Under colonial rule, group divisions had economic implications.
The post- independence society is dominated by some ethnic or religious groups.
In Malaysia and Indonesia ethnic Chinese have a disproportionate share of wealth.
Indian immigrants, brought in by the British as indentured labor, came to control a large portion of the business sector.
At the other end of the spectrum, many indigenous populations, such as those in Latin America, are among the least well off in the world, a situation that has sparked ethnically based political movements in several of these countries.
Civil conflicts in developing countries are often driven by economic concerns.
Politics can be complicated by ethnic and religious divisions.
In countries where populations are heterogeneous, the battle for political power often falls along ethnic or religious lines as each group seeks to gain control over the state in order to serve its own particular ends.
Each ethnic or religious group competes to get a piece of the state's goods and services.
This struggle is central to clientelism and patrimonialism, as each group competes to gain access to resources controlled by the state.
If groups fear losing access to resources if they lose elections, this can contribute to authoritarian rule.
In some countries, a majority or plurality of people may dominate politics, as people of European origin do.
A minority may control a large majority.
In Iraq, the majority of the population are members of the Shia sect of Islam, but those in power have traditionally been members of the Sunni sect.
Sunnis and Shias were at odds over control of the country after Saddam Hussein was deposed.
In the Syrian civil war, individuals from the Alawite sect of Islam have dominated political power and have been unwilling to relinquish it.
Economic and political interests are entangled with different social identities.
Economic and political difficulties that arise from such social divisions make the creation of a single national identity difficult and weaken the notion of citizenship-- that all individuals have a common political relationship to the state.
Many populations are less inclined to see the postcolonial state as a true representation of their group's wishes, and states themselves have little beyond the initial struggle for independence on which to build a shared political identity.
Disgruntled groups may try to create their own countries when ethnic and religious conflicts are bad.
The creation of South Sudan, which separated from Sudan due to a long civil war, was the most recent example of this.
They were administered as separate political entities under the British Empire.
Despite southern Sudanese opposition, Britain oversaw the unification of these two areas.
South Sudan's independence led to a civil war between two different ethnic groups.
The legacies of imperial ism have shaped gender and family.
Gender and family identities have been affected by rapid urbanization and the commercialization of agriculture, which favored male labor and property rights.
The structure can give women less power in family decisions.
It may lead families to view girls as a burden since they can't take care of their parents in old age, and they must be married off.
Families may be less willing to invest in their daughters if family sizes are decreasing.
At its most extreme, this favoritism can lead to death, such as female neglect or infanticide.
Political boundaries are imposed by imperial powers.
Vietnam, Pakistan, and other countries have faced similar issues, either through sex-selective abortions or neglect of girl babies.
Some scholars have already noted that violent conflict and crime in part results when there are a large number of unemployed and unmarried young men-- a worrying thought considering that some of the highest gender imbalances are found in the two most populous countries in the world, China and India.
Those who study developing countries focus on economic growth.
Economic progress is the first thing that comes to mind when we think of development.
These countries experienced rapid changes because of the power of the imperial powers, instead of undergoing economic modernization on their own terms.
Many of the countries that gained independence found themselves in a state of economic dependency on their former empire.
Since they often stressed the production of agricultural and other basic commodities in return for finished products, dependent relationships did not bode well for long term development.
The greatest concern for the developing countries after independence was breaking this cycle of dependent development.
Under import substitution, countries restrict imports to spur demand for local alternatives.
New businesses are built with state funds by creating parastatal industries.
Intellectual property rights are weakly enforced to tap into foreign innovations.
The hope is that these firms will be able to compete domestically and internationally.
After World War II, import substitution was taken up in Africa and parts of Asia.
State-supported firms could dominate the local market, but they were not as innovative or efficient as their international competitors.
It was thought that the harsh climate of the international market would quickly kill off the less competitive firms if these economies were to be opened up to the outside world.
Economies with large industries reliant on the state for economic support were unable to compete in the international market because of import substitution.
