Shaping the Developing World The West, The South, and the Natural World Andy Baker University of Colorado atooulder OSAGE I Los Angeles London New Delhi Singapore Washington DC
Contents Tables, Figures, and Maps Preface XIII xxii XXV PART I INTRODUCTION 1 Underdevelopment and Diversity in the Global South 3 Defining the Developing World 5 Naming the Developing World 5 Delineating the Developing World 6 Economic, Social, and Political Characteristics 8 Economic Characteristics 8 Understanding Indicators: Measuring Prosperity with Gross Domestic Product 10 Social Characteristics 11 Political Characteristics 12 A Brief History of Economic Development 15 The Pre-Industrial Eras 15 The Industrial Revolution 15 Modern Economic Growth in the Developing World 16 Goals and Organization: Who or What Causes Global Poverty? 18 Causes of Underdevelopment: A Framework 19 Organization of the Book 20 Case Study: Why Is the Democratic Republic of Congo the Poorest Country on Earth? 21 The South: Kleptocracy and Cultural Fragmentation 22 The West: Stolen Aid, Colonial Abuses, and Slavery 23 The Natural World: Geography and the Resource Curse 24 Thinking Critically about Development 25 Key Terms 25 Suggested Readings 25 Web Resources 26 2 Human Development and Underdevelopment 29 Defining Human Development 30 The Human Development Approach 30 The Complex Relationship between Economic and Human Development 31
Developing World Health Snapshot: Description and Causes of the Developing World's Deficit Key Health Indicators: Life Expectancy and Child Mortality ^ 31 Development in the Field: Humanitarian Groups in Health and Education 32 The Immediate Causes of Poor Health Outcomes 34 Health Trends: Tracking Improvements in LDCs 39 Longer Lives 40 Causes of Convergence: The Declining Cost of Good Health 40 Education Snapshot: The Nature and Causes of the Developing World's Deficit 41 Key Education Indicators: Attainment and Achievement 42 The Immediate Causes of Poor Educational Outcomes 43 Education Trends: Tracking Improvements in LDCs through Time 45 Higher Enrollments and Better Quality 45 Causes of Convergence: Better Government and Parental Commitment 45 Understanding Indicators: The Human Development Index 47 «Case Study: What Are India's Challenges and Successes in Human Development? 48 Health and Education Challenges 49 Health and Education Successes 50 Thinking Critically about Development 51 Key Terms 52 Suggested Readings 52 Web Resources 52 3 The Benefits and Costs of Economic Development 55 The Cultural Costs of Development 56 The Cost: The Westernization and Homogenization of Cultures 56 The Cost: Deteriorations in Social Connectedness and Personal Character 57 The Response: Prosperity as a Universal Desire 57 The Response: Minimal or Beneficial Cultural Change 58 The Equity Costs of Development 59 The Cost: Deepening Global Inequality 59 Understanding Indicators: Measures of Income Inequality 60 The Cost: Deepening Domestic Inequalities 61 The Response: The Complex Relationship between Development and Inequality 62 The Environmental Costs of Development 64 The Cost: Environmental Degradation 65 The Response: The Benefits of Development for the Environment 66 The Psychological Costs of Development 68 The Cost: Insecurity, Alienation, and Unhappiness 68 The Response: Revisiting the Ethics and Evidence on Happiness 69 «Case Study: Has Economic Growth Brought Happiness to China? 71 The Gains 72 The Costs 72 Thinking Critically about Development 75 Key Terms 75 Suggested Readings 75 Web Resources 7g
