On ´fair´economic development

So on to some serious business here, because I do occasionally dwindle away from sarcasm and comics. Had I not been so unfortunate to contract this neurological restraining order, I would in fact have been located in York, UK, studying a masters in "Conflict, Governance and Development" in said political faculty, and far too busy to be spending my over-worked braincells on blogging.

When I got accepted to the course I went straight on to amazon to start buying some of the recommended course litterature, and then when I realized that I really was too ill to be able to attend the course, or even stay in the country, I was stuck with a respectable stack of publications on econominc development. But as we say in Sweden "Skam den som ger sig" (shame on whoever gives up), so in the periods when my brain doesn´t have the attention-span of a 5 year old, I do my best to absorb the information the course litterature wants to get across. Last weeks reed was interesting as always, and written in a language that is easily accessible, so I thought I´d make an attempt to a brief summary of what the author wants said.


Contemporary economists ignore the truth of economic development of the western world in favour of the view that the high levels of development in the NDCs (Now Developed Countries) were reached much thanks to the adoption of a free trade policy. Pointing to this historical account of their success, they now firmly advice all development countries to follow suit if they are ever going to be able to reach standards comparable to for example UK, the Netherlands, Germany, USA or Sweden.
But Chang looks at the actual historical development of these NDCs, and proves that they all in fact relied heavily on infant industry protection, export subsidies and tariff protection until they had caught up with their domestic industry and the protective legislation was no longer neccesary. So the truth is then that NDCs warn developing countries from the ´bad´ (protective) policies, and advice them to adhere to the ´good´ (free trade) policies, although themselves used the ´bad´ policies during their catch up phases. And they don´t only advice, but force developing countries to sign unequal treaties, giving them no options but to keep their tarrif rates on very low levels.

There is also the pressure on developing countries for institutional development that should reach a certain global standard within a very short time span. These institutions involve, to mention a few, democracy, central banking, public finance, regulations against child labour and competition laws. Chang acknowledges the need for this development, but claims that it is not feasible for development countries to raise the institutional standards within the 5-10 year period that the NDCs demand, and threat with sanctions if not adhered to. He reminds the reader that it took several generations for the NDCs to develop these institutions themselves, and longer still before they actually were implemented. It is also important to note that "contemporary developing countries have much higher levels of institutional development than the NDCs did at comparable stages of development" (p.111). Naturally we cannot compare the global situation in the 19th century with that of today, and the developing countries have advantages of being follower nations who will not have to introduce completely new ideas, like democracy, to their societies, but will already have a generally informed public opinion from the start. But it is still important to see that, although these institutions will develop, it is not feasible to expect them to be financially viable straight away. Chang illustrates this with the institution of maintaining property rights to a global standard, it would "reqire the developing countries to train (or even worse, to hire from abroad) a large army of world-class layers and accountants. This means that they will inevitably have less money (their own or donors´) to spend on, say, the training of schoolteachers or of industrial engineers, which may be more necessary given their stages of development" (p.135).

Chang concludes that "in recommending the allegedly ´good´ policies, the NDCs are in effect ´kicking away the ladder´by which they have climbed to the top" (p.129).

I can only say shame on us. Its remarcable that we think only of ourselves, even when we are so much ahead, that we hinder developing countries to get a fair chance to catch up. But as Chang says, many of those who hold posts on desicion making levels, are not actually informed of our economic history, and can only rely on what they are told by today´s leading economists. There are naturally arguments against this focus on industrial development as the starting point for development, like that if institutions such as social security and various increases in individual freedom were put foremost, economic growth would follow. Whatever should come first, I do feel that all this involvement by the NDCs has led to questions like who is it that actually benefits in the end? So I recommend this book to be read, and hope, like its author, that more along the same lines with be published.