Such firms became a drain on state treasuries and a tempting resource for clientelism.
For states to build and subsidize their industries, they had to borrow from other countries.
The economy was stagnant because of uncompetitiveness and debt.
A middle income trap is a situation where a country's economic growth is not enough to catch up with developed countries.
Brazil and South Africa are examples of countries where rapid growth slows down before they reach high income status.
Not all countries pursued import substitution.
The innovator of a good makes it for the domestic market and then exports it to the rest of the world.
As this product spreads, other countries find ways to make the same good more cheaply or more efficiently and eventually export their own version back to the country that originated the product.
In South Korea, initial exports focused on textiles and shoes but eventually moved into more complex areas such as automobiles and computers.
The policy had its problems, as countries that pursued industrialization relied on high levels of government subsidies and tariffs.
This strategy has led to higher levels of economic development than can be achieved through import substitution.
The Challenges of Post- Imperialism was 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 800-273-3217 The question of why Latin America pursued a path of import substitution while much of Asia focused on export- led growth is an interesting puzzle, and one that we will turn to at the end of this chapter.
By the 1980s, many developing countries faced deep economic problems, including high levels of government debt.
Economic liberalization was a condition of support from organizations like the World Bank.
Since they reflect the policy preferences of institutions based in Washington, D.C., they typically required countries to privatize state- run firms, end subsidies, shrink the size of the state, and welcome foreign investment.
The benefits of these reforms have been mixed.
When we consider future directions for economic prosperity in the poorer countries, we will discuss this situation in greater detail.
Some of the common challenges faced by developing countries in building institutions that will generate economic development and political stability have been covered in Puzzles and Prospects for Democracy and Development.
Our discussion suggests that many of the developing world's challenges are insurmountable.
The developing world has seen dramatic improvements since independence.
In 1960, the average life expectancy in India was 43 years old, and in Brazil it was 54 years old.
In 1990, the infant mortality rate in Indonesia was 86 per 1,000; in 2015, it was 24.
Different parts of the world have had very different experiences when it comes to development.
Asia has done the best.
Many of these countries are experiencing rapid growth as well as a trend toward effective states and democratization.
In the last decade, several countries in Latin America have made great strides, despite slower economic growth and high levels of inequality.
There are three paths to economic growth.
State has a strong role to play in the economy.
Nontariff barriers are used to restrict imports.
Large industries reliant on the state for support and unable to compete in the international market were criticized for creating "hothouse economies."
It is based on mercantilism.
State has a strong role to play in the economy.
Domestic industries are protected by tariffs.
Integration directly into the global economy is sought.
Economic development has a higher level than import substitution.
It is based on liberalism.
Foreign investment is encouraged.
Follow import substitution.
Even here, there is progress.
Between 2005 and 2015, GDP in Africa rose by more than 50 percent.
Some of the major factors at work are now agreed on by scholars, though their assessments of how to solve the problems differ.
The interplay between ethnic divisions and borders is an important factor.
Economic and political instability can be linked to deep ethnic divisions.
It may be more difficult to forge a sense of national identity or national welfare when economic and political institutions are viewed as a means for one group to dominate others rather than as instruments to share power and wealth.
This difficulty in forging national identities can be compounded by borders, which can cause conflict by dividing ethnic or religious groups.
The conditions are difficult in Africa.
The resource trap theory of development argues that countries with natural resources are hampered from political and economic development because the state or political actors can rely on these resources and effectively ignore public demands or needs.
When combined with ethnic divisions, this strategy can further polarize politics since each group will seek to control assets at the expense of others.
While many natural resources are relatively scarce in Asia, they are a central part of African economies where timber, oil, and diamonds lead to conflict and generate revenue for private militias and civil war.
There is a question of governance.
This is the most important factor of the three and it is the hardest to get a handle on.
It is clear to scholars that obstacles can't be addressed unless there is an effective state.
The state needs to be able to establish sovereignty, resist corruption, and allow for the transfer of power between governments over time.