Table PART II [ THE WEST: INTERNATIONAL CONTEXTS 4 Slavery and Colonialism 79 The Atlantic Slave Trade 80 The Triangular Trade 80 Features of the Trade in Africa 80 Features of the Trade in Latin America 81 Causes of Underdevelopment: The Long-Term Damage of Slavery 82 Consequences for Africa 82 Development in the Field: Anti-Trafficking Organizations 84 Consequences for Latin America and the Caribbean 85 Critique: Questioning the Magnitude of Slavery's Legacy 85 Western Colonialism 86 The Importance of the Western Colonial Era for the Contemporary South 86 A Brief History of the Western Colonial Era 87 Causes of Underdevelopment: Western Colonialism's Consequences 91 The Colonial Drain 92 Colonialism's Institutional Legacy 93 Colonialism's Cultural Legacy 94 Critique of Colonial Legacy Arguments 95 Case Study: Do Slavery and Colonialism Explain Nigeria's Development Failure? 97 The West: Slavery and Colonialism's Consequences 97 The South: Domestic Problems in Independent Nigeria 99 The Natural World: The Burden of Geography and the Paradox of Oil Wealth 100 Thinking Critically about Development 101 Key Terms 101 Suggested Readings 101 Web Resources 101 5 Globalization and Neocolonialism 103 From the First Global Century to Import Substitution 104 The First Global Century 105 The ISI Phase 106 Export Promotion 107 Causes of Underdevelopment: Dependency and Other Early Theories of Global Exploitation 108 Latin American Structuralism 108 Dependency Theory 110 World Systems Theory 111 Falling Behind in the First Global Century 111 Critiques of Structuralism, Dependency Theory, and WST 112 Reintegrating the Globe 114 Trade Liberalization 114 Capital Market Liberalization 115 Changing Migration Flows 116
Developing World Causes of Underdevelopment: Newer Concerns about Globalization 116 Deindustrialization Sweatshops and the Race to the Bottom 117» Development in the Field: Promoting Fair Trade 118 Volatile Capital Flows H Foreign Debt ^ Brain Drain 120 Critique: Defending Globalization 120 The Benefits of Free Trade 120 Labor Exploitation or Enrichment? 121 The Nature of Foreign Debt 122 Brain Gain 122» Case Study. Is Neocolonialism Why Brazil Is Always the "Country of the Future"? 123 The West: Failures of Openness 123 The South: Shortcomings of Domestic Institutions 125 The Natural World: The Illusion of Abundance 126 Thinking Critically about Development 127 Key Terms 127 Suggested Readings 127 Web Resources 128 6 Foreign Aid and the Bretton Woods Institutions 131 Foreign Aid 132 Understanding Key Concepts and Players in the Aid Regime 132 A Brief Flistory of Foreign Aid 134 Understanding Indicators: Classifying Official Development Assistance 136 Causes of Underdevelopment: The Case for Aid Skepticism 137 Donor Motives 137 Development in the Field: Millennium Development Goals 138 Donor Paternalism and Lack of Accountability 139 Donor Fragmentation and Aid Volatility 139 Recipient Absorptive Capacity and Governance 140 Recipient Economic Problems 141 Critique: Defending Foreign Aid and Its Record 141 Theoretical Defenses 142 Foreign Aids Many Successes 142 The Aid Trickle 142 Learning from Past Mistakes ] 43 The Bretton Woods Institutions: The IMF and the World Bank 144 A Brief History of the IMF and World Bank 145 Causes of Underdevelopment: Imposing Market Fundamentalism 147 Foisting Capitalism on the Developing World 147 Other Criticisms 14g Critique: Defending the Bretton Woods Institutions 149 Loans and Conditionalities as a Choice 149 The Ethics of Conditionalities 150 The Case for Market Policies 150 Case Study: Has Foreign Aid Made Pakistan Poorer? 151 The West: The Failures of Aid and the IMF 151
Table of Contents The South: The Worst of Continuity and Change The Natural World: The Paradox of Flooding amidst Dryness Thinking Critically about Development Key Terms Suggested Readings Web Resources 153 154 155 155 155 156 PART III THE SOUTH: DOMESTIC FACTORS Culture and Identity 159 Understanding Culture and Social Identity 160 Social Identity 160 Other Cultural Traits 163 Causes of Underdevelopment: The Culturalist School 164 Max Weber and the Protestant Ethic 164 Modernization Theory 165 Social Capital and Trust 166 Religion and Natural Culture 167 Critique of Culturalist Claims 169 Culture as Consequence, Not Cause 169 Mischaracterizing Culture in LDCs 170 Mixed Evidence 171 Cultural Relativism 172 Causes of Underdevelopment: The Costs of Cultural Diversity 172 Underprovision of Public Goods and Fragmented Markets 172 Poor Governance and Conflict 173 Stereotype Threat 174 Critique: Diversity as Consequence, Not Cause 174 Understanding Indicators: Measuring the Degree of Cultural Diversity 175» Case Study: Are Iraqis Poor Because of Islam and Ethnic Cleavages? 