
grow and learn will try to shape our views of how policy and practice work and
should work elsewhere.38

Table 1 breaks these assumptions down by whether they are knowing/unknowing

and whether they are explicit/implicit.

Table 1: Types of assumptions about international development

Knowing Unknowing
Explicit 1. Assumptions about policies to 2. Assumptions about goals and
pursue aspirations
Implicit 3. Assumptions about how things 4. Assumptions about universal
work behaviours

In quadrant 1, we can place assumptions about free trade and the wisdom or
otherwise of supporting infant industries. The West believes certain policies
work in the West and if more countries adopted them everyone would be better
off (the Washington Consensus or the Universal Convergence as it was nearly
called is one example Williamson 2009). Chang (2003)39 has shown how there
must be considerable scepticism placed on this perspective. What the West says
is good for the rest is not necessarily the case and does not necessarily reflect
the policies the West adopted during their own development. In quadrant 2
there are assumptions about goals and aspirations, driven by assumptions over
what is good in the West. Is absence of conflict a good thing? Yes, if everything
else is in place, but perhaps not if it is the absence of conflict that is the barrier
to social progress. Should health systems developed in the West in the mid 20th
century look like health systems developed in the 21st century in Asia, Latin
America and Africa? Not necessarily given current combinations of knowledge,
technology and tax revenues.

37
Humphrey (2007) notes the women’s movement and the green movement as positive
influences. And one can think of structural adjustment as a failed idea from the West’s
emphasis on neoliberal remedies for its own economies in the 1980s. Forty Years of
Development Research: Transformations and Reformations. IDS Bulletin. 38 (2)
38
See Victor R. Fuchs, Alan B. Krueger and James M. Poterba. 1998. Economists' Views
about Parameters, Values, and Policies: Survey Results in Labor and Public Economics.
Journal of Economic Literature. Vol. 36, No. 3 (Sep., 1998), pp. 1387-1425
39
Chang. H. 2003. Kicking Away the Ladder. Anthem.

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DRAFT

In quadrant 3 we find ideas about how things work. How markets work is a good
example. Markets in the West are not how markets have to look everywhere--
they are the outcome of political choices. In quadrant 4 we are into the territory
of assumptions about universal behaviours and incentives. What is the
preference for equity in a society? For relational and material well being? For
change and continuity? For rationalism and religion? These will vary by culture
and by the levels of a variety of development indicators.

Schmitz (2007)40 captures many of these ideas by highlighting a strand of

development thinking which he calls “find your own way”. Essentially this is
looking for solutions from the ground up while not forgetting the larger system.
He notes that this is not always an easy message for aid donors who seek
organisational coherence around standard approaches. A

Have the crises forced us to become ever more humble in the West and realise
that we do not have a monopoly on solutions nor the rest of the world a
monopoly on problems (Olukoshi 2007)41? A context of increasing uncertainty
and an increasingly multi-sited capacity to articulate ideas make this hastening
of humility inevitable. McCulloch and Sumner (2009)42 conclude that “The global
financial crisis may change the development paradigm – but it is most likely
to do so through its impact on the attitudes of developing country
policymakers towards the prevailing policy prescriptions, rather than through
major structural changes in global economic governance.” Even the World
Bank recognises the need to “democratize development economics” noting that
a “multipolar global economy requires multipolar knowledge” where the flow of
knowledge is no longer North to South, West to East, rich to poor (Zoellick
2010)43.

But this reimagining is difficult. Some argue that there is a “geography of

thought”44 whereby geography, culture and history affect how we see things and
construct knowledge. I find this convincing, but wherever one starts from,
Rienhold Niebuhr, the 20th century protestant theologian and philosopher,
describes “original sin” as a systematic failure of all of us to have a truly
unbiased view of the world (Mead 2007)45. But it is increasingly important, if
difficult, to reimagine others in more than one or two dimensions in a distracting
fast paced world that in the short term rewards simplicity even given the rise in
complexity (Chan 2009)46.

Once we can achieve the state of openness necessary to reimagine, knowledge

from the West becomes simply one more type of local knowledge (Olukoshi
2007) and we can see the policy innovations emerging from everywhere.