There is a lot of controversy in the policy realm because of this confusion.
Some possible solutions and the debates surrounding them will be looked at in the remainder of the chapter.
Over time, the view of the state as an aid or obstacle to development has changed.
In the postwar era, modernization theory focused on the importance of the state in economic and political development, seeing it as the source of industrialization and modern political identities.
Aid agencies and developed countries relied on states to be conduits for aid focused on large scale, top down development projects.
More than 3 trillion dollars has been spent on overseas development aid since 1960.
Many states failed to live up to expectations because of corruption.
Many large but inefficient states were abetted by foreign funds.
The Washington Consensus encouraged many developing countries to roll back state power, promote private industry, and limit regulation in the belief that market forces could succeed where states had failed.
The Washington Consensus viewed states as too big and interventionist, but others disagreed.
Smaller would not be better if basic public needs could not be met.
Reducing corruption, improving health care, and increasing economic growth require more effective state capacity.
How do we achieve this?
The developing world has a lot of variation in terms of pre- imperial, imperial, and post- imperial history, natural resources, ethnic diversity, and other elements.
It is difficult to create a common sequence of actions that will improve institutions and create more effective and accountable states.
How states can be made more effective depends on the institutions they work with.
None of these approaches are necessarily the "right" response.
Developing countries with a reasonable degree of capacity and autonomy may benefit from an emphasis on the rule of law.
All individuals and groups are subject to the law regardless of their power or authority, as we discussed in Chapter 5.
The rule of law is important in transitional countries that are moving from nondemocratic to democratic systems.
democratic practices are less likely to become institutionalized if the rule of law is not in place.
Rather than a system of democratic representation to serve the citizens as a whole, elections may function as a contest to gain control over spoils.
How to build the rule of law is a puzzle.
Those of the developed democracies where the rule of law emerged over a century or longer are of limited help.
International donors, think tanks, and aid agencies argue that building the rule of law requires judicial reform, including stronger constitutional courts, police, and civil service reform with tougher measures against corruption.
The goal is for the state to treat its citizens fairly.
Critics argue that policy makers confuse cause and effect.
The rule of law will not be created by institutional reforms, but by the emergence of norms.
Political elites need to show a commitment to reform.
This means not just new rules of the game, but also a commitment from political players that they will follow the outcomes.
Rule of law can't be institutionalized if individuals with political power are not willing to make changes.
In the late 19th century, a host of movements and organizations sprang up to fight for things like labor rights, women's rights, improved health and safety standards, and anticorruption.
The League of Women Voters and the American Red Cross were founded during this era.
The India against Corruption movement was founded in 2011.
Fostering social movements and nongovernmental organizations that embody and advance ideas such as impartiality and universal application of rights may need to go hand in hand with changes in political elites and the institutions they control.
Making developing states more effective is connected to institutionalizing the rule of law.
Political elites are important in that they need to get on board with the changes, and society is important in helping to articulate them.
Chapter 5 of civil society talks about organized life outside the state.
Civil society can accomplish several important things, such as binding people together, creating a web of interests that cuts across class, religion, ethnicity, and other divisions, as well as holding political elites accountable and forming a bulwark against the abuse of state power.
Civil society discussions often assume that when a society develops economically people will cultivate a more diverse array of interests, and this inevitably leads to civil society.
It doesn't give much guidance for how to consciously build civil society in countries that are less developed.
The lack of clarity around fostering organized political engagement is a legacy of the attention paid to the state by many development experts.
The World Bank, a major international development organization, has only recently begun to think about how people mobilize, and to what end.
They note that the discussion has tended to emphasize how to get around politics rather than how politics work.
Electricity theft can be solved with regulations, meters, and fines.
This ignores the bigger question of how to use civil society as a way to manage a public good and hold citizens, political leaders, and the state accountable to each other.
Unless the public believes in, trusts, and is part of the process, institutions that work well in developed countries cannot be expected to work in developing countries.
There are many examples of development projects that failed due to lack of public legitimacy.
