Economic Development: Theory and Policy Applications


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Economic hardships prompt girls to take desperate measures with some deciding to sell their bodies.

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A Global Profile of Development and Underdevelopment 3. History of Economic Development and Underdevelopment 4. The Structuralist Theories of Economic Development 7. Capital Accumulation and the Process of Development 8. Population and Human Resources in Development 9. Agriculture in the Process of Economic Development Industrialization in the Process of Economic Development more Industrialization in the Process of Economic Development Environmental Issues in the Process of Economic Development Development Planning and Policy Issues International Trade and Economic Development Indicators for monitoring the MDGs.

Poverty can be an outcome of inefficient use of common resources and a result of exclusive mechanisms. Weak policy environment, inadequate infrastructures, weak access to technology and credits can cause poverty. Poverty can also result from the use of mechanisms by some groups in a society or community to exclude others from participating in democratic and economic development process Ajakaiye and Adeyeye, This is defined by Hazell and Haddad as social deprivation…From the different reasons mentioned above in relation to poverty in developing countries, it is clear that strategies to alleviate poverty and help poor people must aim at improving the productivity and the living conditions of smallholder farmers and landless agriculture workers who constitute the majority of poor people.

Furthermore, agriculture is seen as central to rural development. It is the major economic driver, the hub of rural activities, and permanent estate IRG, The improvement in agriculture productivity is based on agricultural research and improved technologies. In many developing counties government must play an important role in this domain. However poor people may benefit from agriculture productivity only if favorable macroeconomic and trade policies good infrastructure and access to credit, land, and markets is in place. As far as land is concerned, government in many developing countries must undertake land reform program not only for a better distribution of land but also to create mechanism capable to define and enforce property right.

Land reform can promote smallholder entry into the market, reduce inequalities in land distribution, increase efficiency and thus boost output. The ubiquitous problem of poverty continues to confound development practitioners, politicians and researchers alike. In spite of countless efforts to eliminate poverty over the past decade, 2.

Most of these depend on agriculture for their livelihoods World Development Report, While some progress has been made in some countries, the ambitious goal of halving poverty by the year appears like it will not be achieved. The objective of this paper is to characterize the problem of poverty and attempt to proffer possible insights on pathways that may jettison the rural poor out of misery into prosperous economic agents with a brighter hope for the future. Poverty is a multifaceted concept.

It affects many aspects of the human conditions, including physical, moral and psychological. View original post 2, more words. He said such positions were mainly caused by low export of commodities and high import volumes which exerted negative burden on currency stability. The AMF would be established to basically help to tackle macro-economic matters in Africa, he added. Maruping said the Fund was expected to create proper lending system in Africa to correct imbalance in payments within the continent and ensure exchange rate stability. The Fund will promote monetary cooperation on the continent and speed up economic development.

He said South Africa was expected to get the highest allocation of the , shares, with an 8. Each country was expected to pay for its subscription at once or in four instalments of 25 per cent of the amount and payment period would last between the initial four years and eight years. The Fund would invest in international financial markets and expected to maintain a sound credit rating. The economic case is quite straightforward. Fruits of trade can be seen in many countries. Many developing countries depend on the export of a few primary products and in some cases a single primary commodity for the majority of their export earnings.

This is where the problem starts. Often, the fluctuation of these products are out of the hands of the developing countries as they individually have only a small portion of the world supply which is not enough to affect world prices. At the same time, some shocks ie. The unstable commodity price brings uncertainty, instability and often negative economic consequences for the developing countries.

This also affects the policymaking in the country as it is hard to implement a sustainable development scheme or a fiscal expansionary policy with uncertain revenue. Positive shocks do increase income in the short run however a study by Dehn found that there are no permanent effect on the increase on income in the long run.

Theory and Policy Applications

Furthermore, there is often very little scope to growth through primary products as it is very hard to increase volumes of sale. This is due to the demand being inelastic. The over dependence on the export of primary products also causes another problem — a risk of a large trade deficit. Several studies Olukoshi, , Mundell, have shown that primary commodity prices are the main cause for the debt problems in many developing countries.

In an empirical research done by Swaray , he shows the main reason behind this is the deteriorating terms of trade, developing countries face. Terms of Trade is equal to the value of export over the value of import. Over time there has been a general trend of primary products falling in value. This has occurs due to inelastic demand for commodities and lack of differentiation among producers hence making it a competitive market.

