First, it has to do with the organizational governance and structure of International Financial Institutions (IFIs). In terms of organizational governance, IFIs are subject to the three influencing factors, environment, external forces and internal forces. These three pressure points coupled with the political aspirations of their donors and governing boards highly affect the impact of their projects. These loop holes create significant decision making and efficacy obstacles to the organizational functions and limit the ability of IFIs to adapt to the ground situation and realities. For instance, implementation of the same structural adjustment program in different countries (Babb, 2003). The case studies presented in the readings show the inability of the IFIs depict a true picture of the diversity and difference between developing countries. The implementation of the same program not only in different regions but also repeating the failed attempts shows the obscure and unrealistic view of World bank and IMF managing people of the third world.
In terms of organizational structure, these IFIs are blotted bureaucracies and like any other organization, they are bound to its people. After all, organizations are not their wall or rules written on papers but their employees and people who run them. Their organizational view of growth in the third world countries and how-to bring development are from mere theoretical and western technocratic views. That is why the programs of 1960s and 70s of mega government driven economic growth and Import Substitution Industrialization (ISI) failed to produce the desired results.
The second reason why these structural programs are not useful is due to the capacity of the receiver countries. For any diagnosis to work the recipient should be prepared and tested to accept the dose. However, in case of the structural adjustment programs, it is very difficult to implement and achieve, even immediate results, if the governments are not complying with the stipulations of the reforms. The patrimonial and vintage culture of administration system in majority of the third world countries are main reasons for failure of reform programs.Implementation of any reform jeopardizes and limits their rent seeking and exploitative abilities. The complex interconnectedness of the government bodies with the elites and warlords, who are often corrupt, creates insurmountable obstacles toward effectiveness of any reform.
Third reason for why these reforms do not yield the desired results is due to their incomplete implementation. The incomplete implementation of these programs apart from the external factors have two crucial domestic reasons. The misuse of funds by corrupt rulers and elites is one reason while, the other reason is lack information sharing intent and mechanism and understanding of such programs by local populations. In major of the World Bank and IMF funded programs local populations are not even considered as beneficiary, all bets are made on governments and officials. Due to the technicality of the reform language and context, both the IFIs and governments fail to explain and get support of the population. The image of IMF and World bank is very distorted in the third world countries. People refer to them as clandestine operating organizations of the United States and the West who are there to occupy and dominate them.
To conclude, in absence of autonomous organizational governance, sound organizational structure, expert (true) knowledge of the recipient countries, and an engaged local population as main beneficiary of the programs, it is difficult to achieve any results beyond immediate programmatic outcomes.
In the readings for Thursday, we begin to see the outlines of how neoliberally-minded reform projects and mandates actually played out in developing nations of the Global South. As our authors argue, there was often an appreciable gap between what neoliberal reformers promised and what they achieved. Your question, then, is why did IMF and World Bank-sanctioned (or imposed) reform projects rarely seem to work as they were supposed to?
What is the “Washington Consensus”? And how do the policy prescriptions of neoliberal economists seek to correct the problems caused by the state-led growth policies of structuralists and dependency theorists?
In our readings for Tuesday, we see a number of explanations for and evaluations of the state-led development strategies pursued by developing nations in the 1950s, 60s, and 70s. For your prep exercise, briefly respond to the following two questions:
1) Briefly, what was the strategic logic behind the state-led development strategies (particularly ISI) promoted by most development economists and tried by most developing economies in the postwar era?
2) What were the political and economic consequences of state-led development in this era for most developing nations (especially in Africa, the Middle East, and Latin America)? Why, in the assessment of our authors, did state-led development fail?
Beginning with Thursday’s readings, we be begin a new unit. Having covered the necessary theoretical and general background, we’re turning now to the question of how specific kinds of development strategies adopted since the late 1940s or so have generally failed to create growth.
Your prompt: How do modernization and dependency theories view the problem of development differently? What policy solutions do they seem to propose, and do their solutions have anything in common?
In the first reading for Tuesday, Samuel Huntington provides both a concise definition for corruption and a brief narrative explaining why corruption is often common in developing areas (broadly defined, not by geography, but by economic station). Meanwhile, all three papers we’re reading offer at least an implicit account of why corruption occurs in some times and places, and not others.
For your response today, please consider the authors’ various positions in offering your own answer to the question–why does corruption occur in some places/times more than others? What is the “root cause” of corruption (or is there such a thing)?
How political structures, incentives, and institutions impact the long-term trajectories of developing countries? Having examined the impact of colonial rule on institutions of countries across the Global South, we now move to a broader consideration of how bad institutions and perverse incentives create challenges for development.
Thursday’s readings focus on one specific example of this issue, in the form of what is commonly called the “resource curse”–the paradox by which countries with significant natural resources often end up worse off than their less resource-wealthy neighbors. In particular, we focus on one specific resource (oil), and one example (Nigeria) to see how this process plays out in practice.
Thus, my question is this:
Why do countries that depend on natural resources like oil often struggle to govern and grow their economies, and why do they often end up with deeply dysfunctional political systems? Please provide at least two specific examples from the Nigerian case to illustrate your argument.
In the readings for Tuesday, we explore the impact of colonialism and colonial rule on long-term trajectories of development. Although colonialism’s negative impact is widely (if not universally accepted), there is some disagreement on exactly how its legacy is best observed and explained. Drawing on the readings, please explain one specific pathway by which colonial rule has a persistent and negative effect on contemporary development.
In the selections for this class by Robert Bates, Walter Scheidel, and the US Department of Justice, we transition from our discussion (and critique) of the “standard” model of economic growth into a new topic, focusing on the economic and political origins of the modern state–the form of governmental organization that encapsulates nearly all of the territory on Earth today. If I have anything like a “theory” for this course, it’s that the histories of global economic development and global political development are linked, and with these three insightful takes on where political order comes from and how it operates, we can begin to consider why exactly certain forms of governmental organization might be better at improving human development than others.
Thus, your prompt:
What is a “state” in the parlance of Bates, and under what conditions, do “modern” states emerge as the dominant form of political order? In particular, pay close attention to the importance all three readings places on the role of violence in this process of “state formation.” How is it that something so rooted in violence, with its origins in little more than a large-scale “protection racket,” able to encourage economic growth and development, and under what conditions does that violence simply end up hurting the most vulnerable?
For Tuesday’s readings, we find ourselves further considering the origins of the “great divergence” in global economic growth and development. Having discussed the importance of “modern” states and state-making in driving economic development, we now turn to the question of why such states developed in some places and not others. In this pair of essays be famed geographer Jared Diamond, historian David Landes, and economists Diego Comin et al, we consider the role of ostensibly “non-political” factors, particularly geography, demography, and culture, in development.
What role do factors that people today can’t do much to change–cultural heritage, geographic endowment, and long-term history, for example–play in encouraging or preventing economic growth or development? In other words, how powerful is the past in terms of shaping the future? In your answer, you should specifically engage with whether or not you find the arguments advanced in these reading persuasive or not, and on what grounds.