40
Schmitz, H. 2007. The Rise of the East: What Does it Mean for Development Studies?
IDS Bulletin. 38 (2)
41
Olukoshi, A. 2007. From Colonialism to the New Millennium and Beyond. IDS Bulletin.
38 (2)
42
Will the Global Financial Crisis Change the Development Paradigm? Neil McCulloch and
Andy Sumner. IDS Bulletin 40 (5). 2009.
43
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22716997~pagePK
:34370~piPK:42770~theSitePK:4607,00.html (Robert Zoellick Speech. September 29,
2010).
44
Richard. E. Nisbett. The Geography of Thought. 2003. Nicholas Brearly Publishing.
45
Walter Russell Mead 2007. God and Gold. Britain, American and the making of the
Modern World. Knopf. New York.
46
S. Chan. 2009. The End of Certainty. Zed Books.

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DRAFT

Conditional cash transfers in Latin America have now been adopted in New York
City; participatory budgeting developed in Brazil and South Africa is being
considered in Europe; social accountability ideas developed in the South should
be at the heart of emerging ideas about institutions help connect citizens and
the state in Europe (Gaventa and Barrett 2010; Haddad, Lindstrom and Pinto
2010).47 The multiple sources of innovation and the increased capacity to share
lessons afforded by ICT makes increasingly nonsensical the artificial separation
of solution streams into South and North, international development and non-
international development.

Assumption 3: economics should be the dominant discipline in the

policy discourse

Economics as an analytical tool and as a generator of evidence has a primacy in

the international development debate. This primacy has many drivers including
colonial economics (Tignor 200548), reconstruction (the establishment of the
Bretton Woods organisations) and the economics of the great depression
(Skidelsky 2009). This drives and is further driven by the recruitment of
economists at major international development research organisations. This
primacy puts economics in the spotlight when things go wrong.

Key assumptions of economics have been found to do violence to reality, and

hence, via poor policy choices, violence to wellbeing. Core assumptions around
information asymmetries, definitions of rationality, independence of behaviour,
discounting, and the ability to insure against all risks were shown wanting prior
to 2008 (Coyle 2007).49 Krugman “don’t mistake truth for beauty” (2009)50 and
Skidelsky we need to acknowledge “irreducible uncertainties” (2009) elaborate
on how economics got it wrong in the context of the global financial crisis. The
LSE letter to the Queen describes the failure to predict the ferocity of the crisis
as a “failure of collective of imagination of many bright people”, which leads me
to conclude that there aren’t enough checks and balances in place to keep
economics grounded in the real world where flaws and friction are the norm, not
perfection and the absence of friction (Krugman 2009). Dasgupta (2005)51
describes economic modelling as a “strategic simplification of complicated
reality”. I would argue that the space over which such strategic simplification is
valid is diminishing.

In terms of the other great crisis, global warming and natural resource
mismanagement, the use of economics gives us a very particular perspective
and one that is different from environmental sciences. Collier (2010) shows how
economistic models can generate views about our obligations to the future that
are profoundly different to those generated by environmentalists. Economic
utilitarianism says that society seeks to maximize the utility of its members—
47
Gaventa, John and Greg Barrett (Forthcoming) So What Difference Does it Make?
Mapping the Outcomes of Citizen Engagment (Draft), IDS Working Paper. Haddad, L.
2009. Lifting the Curse: Overcoming Persistent Undernutrition in India’ IDS Bulletin Vol.
40 (4)
48
Robert L. Tignor. W. Arthur Lewis and the Birth of Development Economics. 2005
Princeton University Press.
49
D. Coyle. 2007. The Soulful Science. Princeton University Press.
50
Krugman. Paul. September 6, 2009. How Did Economists Get It So Wrong? New York
Times Magazine.
http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=1&em
51
P. Dasgupta. 2005. Mathematics and economic reasoning. Working Paper. University of
Cambridge. http://www.econ.cam.ac.uk/faculty/dasgupta/publications.htm

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DRAFT

current and future--and that each amount of income generates the same utility
for each member, and extra income generates decreasing amounts of utility.
Individuals in the future will be richer (assuming positive real rates of return on
savings and investments) and so they generate less utility for a given amount of
income (or assets). Collier says that this model—a willingness to sacrifice for the
collective good—is more representative of ants than people. In other words,
propinquity (whoever is closest to the natural resource should benefit) cannot be
wished away-human nature dictates otherwise. He draws on mainstream
environmental work to suggest an alternative: the idea of custody. Unlike
preservation, custody of the natural world implies that the current generation
has to have an answer to the future generation’s question: if you used up these
natural resources did you leave us “man made” assets of equal value? Collier
argues that if future individuals are wealthier they will be awash with “man-
made” assets and will value the natural assets that we have used unsustainably
even more highly than we do. While utilitarianism says that the richer the
following generations the fewer are our obligations to save assets for them, the
custodian principle suggests that their increased wealth of following generations
means that we have an even greater obligation to answer their question from
the future in a satisfactory way.