The creation of synthetic substitutes has also suppressed prices. At the same time, manufacturing products which generally developing countries tend to import see a general rise in prices. Put these trends together, over time, developing countries have seen their terms of trade worsen. This, alongside the difficulty to increase volumes of sales has meant many developing countries have a trade deficit.

According Bhagwati , it is possible that this decline in the terms of trade could result in diminished welfare. In other words, growth from trade can be negative rather than positive. Just a bit of Economics. The benefits of trade have been well documented throughout history. View original post 1, more words. The West has been engaged in the project for more than six decades now, but the number of poor people in the world is growing , not shrinking, and inequality between rich and poor continues to widen instead of narrow.

People know this, and they are abandoning the official story of development in droves. They no longer believe that foreign aid is some kind of silver bullet, that donating to charities will solve anything, or that Bono and Bill Gates can save the world. This crisis of confidence has become so acute that the development community is scrambling to respond.

They commissioned research to figure out what people thought about development, and their findings revealed a sea change in public attitudes. These findings clearly demonstrate that people are beginning to reject the aid-centric approach to development. But instead of taking this as an opportunity to face up to their failures and change the way the industry works, the Gates Foundation and its partner NGOs have decided to stick with business as usual — but to cloak it with fresh language.

The strategy goes like this: Progressive Westerners love this stuff. This new framing amounts to little more than a propaganda strategy. In the end, the existing aid paradigm remains intact, and the real problems remain unaddressed. Why do people no longer believe in the charity and aid-centric model of development?


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And there are many. The richest 85 people in the world Mr Gates being one of them now have more wealth than the poorest 3. The aid project is failing because it misses the point about poverty.

It assumes that poverty is a natural phenomenon, disconnected from the rich world, and that poor people and countries just need a little bit of charity to help them out. People are smarter than that. They know that poverty is a feature of the global economic system that it is very often caused by people, including some of the people who run or profit from the aid agenda.

People have become increasingly aware — particularly since the crash — that poverty is created by rules that rig the economy in the interests of the rich. We can trace this rigging process through history. Western-backed coups in Iran in , Guatemala in , Congo in , Brazil in , Indonesia in , Chile in — to name just a few — deposed democratically elected leaders with pro-poor platforms to install dictators friendly to multinational corporations.

These destructive policies only persist because voting power in the World Bank and the IMF is controlled by rich countries. All of this makes it clear that poverty is not a natural condition. It is a state of plunder. It is delusional to believe that charity and aid are meaningful solutions to this kind of problem. Some people in the NGO community know this all too well, and they are calling for genuine political change: If the Gates Foundation and NGO leadership want to get serious about tackling poverty, they might start by talking to the public about the importance of releasing developing countries from the siphons of rich countries and their corporations.

They might help put the final nails in the coffin of the paternalistic story of charity and aid, white saviours and poor brown victims, and tell the real story about how the rich get richer off the backs of the poor. That would be a true starting point for development in the 21st century. Most of that aid went to areas where national leaders were born, indicating a strong political bias, AidData said. Ghana, the Democratic Republic of the Congo and Ethiopia received the most Chinese development assistance over the reporting period, the study showed. China is sending development funds to African governments with the aim of buying long-term political alliances, Hodler said.

If these governments want to channel projects to their home town, Chinese banks would have no objection. This is why they use their official aid for big, visible projects like stadiums, ministry buildings, and airports that can be seen and used by many people — in the capital city — and not tucked away in a rural hamlet. Researchers took data that China published on its foreign assistance and mapped where development projects were located. China maintains that it sends aid to African governments with the aim of furthering their development agendas.

The Chinese government said in July: The basic principles China upholds in providing foreign assistance are mutual respect, equality, keeping promise[s], mutual benefits and win-win. The truth is that humanity must now confront, not just poverty, but a convergence of mega crises, all of which are deeply interconnected: Government corruption; ecological destabilization; structural debt; and hyper-consumerism established in the west and rapidly expanding worldwide. These will set the parameters for international development for the next 15 years and every government, UN agency, large corporation and NGO, not to mention billions of citizens on the planet have a stake.

The best way to describe it is with an old joke: First things to note are the big differences with the MDGs. Most strikingly, the SDGs suggest an end to poverty is possible in the next 15 years, whereas the MDGs aimed at halving it. Secondly, the SDGs get serious about climate change. This suggests another paradigm shift, and a controversial one because it opens the door, just a crack, to the idea that the extremely rich might be making an undue amount of their money off the backs of the extremely poor.