According to research, accountability is key, that is, monitoring how political leaders and the state are delivering public goods.
There has been a lot of interest in promoting civil society in developing countries, but advocacy groups often don't focus on institutional reform.
Civil society is promoted as a way to manage local issues that have been neglected by the state.
It is not surprising that experts from developed democracies would promote the kinds of changes that are under way in their own countries because this emphasis on the role of local politics is very much consistent with our discussions of devolution in Chapter 8.
To be effective, local engagement needs to hold individuals and institutions accountable all the way up to the national level.
This may seem like a tall order; however, the widespread penetration of mass media and electronic communication can allow for effective engagement, increasing the public's political efficacy.
They go hand in hand.
A state is not likely to reform without both leadership and pressure.
Political engagement doesn't mean better politics.
Political leaders can buy off local groups in return for political support if they choose to target organized groups.
Civil society can overwhelm a state if it can't meet public demands.
Interwar Germany is an example of a country with a vibrant civil society alongside a weak state, and the Soviet Union is another example where growing civil society did not simply bring down the regime but fractured the state as well.
We should not conclude that development strategies can be carried by society alone, as we should not look to the state as the sole instrument of development.
The interaction between political engagement and institutional reform is emphasized in our discussion of states and societies in developing countries.
There are many Puzzles and Prospects for Democracy and Development 331 people who would put economic development front and center.
Our argument is that a primarily economics- based approach, which has dominated development strategies for decades, has been ineffective due to a failure to focus on political institutions.
The nature of markets and property is an important aspect of the problem.
In this chapter, we discussed the differences between import substitution and export oriented industrialization.
The majority of workers who work in local service, agriculture, or manufacturing are not accounted for by these strategies.
The informal economy is usually dominated by small businesses, such as an individual street vendor or a family that makes or repairs goods out of their home.
The informal economy may represent half of a country's GDP, and women play a large role.
A majority of women working outside the agricultural sector are part of the informal economy, according to some research studies.
There are opportunities for work in the informal economy.
It raises the question of why informal economic activities are stronger in developing countries than in more developed ones.
Weak states that are unable to regulate the economy or prevent corruption are often associated with informal economies.
The state may be bureaucratic but unable to provide oversight of property or markets where the rule of law is strong.
State and government officials often use their authority to demand bribes from business owners to ease their way through regulations.
The challenge for states to generate revenue is that an informal economy is more difficult to tax.
State weakness in managing markets and property makes it hard for businesses to scale up into larger firms.
There is a difference between these terms.
Credit, savings, insurance, and financial transfers are covered by Microfinance.
Microcredit is often funded through nonprofit organizations, and in some cases the borrower is also held accountable to other borrowers in a local association, in 332 CHAPTER TEN #DEVELOPING COUNTRIES that a failure of one individual to repay limits further loans that can be taken out by the members The desire for members to vet loans increases with this system.
Microcredit has expanded with globalization, and now organizations like the U.S.-based Kiva allow individuals around the world to make loans to people in need.
The bank has lent over $800 billion to over 2 million individuals and is modeled after Bangladesh's Grameen Bank, whose founder, Muhammad Yunus, won a Nobel Peace Prize in 2006
Critics of microcredit note that there is little evidence as to its effectiveness.
Studies in India showed that poor communities that had access to microcredit did not see a drop in poverty or an improvement in outcomes like education, health care, or women's empowerment.
They are not a means for firms to grow and take on employees, which is a critical step in development and the creation of a middle class.
Some suggest that focusing on larger scale projects is what is required if micro- level solutions are not the way to go.
Microcredit and the Millennium Villages are controversial examples.
The Villages' 14 small communities were given targeted interventions to improve their lives, ranging from changes in crop production and improved education to the distribution of bed nets to reduce Malaria.
The idea was that successes could be expanded to new communities.
The project cost about 120 million dollars, but is far below the trillions that have been spent on global development aid over the past decades.
There is a great debate about the findings.