Of course, there are plenty of counter views about whether economics is in

trouble. Halsey-Rogers (2010) 52concludes “the global crisis does provide new
information in key policy areas, but it need not provoke any crisis of confidence
in the current state and direction of development thinking... over the longer
term, the crisis could have its biggest effects on the development thinking of
those who are not development specialists. In many cases, policy prescriptions
from policymakers and researchers from outside the development field have
relied on implicit or explicit models that assume that developing-country markets
function much more like textbook models than is actually the case”. But if those
outside the development field have unrealistic expectations about how well
markets work in the developing world, surely this raises the possibility that those
from within the field and trained in the same universities will too?

It seems to me that economists must become much more alive to when their
models and assumptions can no longer offer a strategic simplification of complex
reality and in fact when they begin to do violence to reality and to people’s lives
and livelihoods. This has fundamental implications for how economics is taught,
the mix of disciplines that development research organisations hire and the
heterogeneity of economics schools and economic schools of thought that they
draw on. Wade’s (2009)53 “neoclassical monoculture” in economics, makes the
discipline very susceptible to shocks and the need to write further letters to the
Queen.

Assumption 4: Collier’s bottom billion is where international

development cooperation should be focussed

52
F. Halsey Rogers. The Global Financial Crisis and Development Thinking. Policy
Research Working Paper 5353.
The World Bank. Development Research Group. Human Development and Public Services
Team & Office of the Chief Economist. June 2010
53
Robert Wade. 2009. Review of International Political Economy 16:1 February: 106–121.
Beware what you wish for: Lessons for international political economy from the
transformation of economics.

11
DRAFT

In the past 3-4 years, the Collier thesis has held sway about where international
development cooperation (e.g. trade, security, aid, international standards)
should focus. Collier (2007) argues that development cooperation should focus
on the 1 billion people living in countries that have missed out on growth and
development due to a series of traps: conflict, being landlocked with bad
neighbours, poor governance of small states, and poor governance of natural
resources. The countries are mainly in sub-Saharan Africa and Central Asia.

Have the crises challenged this assumption? Perhaps. In terms of GDP per
capita, South Asia was well insulated from the global financial crisis. But as we
have seen this preserved growth does not seem to be that effective in reducing
poverty and undernutrition. Real per capita income has increased by 50% over
the past 15 years in India. Over that time, infant undernutrition rates have
barely shifted (Deaton and Dreze 2009)54.

But GDP per capita is also the metric that mechanistically determines whether a
country has a low or middle income label. So we have a situation where growth
can be good enough to move countries from low to middle income status --and
hence out of development cooperation territory--but not good enough to reduce
poverty and undernutrition. If a massive global downturn cannot put a dent in
GDP/capita figures, it does not mean it cannot increase poverty and
undernutrition. As Figure 4 shows poverty reduction was difficult in India even
before the global financial crisis (Sumner 201055). In fact the performance of
India in terms of poverty reduction was even worse than in low income fragile
states of the kind Collier highlights. Has the global financial crisis shown us the
folly of relying on GDP/capita as a way of prioritising development cooperation?
Has it told us to focus on poor people not exclusively on poor countries?

Figure 4:
At current rates India would meet its MDG1 target in 2043 (Haddad 2009). It is
not clear if the poor and malnourished in India are subject to any of Collier’s

54
Angus Deaton, Jean Drèze. Food and Nutrition in India: Facts and Interpretations.
February 14, 2009 vol xliv No 7. Economic and Political Weekly
55
Global poverty and the new bottom billion: what if three-quarters of the world’s poor
live in middle-income countries? Working Paper for comment and debate. Andy Sumner.
http://twitter.com/andypsumner. 12 September 2010.

12
DRAFT

traps, but they are trapped. New ways of development cooperation that work for
this “other bottom billion”, people living in poverty, need to be found.