Of these three goals, it is fairly certain that two will disappear before the process concludes. This is a given. How do we know? Because of the language. Language is a code that contains a lot more than its literal meaning, and an analysis of semantic frames in the Zero Draft exposes the logic upon which it is built. We are therefore committed to freeing humanity from poverty and hunger as a matter of urgency.

Diseases are just part of the natural world, so if poverty is a disease, it suggest that it is something for which no-one is to blame. The logic of a prison meanwhile is that people are in it for committing a crime. Also note the phrase: The truth, however, is that humanity must confront a convergence of mega-crises all of which are deeply interconnected. Government corruption, ecological destabilisation, structural debt, hyper-consumerism established in the West and rapidly expanding in the east and south, for example, are all closely linked.

No systemic solutions can arise from a logic that denies systemic problems. There is a good reason for this: This logic validates the current system and ordering of power by excusing it of blame and says it can, indeed must, continue business as usual. This is the logic of the corporate capitalist system. Or that the reality masked by the ratios is that one third of all deaths since million have been poverty-related.

The point is that, in light of the logic the language exposes — and we have mentioned just two of many possible examples telling the same story — any glorification of the SDGs we hear over the next year must be seen as reinforcing the logic their language contains. To really tackle poverty, inequality and climate change, we would need to change that logic to one that is built on an acceptance of how much these problems are the result of human actions.

And that the fact of living in poverty makes no inherent comment whatsoever on the person or people concerned, other than that they live in poverty. This in turn would make a wholly different type and scale of change feel like common sense. We would instinctively reach to introduce laws that give local authorities everywhere the right to revoke corporate charters for serious social or environmental misdeeds anywhere. And the big one: Ridiculous though it may sound, right now we allow private banks to control the supply of US dollars, euros and other major currencies that surge through the global economy.

These banks charge everyone, including governments, interest on every note, thereby guaranteeing that a constant river of money flows into their coffers, along with immense power. We compound our problems when we allow ourselves to be drawn into processes like the SDG-design are turning out to be. Every ounce of credence given to their frames helps weigh down the center of debate far from where it needs to be.

Until the UN can use its powers, resources and privileges to promote policies that grow from the logic of its highest ideals, we may help it, the planet and each other best by divesting our attention from it and finding avenues for change that can. This article was originally published by Common Dreams. Since the s, when there were just two public universities, almost 30 new institutions have sprung up. On the face of it, this is good news for ordinary Ethiopians.

But dig a little deeper and tales abound of students required to join one of the three government parties, with reports of restricted curricula, classroom spies and crackdowns on student protests commonplace at universities. The Ethiopian government likes to trumpet its higher education system to its western aid backers as a crowning success of its development policy.

As billions in foreign aid are spent annually on Ethiopia, the west must be more cognisant of the fact that this money helps reinforce a government which cuts down those who dare to speak out against it. Nowhere has this been more evident than in Ambo in Oromia state. On 25 April, protests against government plans to bring parts the town under the administrative jurisdiction of the capital, Addis Ababa, began at Ambo University.

By the following Tuesday, as protests spread to the town and other areas of Oromia, dozens of demonstrators had been killed in clashes with government forces, according to witnesses. As Ethiopia experiences rapid economic expansion, its government plans to grow the capital out rather than up, and this involves annexing parts of the surrounding Oromia state. However, Oromia opposition figures tell a different story. While news of the killing of unarmed protesters has caused great concern among many Ethiopians, there has been little coverage overseas.

Local residents maintain that the figure [of those killed] was much higher. Inevitably, continued support for such an oppressive regime justifies its brutal silencing of dissent. Yes, the higher education system has grown exponentially over the past 15 years but the oppression and killing of innocent students cannot be considered an achievement. Any system which crushes its brightest should not be considered a success. The message is that African leaders now have licence to oppress their people, clean their national treasuries; and generally rob, loot, rape and plunder because their new masters will not hold them to account on how well or how badly they treat their subjects.

The appetite for debt by African governments is particularly concerning given that there does not appear to be any serious action to end the gross mismanagement of public funds. Getting into debt only makes sense if you plan to use the money properly. But if substantial sums of money end up in the pockets of faceless politicians, then Africa is ransoming future earnings with no future benefits. This is self-sabotage at its best. There is no need to belabour the point. Africa is bingeing on debt and risks overeating at the buffet of financial offers from China, India, Brazil and many others.