There is a surprising problem with the comparative method that we talked about in Chapter 1.
The Millennium Villages needed to be compared with similar communities that did not have such intervention.
One report noted the rapid rise of mobile phone use in the Millennium Villages without noting that this had occurred at the same rate across sub- Saharan Africa as a whole.
The rise of Asia over the past four decades and foreign investments that concentrated as a global exporter, producing increasingly on the production of consumer goods for the sophisticated goods over that time, presents small upper and middle classes rather than an interesting puzzle.
Argentina's per capita GDP was higher than South Korea's or Taiwan's because the United States viewed Asia as under and Brazil's per capita GDP was higher because of communism.
The GDPs of Latin American countries were limited by the preferential trade agreements, but the GDPs of the South led the growth.
Latin American markets were influenced by Western values of $33,000 and $40,000.
Asia's drive toward industrializacountries came from behind and grew so fast that it was fueled by state wealth.
A simple explanation of why the regions' economies developed, such as a correlation between so different, doesn't account for a country's democracy and economic growth.
Most of the early twen did not work, since all of the states were tieth century and foreign investment was limited.
Asia's faster growth is the second argument.
According to one person, the politics and institutions within these ment are called "geostrategic regions".
One area that has attracted a great deal of attention is land ownership and land and Asia's relationship to the reform.
In many countries, agriculture is a political and economic force.
The case where agriculture takes the form ships shaped thisinstitution.
Much of the twentieth century has been described as neo population works land they do not own because of the large landholdings of the U.S.
States were able to prevent the develop autonomy.
The interests of landed elites and being competitive in world markets hold back industrialization and urbanization.
Latifundia economies remained in Latin America as landed elites continued to dominate economic and political institutions.
Some factors seem significant.
The first steps the state took after gaining strength in Latin America were to create widespread agriculture and break the landed elites' regions.
The desire to stave tion of institutions and policies may be the reason for the peasant- backed communist revolutions in Asia and Latin America, as well as the different paths of development in China and North Korea.
The critical issue here is the role of political elites in bringing the old feudal order to an end.
Latin America versus state investment in this argument has flaws, however, what role did foreign direct investment in of our first possible explanation?
Many Latin American couns influence both the Asian countries' rela tries and develop a significant industrial base with the United States even in the absence of land reform.
It is nearly impossible to evaluate the effectiveness of the Millennium Villages relative to their surrounding communities according to Puzzles and Prospects for Democracy and Development 335.
The dilemma plagues governments, international actors, and citizens alike.
States are necessary to support and protect economic development, but in many developing countries they lack capacity and are one of the biggest obstacles to progress.
A common response to the challenge is to use grassroots funding to improve conditions in the village.
The approaches don't address how to take advantage of any successes they might achieve.
It's easy to draw bad conclusions from our discussions so far.
Many wonder what progress has been made after various attempts to improve institutions in developing countries.
We can point to steps in the right direction that are focused on methodology.
One major concern is that hardly any comparative research has been done in trying to control variables and look for relationships.
States and international agencies have done relatively little comparative research to assess what kinds of policies can work and under what conditions.
Scholars are studying development strategies before, during, and after they are implemented to see if they are similar to other cases.
Most of the developing countries share the legacies of imperial rule.
Challenges were created by the fusion of local institutions with those of the imperial powers.
Weak states, conflicts over ethnicity, nation, religion, and gender, and incomplete and distorted forms of industrialization all contributed to instability, authoritarianism, economic difficulties, and overall low levels of freedom and equality.
Some countries have overcome obstacles, but it's not clear if their strategies and experiences can be used elsewhere in the world.
There isn't a consensus on how to tackle the most pressing problems in the world.
Ambitious top- down goals and a recommitment of foreign aid have been advocated by some.
Aid interventions are effective according to others.
We don't have a lot of hard evidence about what works and what doesn't.
The situation suggests that we should focus on policies where we can control our variables in order to evaluate what works.
globalization, which we will turn to in the next chapter, will shape future development.