Unit 3: The (im)possible replication of state success. What role for development aid?

In 1997 the World Bank introduced its World Development Report (WDR) as follows. “This report shows that the determining factor behind these contrasting developments is the effectiveness of the state” (WB, 1997: 1). This statement was not an isolated one, but took place in the middle of the apogee of the good governance paradigm in development .
In the aftermath of the Cold War, the word governance was re-coined and good governance rapidly became part of the development jargon to the detriment of good government, to broadly mean the institutional political arrangements which better work for economic development . Governance actually emptied government of its political content, so as to transform political recommendations, that could potentially be seen as intrusive and non respectful of states’ sovereignty, into apolitical technical recipes centered on formal arrangements and institutions. This de-politization is often explained through the fact that the Bank’s articles of agreement do not allow it to allocate funding according to political criteria (Leftwich, 2000: 105-106; Moore, 2006: 51) This being true it is also part of a broader picture: we cannot lose out of sight that, at the time, the scrupulous respect for state sovereignty and the non interventionism in States’ internal affairs still were, at least formally, fundamental principles of international relations.
Since the Bank could not overtly talk about power and politics, its role was limited to assessing formal institutions and proposing recommendations to improve them. The way of approaching political institutions by the Bank is well epitomized by the main WB’s governance diagnosis tool: the Country Political Assessment Framework
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:21378540~menuPK:2626968~pagePK:51236175~piPK:437394~theSitePK:73154,00.html
The CPIA is organized around the analysis of four dimensions -economic management, structural policies, policies for social inclusion/equity, public sector management and institutions- each having a number of sub-dimensions which are quantitatively valuated for each country so as to construct composite indexes per dimension and country.

Indexes as analytical tools pose a fundamental problem: they offer a fixed picture, which does not incorporate time in the analysis, in other words, they are a-historical. No research is undertaken about the causes of these governance indicators in specific countries through historical analysis, or, at least, this is not disclosed. CPIAs of one year for a country do not refer to previous CPIAs so as to least assess trends. States are compared with each other and ranked within the same year. This comparison among states is made on the basis of quantitative measures assigned to complex dimensions of dubious consistence. With this kind of diagnosis it is not surprising that the results yielded by this approach are scarce even according the World Bank (The World Bank and Governance. The Bank’s Efforts to Help Developing Countries Build State Capacity (de Janvry y Dethier, 2012)

There are two strains of thought that have tried to correct this essential shortcoming of the good governance approach: The political development school -more oriented to answer why States fail and focused on Sub-Saharan Africa- and the developmental state school -more oriented to inquire why states are successful and centered on East Asia-. Both schools take a historical perspective of state formation, moving away from the political asepsis and context blindness of the World Bank.
The political development school represented, amongst others, by Mick Moore and Vernon W. Ruttan, takes as a point of departure the existence of “really poor performers” and/or politically under-developed countries who are “unable to rule many of their nominal citizens or to pursue any kind of collective interest in an authoritative fashion – and arbitrary despotic and uncountable” (Moore, 2001: 386).
According to their analysis, unequal power relations between the North and the South, and rapid decolonization processes left behind newly born states with no solid centralized authority -politically underdeveloped-. Most of these new states survive solely on their external legitimacy, fuelled by what Moore calls unearned state income which is equal to funds not coming from taxing but from external sources such as, amongst others, aid, natural resources rents, and criminal networks. This has acted as a disincentive for the construction of internal legitimacy, disconnecting rulers from the ruled, and perpetuating fragility and failure (Moore, 2001).

According to Adrian Leftwhich a developmental state is ‘a state capable foster(ing) economic growth by a variety of active state measures of involvement, and also provide the social policy to generate and sustain the legitimacy which such a state requires, whether democratic or not’ (Leftwhich, 2008: 17). Fritz and Menocal define them as follows: ‘we understand a developmental state to exist when the state possesses the vision, leadership and capacity to bring about a positive transformation of society within a condensed period of time. (Fritz and Menocal, 2007: 533).

The origin of the developmental state concept is the successful experience of a handful of Asian countries that have achieved sustained development in a short period of time (Fritz and Menocal, 2006: 3; Leftwhich, 2008: 12). Whether there are developmental States out of Asia or not remains debatable: Lockwood describes Botswana, Tanzania, Uganda, Ghana and Mozambique as African successful stories, but he recognizes that they are far from qualifying for developmental states, since their process of political power concentration is unachieved and their industrialization degree is low (Lockwood, 2006: 100-120). Leftwhich qualifies Botswana, Finland and Mauritius as developmental States, and Fritz and Menocal add Brazil (Fritz and Menocal, 2007: 9). However the criteria are not clearly established.

The specific feature of developmental states is an efficient, meritocratic bureaucratic system led by a results-oriented elite, both acting independently from particularistic societal interests (Fritz and Menocal, 2006: 6). The authors attribute the causes of its appearance to “Japanese colonization, the invasion of Taiwan by the Kuomintang, the US-Vietnam War, the Chinese revolution and similar shocks” (ibidem: 9). These events are said to have weakened the traditional elites and promoted state effectiveness and power concentration in the context of external threats, an account which reminds us to the one of the emergence of the modern European state, suggesting a causal link between conflict and state effectiveness. In a different paper the two authors point to a second essential characteristic of the developmental state: industrialization. (Fritz and Menocal, 2007: 533). The East Asian Tiger have successfully built an export oriented economy based on the electronic sector, that has facilitated capital accumulation and economic take-off. Economic growth and decreasing poverty have legitimated these states internally allowing for long-lasting peace and prosperity in spite of their authoritarian character.

Conclusion

Both the developmental states school and the political underdevelopment school point that successes and failures of the state may only be explained through history. This has two major implications for the development agenda: (i) The good governance agenda is condemned to failure because it is a-historical in its diagnosis, and naive in its recommendations. No political change leading to better government can be promoted in without a historical perspective of why the state is as it is and an analysis of power constellations within the society. Hence, to assume that the right formal institutional arrangements will produce the right results is naive. (ii) If state effectiveness and state failure are historical processes very much related to war, revolutions and conflict, Fritz and Menocal seem to indicate for East Asian tigers and was the case with European countries, is it possible and/or desirable to replicate them? Are there cases in history that support the claim that foreign aid may be of use?

References:
World Bank (1997) World Development Report. The State in a Changing World, The World Bank and Oxford University Press, Washington DC available at http://wdronline.worldbank.org/worldbank/a/c.html/world_development_report_1997/abstract/WB.0-1952-1114-6.abstract
De Janvry, Alain, Dethier, Jean-Jacques (2012) The World Bank and Governance. The Bank’s Efforts to Help Developing Countries Build State Capacity, The World Bank Development Economics Department Research Support Unit.
Fritz, V. and Menocal, A. R. (2007), ‘Developmental States in the New Millennium: Concepts and Challenges for a New Aid Agenda’ in Development Policy Review, 25(5): pp. 531-552
Leftwhich A. (2000) States of Development: On the Primacy of Politics in Development, Polity Press, Cambridge.
Leftwhich, A. (2008) ‘Developmental states, effective states and poverty reduction: The primacy of politics’ UNRISD, Geneva.
Lockwood, Michael (2006), The State they’re in: An agenda for international action on poverty in Africa, Rugby: Intermediate Technology Publications Ltd.
Moore, Michael (2001), ‘Political Underdevelopment: What Causes ‘Bad Governance’ in Public Management Review, 3(3)

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