In this new world order Africa is spoilt for choice with regard to who to partner with to fund development. But we Africa seem to have an insatiable appetite for this new money and do not seem to be fully aware of the implications of accepting all these tasty offers of cash. Having spent the past decades grovelling at the doors of donors and investors from Europe and North America, many Africans felt we were giving away our pride for monies tied to what many felt were onerous conditions.

But is this truly smart? The reality is that all borrowing has conditions. So allow me to digress briefly and go slightly further with this point. The Chinese government, like any other government, will protect its investments; investments made almost exclusively with African governments…which seems to suggest that if China has to back up even unpopular or despotic African governments to protect its investments, it will. See more here and here. Perhaps for Zimbabwe the conditions that make China feel most secure in its investments is if Mugabe is in power.

So maybe there are some conditions tied to money from China. How much of this money from China is grants vs debt? We are getting into debt to fund numerous development projects that range from infrastructure to agriculture, to security and wildlife but, pray tell, do we have the absorptive capacity to soak up these billions? Because whether we can absorb the money or not, we will be paying it back.

Absorptive capacity here relates to the macro and micro constraints that recipient countries face in using resources, in this case money, effectively. For example, do county governments have the technical savoir faire to implement agriculture projects worth millions? One of the issues of serious concern is that investment in educational infrastructure rarely features prominently in these deals. There are very limited if any provisions for building the educational capacity of African countries especially at tertiary and vocational levels.

Bear in mind that already, with regards to China, Africa has fallen into a trap where, 1 China is allowed to bring in Chinese nationals to provide labour and, 2 When African labour is used, it is cheap, unskilled labour. Africa should be using every single government- funded project to hire Africans and build the capacity of Africans to do the job competently in the future. Africa cannot continue to so fundamentally rely on outsiders to do the basics for us such as building roads. But sadly, African countries seem to be happy with outsourcing all the large-scale projects, sometimes back to companies from the country that gave us the loans in the first place.

This leads to the next point. Africa is not being very bright. We get loans then outsource the implementation of the projects back to companies from the donor country. Generally however, using outsourcing as the default strategy for large-scale project implementation is problematic in at least two ways: The first point is obvious, if we continue to rely on others to build our roads, we will continue to lack the skillsets and capacity to competently build and maintain our roads ourselves.

But since the roads are being built, we never feel the weight of our incompetence in this area and therefore have no sense urgency to rectify this problem. Secondly, companies implementing projects in Africa make a profit then expatriate the profit. This makes no long-term sense. Ideally we should use local contractors to implement projects however, as elucidated in point 2, we do not seem to have sufficient volumes of companies capable of absorbing this workload.

African governments should essentially use the development projects led by non-Africans as structured training opportunities for newly qualified professionals as well as building more seasoned professionals into the management structure of projects. This issue relates to point number 1. The scary part is that some African governments seem to think debt will fix all our problems with Heads of States expecting hearty praise when they secure even more debt for the continent.

It is true that structures such as the Debt Sustainability Framework DSF exist which seek to stop lenders from lending more money to countries that have exceeded their debt ceilings. This is hard enough to do between public and private lenders from the traditional partners, but is even more difficult with the new lenders [such as China]. Read more from the original sourcce: In Ethiopia in , Human Rights Watch documented how the autocrat Meles Zenawi selectively withheld aid-financed famine relief from everyone except ruling-party members.

Meanwhile democratic Botswana, although drought-prone like Ethiopia, has enjoyed decades of success in preventing famine. Government relief directed by local activists goes wherever drought strikes. Traditional foreign aid often props up tyrants more than it helps the poor. So the development experts may get some roads built, but they are not maintained. Experts may sink boreholes for clean water, but the wells break down. Individuals do not have the political rights to protest disastrous public services, so they never improve.

Meanwhile, dictators are left with cash and services to prop themselves up—while punishing their enemies. But there is another model: Compare free development in Botswana with authoritarian development in Ethiopia. In the postwar period, countries such as Chile, Japan, South Korea and Taiwan have successfully followed the path of free development—often in spite of international aid, not because of it. While foreign policy concerns have often led America to prop up dictatorial regimes, we need a new rule: Instead, we must advocate that the poor have the same rights as the rich everywhere, so they can aid themselves.