Assumption 5: the international development evidence base is growing

stronger

The body of data, information and knowledge on international development is

certainly growing more rapidly than ever. Kanbur (2010) highlights the post
1985 explosion of data (Box 1). But is the body growing stronger or just taller? Is
the base getting stronger or is the stem getting more strung out and flimsy?

Box 1: Powerpoint slide from Ravi Kanbur: Chronic Poverty

Centre Conference September 2010

Just more facts

– WB LSMS website; 60 surveys for 30 countries; ALL are
after 1985.
– DHS website; 175 surveys; most from 1990s onwards
– Africa; 1985—no modern HH IES; Africa Household
Survey Databank, lists 406 surveys; most from 1990s
onwards
– China from mid 1980s onwards
– Panel data. Mid 2000s, around 15 countries; more now.

The crises cast a harsh light on the assumption that the international
development evidence base is growing stronger. First, we could not even
measure the impact of the crisis on the level and distribution of poverty and
undernutrition. The World Bank, IFPRI, the UN--all took at least 18 months from
the food price rise increases of late 2007 to estimate the impact of on poverty
and malnutrition based on post 2007 data. The FAO did manage to generate
rapid numbers on hunger, but this was on the basis of national data on food
production and trade. As Figure 5 shows, the correspondence between such
quickly assembled numbers and the more grounded numbers is weak (see
Ghana for the worst overlap). We need to find a middle ground where the
quality of data collection is not so sensitive to crisis incidence.

13
DRAFT

Figure 5:
Comp
Source: From Data in Smith, Alderman and Aduayom56 (2006)

Is this possible? New information technologies are being used in many different
ways--all at a small scale--in health and nutrition service delivery. Bhawsar
(2009)57 lists 26 such case studies and classifies the majority as successful.
Initiatives such as the UN’s Global Pulse could be leaders in with real-time
poverty surveillance in key bellwether sites that would provide evidence on rapid
shifts in poverty rates.

Second, are we adding to the evidence base in narrow ways? Halsey Rogers
(2010) states that “One salutary effect of the crisis may therefore be a more
realistic view of actual conditions... reinforce the trend in development thinking
toward a post-Washington Consensus that –while still strongly market-oriented –
is less ideological, more pragmatic, and more empirically grounded.” This
emphasis is to be welcomed if it is focused not only on what works, but also on
why and how things work. The increased emphasis on internal validity (with

76 75
randomized controlled trials being the zenith of methods to do this) has to be
balanced with a strong focus on external validity. Deaton 201058 notes how the
proponents of randomised controlled trials often argue for external validity by
failing to allow for the unobservable effects that the internal validity is so keen to

6
control for. He concludes that “for an RCT to produce ‘useful knowledge’ beyond
its local context it must illustrate some general tendency, some effect that is the
result of mechanisms that are likely to apply more broadly”.

Third, how effectively are we bringing in non-expert knowledge? And fourth how
do we connect more effectively with the knowledge held by those outside the
international development bubble?
56
Smith, L., Alderman, H. and Aduayom, D. (2006) Food Insecurity in Sub-Saharan Africa,
New. Estimates from Household Expenditure Surveys. Washington DC: International
Food Policy Research Institute (IFPRI). Research Report 146.
57
Review of PDA/Mobile Phone Approaches to Improving Health and Nutrition Sytems.
Rahul Dev Bhawsar. 2009. MPTAST. Madhya Pradesh.
58
Angus Deaton. 2010. Instruments, randomization, and learning about development.
Research Program in Development Studies. Center for Health and Wellbeing. Princeton

44
University. March, 2010

14
DRAFT

Table 2 outlines the different categories of knowledge by actor type

(inside/outside development and expert/non-expert). Much of this paper has
been about why experts identified with development need to break out of their
mindsets and question assumptions. This is quadrant 1 in the table.

Table 2: Different types of knowledge and expertise

Identified with development Not identified with development

Exper 1. Need to break out of old
t mindsets, reimagine
development; Help develop
ways of integrating different
types of knowledge
Gener 3. New roles for normative civil
al society?
2. How to engage with Business;
Diplomacy, Defence; Faiths; Legal
4. How to enhance collective
capabilities to
pressure/lobby/innovate for
change?