177 The South: Islam and Sectarian Divisions 177 The West: The British Mandate and War with the United States 179 The Natural World: Oil and Sand 180 Thinking Critically about Development 181 Key Terms 181 Suggested Readings 181 Web Resources 181 States, Markets, and Development Models 183 State-Led Development 184 State-Led Development in Thought 185 State-Led Development in Practice 186 Causes of Underdevelopment: Failures of the State-Led Model 189 Critique: Successes of State-Led Development 190 Socialism 191 Marxist Thought 191 Socialism in Practice 192 Causes of Underdevelopment: Failures of Socialism 193 V' 4
xviii Shaping the Developing World Critique: Socialism's Successes 194 The Market-Oriented Strategy 195 Neoclassical Economic Thought 195 The Market-Oriented Strategy in Practice 197 Causes of Underdevelopment: Shortcomings of the Market-Oriented Strategy 199 Disappointing Results 199 «Understanding Indicators: Gauging State Intervention in the Economy 200 State Capitalism Critique: Successes of the Washington Consensus ^ ^ 201 Success Stories ^02 Debating State Capitalism 202 Case Study: Did India's Postcolonial Development Model Delay Its Economic Rise? 203 The South: India's State-Led Development Model 203 The West: Exploiting the "Jewel in the British Crown" 205 The Natural World: Topography and Transport Costs 206 Thinking Critically about Development 207 Key Terms 208 Suggested Readings 208 Web Resources 208 Economic Institutions and Informality 211 Property Markets and Informal Ownership 212 Urban Slums and Rural Land 213 Causes of Property Informality 213 Causes of Underdevelopment: Informal Property Markets 214 New Institutional Economics and Property Rights 214 Dead Capital 215 Critique: Is Formality Worth It? 216 Informal Work, Firms, and Finance 217 Labor and Business Informality 217» Understanding Indicators: Measuring the Informal Economy 219 Causes of Labor Informality 220 Financial Services 22 I Causes of Underdevelopment: Challenges of Informal Firms and Finance 223 The Drawbacks of Informal Work 223 Shortcomings of Informal Finance 225 * Development in the Field: Microfinance Institutions 226 Critique: Formalization as a False Solution 227» Case Study: Does Informality Explain Peru's Delayed Development? 228 The South: Informal Economic Activity 228 The West: Spanish Colonialism and British Neocolonialism 230 The Natural World: Pizarro Wins the Lottery 231 Thinking Critically about Development 231 Key Terms 232 Suggested Readings 232 Web Resources 232
Table of Contents xix 10 Political Institutions and Governance 235 Political Regimes 236 Democracy 236 Authoritarianism 238 Hybrid Regimes 241 Political Instability and Regime Change 242 The Relationship between Political Regimes and Prosperity 242 Democracy's Third Wave 244 The Judiciary and the Bureaucracy 245 Rule of Law 245 Corruption 246 State Capacity 246 Judicial and Bureaucratic Quality around the World 247 Causes of Underdevelopment: Bad Political Institutions 247 Understanding Indicators: Measuring Regime Type and Governance 248 Extractive Institutions 250 Inclusive Institutions as the Solution 252 Development in the Field: Democracy Promotion 253 Critique of NIE 254 Economic Development First 254 The Authoritarian Advantage 255 Mixed Evidence 255 Case Study: Does China's Authoritarianism Explain Why It Is Poorer Than the West? 256 The South: Serial Authoritarianism 256 The West: A Century of Humiliation 259 The Natural World: Inhospitable