Economists, Dictators, and the Forgotten Rights of the Poor. In some instances, growth under autocracies can be attributed to relative increases in freedoms. Easterly also rejects the myth that dictators are dependable and that a certain level of oppression should be overlooked for the sake of economic growth and overall prosperity. Easterly stresses that instability and tumult in the wake of ousting a dictator is not the fault of an emerging democracy, but instead an understandable result of years of autocratic rule.

The answer is not to continue to support autocrats in the name of stability, but rather to start the inevitably messy process of democratization sooner. Easterly is of course not the first to call attention to the importance of prioritizing rights and freedoms in the development agenda. Political and Economic Lessons From Democratic Transitions , my coauthors and I similarly found that economic growth and political freedom go hand-in-hand. Still, the hard questions remain: And when should donors walk away from desperately poor people because their government is undemocratic?

Easterly argues that the donor community should draw the line with far more scrutiny than it does today — not just at the obvious cases, such as North Korea, but with other undemocratic countries, such as Ethiopia, where human rights abuses are rampant. The aid community should focus on ways to help oppressed populations without helping their oppressors. At the very least, Easterly argues, development actors should not praise oppressive regimes or congratulate them on economic growth they did not create.

Easterly also emphasizes the need for aid organizations to be more transparent about where their money is going. Robert Zoellick made strides in this direction during his tenure as World Bank president. We just disagree about how to end poverty throughout the world. Gates believes poverty will end by identifying technical solutions.

Along with official aid donors, such as USAID and the World Bank, the foundation works together with local, generally autocratic, governments on these technical solutions. The technical solutions have been missing for so long in Ethiopia and other poor countries because autocrats are more motivated to stay in power than to fix the problems of poverty.

Autocracy itself perpetuates poverty. Meles violently suppressed demonstrations after rigged elections in Rulers only reliably become benevolent when citizens can force them to be so — when citizens exert their democratic rights. Our own history in the U. Chris Christie get away with a traffic jam on a bridge. Such democratic rights make technical fixes happen, and produce a far better long-run record on reducing poverty , disease and hunger than autocracies.

We saw this first in the now-rich countries, which are often unfairly excluded from the evidence base. Some developing countries such as Botswana had high economic growth through big increases in democratic rights after independence. Worldwide, the impressive number of developing countries that have shifted to democracy includes successes such as Brazil, Chile, Ghana, South Korea and Taiwan, as well as former Soviet Bloc countries such as the Czech Republic, Poland and Slovenia.

If the democratic view of development is correct, the lessons for Gates are clear: Redirect aid to democrats. This is while police forces are repeatedly accused by Human Rights Watch of serious human rights abuses. An Ethiopian farmer has been given legal aid in the UK to sue Britain — because he claims millions of pounds sent by the UK to his country is supporting a brutal regime that has ruined his life. The landmark case is highly embarrassing for the Government, which has poured vast amounts of extra cash into foreign aid despite belt-tightening austerity measures at home.

The case comes amid growing global concern over Western aid propping up corrupt and repressive regimes. If the farmer is successful, Ministers might have to review major donations to other nations accused of atrocities, such as Pakistan and Rwanda — and it could open up Britain to compensation claims from around the world. His name is being withheld to protect his wife and six children who remain in Ethiopia. Social cohesion, political freedom and environmental protection carry little importance in the comforting world of impressive growth statistics. Rebuilding Libya after the civil war has been a blessing for its GDP.

But does that mean that Libya is on an enviable growth path? When there is only one brick left in a country devastated by war or other disasters, then just making another brick means doubling the economy percent growth. Another problem is the reliability of GDP statistics in Africa. In Zambia, Angola and Mozambique, the press, civil society organisations and the opposition are under threat for demanding that the proceeds from raw material exports and billion dollar multinational corporate investments should benefit everyone.

No-one can predict the future, but what can be said with certainty is that the possibility of a sustainable long-term and fair development that is currently at hand in Africa is being put at risk. The frustration that is fuelled among populations that are hungry and feel ignored by their rulers will bring about increasingly strident and potentially violent protest. In the near future, this will change the political climate, not least in urban areas. But the situation is not hopeless, on the contrary.

Civil society is growing stronger in many places in Africa. The internet makes it possible for people to access and disseminate information in an unprecedented way. Today, a worker in a Chinese-owned factory in Ethiopia earns one-tenth of the wage of an employee in China. There are no excuses for letting African populations and their environment once again pay for the global demand for its raw materials and cheap consumer goods. A reaction to austerity measures in Greece? Or a follow-up to the Arab Spring? The widening gap between rich and poor is as troubling in Africa as in the rest of the world.