Quadrant 2 stresses the need to bring in perspectives that are not identified with
development, but shape the space, such as defence, business and religion.
Quadrant 3 describes new roles for civil society associated with development.
Here, what is the role of the vast number of social accounting mechanisms (see
McGee and Joshi 2010 for a wide ranging and comprehensive review and
Haddad, Lindstrom and Pinto 2010 for an in depth review of the potential for and
of these methods in agriculture). How do we incentivise responsiveness to this
kind of data and knowledge? Quadrant 4 generalises the questions in quadrant 3
beyond “development”. So many books on development now end with calls to
collective action from “the people” (Stiglitz 200659, Green 2008, and Collier
2010) to “make globalisation work”, to stop “plundering the planet” to instigate
a “new deal for a new century”. It’s hard to argue with these sentiments, but
how will this happen? How will this new collective, enabled by the internet and
mobile communications, be catalysed? Some think the internet is overhyped
when it comes to social mobilisation (Morozov 201060; Gladwell 2010) 61, some
think not (Tapscott and Williams 201062). The truth is, no-one knows. This is an
area—collective communicative capability--that development experts need to be
working with civil society on to develop new tools such as hunger reduction
commitment indices and georeferenced hunger maps to help and pressurise
policymakers.

Finally, what are the new mechanisms for globally constructed research? The
Intergovernmental Panel on Climate Change (the IPCC), created in 1988, held an
iconic status as one of the few institutions for organising and grading research so
that it was globally constructed to guide global action to address a global
problem. But for a whole range of reasons, some political, some technical, some
organisational, a shadow now hangs over it. Does the IPCC model just need to
59
Making Globalization Work. Joseph E. Stiglitz. 2006. Norton Press and From Poverty to
Power, Duncan Green 2008. Fountain Publishers.
60
E. Morozov. 2010. Think Again. The Internet.
http://www.foreignpolicy.com/articles/2010/04/26/think_again_the_internet;
61
M. Gladwell. Small Change. Why the revolution will not be tweeted. New Yorker. Sept
27, 2010.
62
D. Tapscott and A.D. Williams. Macrowikinomics. 2010. Atlantic Books. See chapter 9
on Collaborative Science.

15
DRAFT

have tighter controls or is it a failed model for co-constructing global

knowledge?63 More research is needed here.

63
See Hulme for an interesting discussion of the difficulty of governing global knowledge
mechanisms. Hulme, M. 2010. Problems with making and governing global kinds of
knowledge. Global Environmental Change.

16
DRAFT

4 Conclusions

This paper has argued that the crises of the past 24 months offer an important
stress test of the key assumptions underpinning international development
thinking. The effects have been large, rapid, and global; they will be lasting and
they were unforeseen. There is never a bad time to test one’s assumptions, and
now, given some political space for change, is a good time to do so. The fact
that the major perturbations began in the cradle of international development
provides an additional imperative. The paper has focused on 5 key assumptions:
growth, West is best, the dominance of economics, the ways we prioritise
development cooperation and the strength of the evidence base in development.

Was I thinking about some of these issues pre-crisis? Yes, the west is best and
that economics is in need of repair were 2 issues that I had been focusing on.
Here the crises generate additional urgency. For the other 3 issues – growth,
development cooperation and the nature of knowledge –the crises forced me to
think more about the validity of the assumptions that underlay them.

For growth, the paper argues that we should see it as something akin to
technology: a force for good under the right governance and a force for bad
under the wrong governance. The good news is that the growth we get is the
consequence of choices, which are primarily political in nature.

For the West is best perspective, the challenge is not so much to get away from
this as an explicit starting point—the numbers advocating this are diminishing
rapidly I think—but to devise ways of throwing off any implicit shackles of one’s
own experience. How to reimagine outside of one’s own context is difficult and
must be done with others from different contexts.

For economics, there need to be checks and balances so that it does not get so
divorced from reality that it does bad things. It is probably no more susceptible
to this than any other discipline, but its privileged position means that an
increased focus on the governance of economics is vital. That means incentives
that promote a more diverse economics profession and a more diverse set of
disciplines recruited for policymaking.

On prioritising development cooperation, it is time to revisit the question of

where the balance of focus lies between poorest countries and the poorest
people. People within middle income countries are trapped in poverty. India has
450 million living in poverty and they are trapped within a narrative of prosperity
that deters development cooperation.

Finally on the evidence base, is more always better? Are we standing on or

slipping off the shoulders of giants? My sense is that where it is easy to generate
evidence, we are generating it. Where it is difficult –credibly tracking crises in
real time, globally constructed knowledge, building knowledge that has external
as well as internal validity—we are not.

17