Terrain 259 Thinking Critically about Development 260 Key Terms 261 Suggested Readings 261 Web Resources 261 11 Violence and State Failure 263 Political and Criminal Violence 264 Political Violence 264 Criminal Violence 266 State Failure 268 Understanding Indicators: Measuring State Failure 269 Causes of Underdevelopment: The Costs of Violence and State Failure 271 The Costs of Armed Conflict 271 The Price of Criminal Violence 273 Critique: Reconsidering the Costs of Violence 274 Development in the Field: Violence Prevention and Post-Conflict Recovery 275 «Case Study: Is Somalia Poor because of Civil War? 276 The South: Civil War in the World's Least Governed State 277 The West: The Legacy of Foreign Intervention 278 The Natural World: Climate and Nomadism 280 Thinking Critically about Development 280 Key Terms 281 Suggested Readings 281 Web Resources 281
xx Shaping the Developing World 12 Gender Inequality Understanding Indicators: Measures of Gender Equity and Empowerment Female Empowerment The Gender Earnings Gap The Gender Gap in Education The Gender Gap in Political Empowerment Causes of Underdevelopment: Disempowered Women and Girls Women in Development Women as Agents of Human Development Women as Decision Makers Critiques of the Instrumentalist View Female Health, Physical Security, and Fertility Excess Female Mortality and Missing Women Gender-Based Violence Reproduction and Fertility Causes of Underdevelopment: High Fertility Development in the Field: Aid for Female Empowerment Critique: Doubting the Costs of High Fertility Case Study: Is Afghanistan's Treatment of Women the Cause of Its Poverty? The South: Mistreatment of Women and Girls The West: Legacy of a Global Pawn The Natural World: Dry Mountainous, and Landlocked Thinking Critically about Development Key Terms Suggested Readings Web Resources 283 284 285 285 288 289 291 291 292 293 293 294 295 296 298 299 301 302 303 303 305 306 306 307 307 307 PART IV I THE NATURAL WORLD: PHYSICAL GEOGRAPHY 13 Geography and Economic Prosperity Geographic Commonalities of the Developing World The Tropics Other Commonalities Causes of Underdevelopment: Physical Geography and Climate The Tropical Disadvantage Development in the Field: Tackling Malaria Guns, Germs, and Steel Natural Barriers to Economic Exchange Critique of Geographical Determinism Critique of Jeffrey Sachs Critique of Jared Diamond Overcoming Distance The Resource Curse Causes of Underdevelopment: Natural Resources Dutch Disease and a Lack of Industry Effects on Politics 309 310 310 311 312 312 313 315 316 318 318 319 320 320 321 321 322
Table of Contents xxi Critique: A Resource Blessing? Case Study: Is Geography Destiny in Mexico? The Natural World: Mexico's Geographical Disadvantages The West: Colonial and Postcolonial Exploitation The South: Instability and Autocracy Thinking Critically about Development Key Terms Suggested Reading Web Resources 323 324 324 326 327 328 329 329 329 14 Environmental Change and Development 331 Communal Environmental Problems 332 Degradation of Natural Capital 332 Why Community Environmental Problems Are Worse in LDCs 334 Causes of Underdevelopment: A Malthusian Trap 337 Understanding Indicators: The Environmental Performance Index 338 Critique: Recent History versus Neo-Malthusianism 340 Climate Change and Development 341 Causes of Underdevelopment: The Economic Burden of Climate Change 343 Critique: An Exaggerated Threat to Development? 345 Development in the Field: Environmental Activism for Development 347 Case Study: Will Malthusian Traps End Indonesia's Rise? 348 The Natural World: Indonesia's Malthusian Crisis? 348 The South: Poor Governance and Female Disempowerment 350 The West: Pathologies of Globalization 350 Thinking Critically about Development 351 Key Terms 352 Suggested Readings 352 Web Resources 352 Appendix: Country Codes 353 Notes 355 Glossary 372 Image Credits 379 Index 380 About the Author 391