In fact, many Africans believe that inequalities are becoming more marked: A tiny minority is getting richer while the lines of poor people grow out the door. The largest movement ever in Africa of people from rural to urban areas is now taking place. Soon, this will change the political climate, not least in urban areas.

I see newly constructed, subsidised single-family homes accessible for low-income families. I drive on good roads and meet many tourists, although this is off-season. I hear about a growing mining sector, new discoveries of natural gas and oil deposits. I read about irregularities committed by people in power, in a reasonably free press whose editors are not thrown into jail.

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Fidelis Ezeala-Harrison, Economic Development: Theory and Policy Applications

There is free primary level schooling and almost free health care. Most people I talk to are optimistic. A better future for a majority of Namibians is being envisaged. But Namibia is an exception. That is of course good news for the continent. Perhaps the best, from a macroeconomic viewpoint, since the s, when many of the former colonies became independent.

The development industry needs an overhaul of strategy, not a change of language.

This growth is mainly driven by the raw material needs of China, India and Brazil. Meanwhile, the largest movement ever in Africa of people from rural to urban areas is now taking place. But, in contrast with China, where the migrants from the rural areas get employment in the manufacturing industry, the urban migrants in Africa end up in the growing slums of the big cities. In a few places, notably in Ethiopia, manufacturing is beginning to take off.

But the wages in the Chinese-owned factories are even lower than in China, while the corporations pay minimal taxes to the Ethiopian state. However, there is little doubt that many parts of the continent were torn apart by various wars, during that era. Many of the pre-colonial wars revolved around state formation, empire building, slave raids, and control over resources and trade routs.

The slave raiding and looting empires and kingdoms, including those of the 19th century, left behind complex scars in inter-identity relations. It is beyond the scope of this paper to discuss in detail the nature of pre-colonial empires in Africa. The examples of the Abyssinian Empire and the Mahdiyya state in Sudan provide a glimpse of the impacts of pre-colonial empires on the prevailing problems in inter-identity relations. The Abyssinian Empire, for example, is credited for creating the modern Ethiopian state during the second half of the 19th century and defending it from European colonialism.

However, it also left behind a deeply divided country where the populations in the newly incorporated southern parts of the country were ravaged by slave raids and lootings and, in many cases, reduced into landless tenants, who tilled the land for northern landlords Pankhurst, The Empire also established a hierarchy of cultures where the non-Abyssinian cultures in the newly incorporated territories were placed in a subordinate position.

There are claims, for instance, that it was not permissible to publish, preach, teach or broadcast in Oromiya [Afaan Oromo] language of the Oromo people in Ethiopia until the end of the reign of Emperor Haile Selassie Baxter, , Diversity Management in Africa: A number of African governments accused of human rights abuses have turned to public relations companies to salvage the image of their countries.

In many cases across Africa, it often means whitewashing the human rights violations of despotic regimes with fluff journalism and, just as easily, serving as personal PR agents for rulers and their corrupt family members. But they also help governments drown out criticism, often branding dissidents, democratic opponents and critics as criminals, terrorists or extremists. Today, with the preponderance of social media, anyone with an opinion, a smart phone and a Facebook account can present their views to an audience potentially as large as any major political campaign can attract.

This has raised citizen journalism to a level of influence unknown previously.

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Yet, this communication revolution has also resulted in despotic governments smearing not just human rights advocates, but individuals with blogs as well as Twitter, YouTube and Facebook accounts. This undermines the power and integrity of social media. It is no surprise that ruthless governments that deny their citizens basic freedoms would wish to whitewash their reputations.

But PR professionals who spin for them should be exposed as amoral. If a website or magazine commends the government, how is an average citizen to know for certain if the information is accurate or true? There are likely many more that continue to do this work under the cover of corporate secrecy. Only after an international uproar were the policemen directly responsible for the killing brought to justice. Meanwhile, political opponents routinely disappear, journalists are arrested for criticising the government and any comprehensive human rights report contains appalling anecdotes and painful analysis about a country with little judicial independence and respect for the rule of law.

Mr Ayittey — a former political prisoner from Ghana — pulls us a lot closer to the truth. Economic growth and other positive development outcomes in such states are a mirage, the author argues. The dictators whom experts are advising are not the solution — they are the problem. Technical experts in development sometimes concede some rights and deny others, which disrespects rights for what they are: The tyranny of experts that neglects rights is first of all a moral tragedy. The technocratic approach of dictators advised by experts is also a pragmatic tragedy, because it does not actually work to end poverty.

New research by economists on history and modern experience suggest that free individuals with political and economic rights make up remarkably successful problem-solving systems. Such systems based on rights reward a decentralized array of people: Economic entrepreneurs with property rights get to keep the rewards of solving the problems of their consumers. First, societies that have already attained individual freedom are likely to have already escaped poverty. Economists have gone back deep into our own history to confirm this widely-accepted story for how we in the West escaped our own poverty, but we seem unwilling to consider that the same story could play out in the rest of the world.

Second, societies in which there is a positive change in in freedom will likely see a positive change in prosperity ergo, rapid economic growth and fall in poverty. So what should we do about rights for the poor? Possible starting places for Western policy changes are to not fund dictators, to not support projects that torch farms, to not break promises to investigate rights abuses, and to not let us forget such abuses and missing investigations. The danger of such a tyranny of experts is illustrated by a long history of politicians using technical poverty debates as an excuse to avoid debating rights for the poor.

The notion of development assistance was born in a period of unabashed racism. Ethiopia, for example, reaps money and plaudits from development giants such as the Gates Foundation while remaining a bastion of authoritarian rule. Easterly recalls that the very notion of development assistance was born in a period of unabashed racism, out of a conjunction of two opposing demands. One was the need for late colonial empires to provide a different rationale than racial superiority for their continued domination of the Third World.

The other was the desire of Third World leaders to legitimize seizing authoritarian power themselves. The bias in favor of technocratic fixes, and against fundamental political reform, has certainly helped enable autocratic regimes, which, now as then, capture development aid like any other rent. In Yemen, for example, before counterterrorism security cooperation grew to its current scale, aid was a key source of funding for the Ali Abdullah Saleh regime.

Easterly is hardly the first to criticize the international-development community for its avoidance of politics and fixation on technical solutions. But his belabored insistence that freedom and democracy are the only reliable paths to economic prosperity is too general and thus not very helpful for anyone thinking seriously about how to reform development assistance.

While he is right to castigate the many aid efforts undertaken in autocratic contexts, few serious Western development professionals today actively promote dictatorship. Indeed, acceptance of much of Mr. Easterly fails to acknowledge such evolutions. And he thereby misses an opportunity to highlight the obstacles that this approach, in turn, has encountered: Easterly contend in detail with the fundamental question raised by his book: Some explanations do emerge in passing.

Geostrategic priorities, for example, have impelled the U. The desire to self-perpetuate has also been a powerful motive to stick to the status quo for an industry as large as international assistance—a motive Mr. Challenging entrenched power structures is a good way to get thrown out of a country, as a number of democracy-promotion organizations recently learned in Egypt. It draws too sharp an opposition between individualism and collective values. Easterly falls into Samuel Huntingtonesque generalizations.

Similarly, he seems to suggest that geography and climate predisposed the Southern Hemisphere to slave-based or extractive economies. The generalizations, moreover, evade a lot of contrary nuance. The Nordic countries are widely seen as more respectful of community values than the U. And many of their health and development outcomes outstrip ours. And the world economic meltdown of , with devastating development effects for tens of millions, was the result not of excessively collectivist values but the reverse.

At issue is also the distribution of power—justice as well as liberty. From the 12th-century Italian city-states, the narrative winds past the slave trade, expounds the virtues of migration, explores the ideas of Adam Smith and ruminates on the structure of technological innovation.

Supporting anecdotes include a Senegalese religious trading community, the Korean automotive industry and an evolving Manhattan neighborhood. It is hard to trust an author to command such a welter of detail. And indeed, the result is too often haphazard, self-contradictory or erroneous. For example, while the Maghribi traders are said to demonstrate self-sabotaging collectivist values, the Mourides, a modern Somali religious brotherhood that is organized along nearly the same principles, is cited to illustrate the virtues of migration. Easterly calls for a profound overhaul of the way powerful nations conceive of and implement aid—and, more important, of the broader foreign-policy decision-making of which aid is a component.

That change is needed. Yet, almost three decades after, Africa remains a veritable wasteland. Out of the 20 poorest countries in the world, 17 comes from the continent, including nine out of the top Poverty means the health system is weak, which means: Ethiopia has suffered periodic droughts and famines, a long civil conflict in the 20th century, and a border war with Eritrea. This brought millions to the brink of starvation in the s and s. About 29 per cent of the population lives below the national poverty line.

Ethiopia has enormous potential for agricultural development. At present only about 25 per cent of its arable land is cultivated, and agriculture is dominated by subsistence rain fed farming, using few inputs and characterized by low productivity. The vast majority of farmers are smallholders. These farmers are extremely vulnerable to external shocks such as volatile global markets and drought and other natural disasters.

Smallholder farmers form the largest group of poor people in Ethiopia. More than half cultivate plots of 1 hectare or less and struggle to produce enough food to feed their households. A large number of poor households face a prolonged hunger season during the pre-harvest period. Herders, like farmers, are vulnerable to increasingly frequent drought, which can wipe out their livestock and assets and bring on severe poverty.

The persistent lack of rainfall is a major factor in rural poverty. Drought has become more frequent and severe throughout the country over the past decade, and the trend shows signs of worsening. The impact of drought is most severe for vulnerable households living in the pastoral areas of lowlands and the high-density parts of highlands. In addition to their vulnerability to climatic conditions, poor rural people lack basic social and economic infrastructure such as health and education facilities, veterinary services and access to safe drinking water.

Among the more specific causes of rural poverty in Ethiopia are:. Households headed by women are particularly vulnerable. Women are much less likely than men to receive an education or health benefits, or to have a voice in decisions affecting their lives. For women, poverty means more infant deaths, undernourished families, lack of education for children and other deprivations. Ethiopia has an estimated 1. Rural areas have low prevalence rates, but available data suggest that the incidence could increase in these areas. With the support of development partners, the government has embarked on major programmes to combat the spread of HIV and AIDS, and assist poor rural households in coping with the social and economic consequences of living with the disease.

I use the word poor on purpose because although the word risks sounding patronising or dismissive, euphemisms like developing and less-developed can be worse. Poverty is the rule, not the exception. Poverty-as-rule-not -exception is difficult to bend our minds around because we tend to base our views about the world on direct experience. View original post 3, more words. These institutions keep poor countries poor and prevent them from embarking on a path to economic growth.

While having very different histories, languages and cultures, poor countries in these regions have similar extractive institutions designed by their elites for enriching themselves and perpetuating their power at the expense of the vast majority of the people on those societies. No meaningful change can be expected in those places until the exclusive extractive institutions, causing the problems in the first place, will become more inclusive.

We cannot expect loyalty to an unjust regime. The state and its elites must be subject, in theory and in practice, to the same laws that its poorest citizens are. I was always wondering about the most effective way to help move billions of people from the rut of poverty to prosperity. More philanthropy from the wealthy nations of the West? Therefore only the development of inclusive…. View original post more words. As the current economic growth did not result from value addition and increased manufacturing, but instead from increases in world commodity prices, it makes the region susceptible to commodity price volatility.

Even if commodity prices stay high, natural resources are not infinite and they must be managed with sagacity. The AIDA is a comprehensive framework for achieving the industrialization of the continent. If Africa can successfully steward its natural resource wealth, investing it wisely and using some to industrialize, then whether the resources run out or not or whether commodity prices fall, Africa would be on a good economic footing.

Industrialization will address many development gaps in sub-Saharan Africa. The answer is an emphatic yes. The phenomenal growth is one reason why Africa is ready, but growth on its own is not enough. Other conditions need to be considered: Does the continent have access to enough raw materials for production? What is the proximity of these natural resources to the continent? Is there adequate land, labor, and capital? These are the traditional factors of production or inputs to the production process.

Yes, Africa has access to the raw materials necessary for production. Unlike already industrialized nations who have to import raw materials from Africa and elsewhere over long distances, Africa enjoys close proximity to these resources. The average age of an African in Africa is under 19 years. This means Africa has enough manpower or labor to industrialize.

Capital refers to man-made products used in the production process such as buildings, machinery and tools. Africa does have a measure of this, but instead needs to do more in this area — hence the need for greater infrastructural and skills development. In fact, African policymakers as well as their counterparts in the developed world should realize that it is high time for a shift in the nature of aid to the continent — from primarily monetary aid to the type of capital aid needed for industrialization.

Finally, when Africa successfully undergoes industrial development, its huge populace will serve as a market for the outputs of its production processes; any excess supply can be exported and swapped for foreign exchange.

Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications
Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications
Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications
Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications
Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications
Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications
Economic Development: Theory and Policy Applications Economic Development: Theory and Policy Applications

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