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We Need Another Model for
Development
Ashok Khosla
O ver
the past fifty years, the world as a whole has made undeniable, and
often quite dramatic, "progress" on many fronts. People in scores of
countries have attained unprecedented levels of health, wealth and
knowledge. Diseases that were for millennia the scourges of whole
nations have been conquered. Food production has grown to levels
unimagined even a few decades ago. An ever growing range of products
from industry is accessible to an ever growing range of customers.
And cheap sources of energy have made possible facilities for travel
and communication that enable large numbers of people to acquire
knowledge and live a life of convenience and comfort on a scale
never known before.
However, the flip side of this development
coin presents a very different tale. The forests, rivers and soils
of large parts of the world have experienced greater and more rapid
deterioration in the past few decades than they had over the
preceding thousands of years. Species are becoming extinct at a rate
that is rapidly approaching levels comparable to those of the mass
extinction that wiped out the dinosaurs. Climate change caused by
human activity is now one of the top items on the international
agenda. These pressures on the Earths natural resources have been
extensively documented in The Environmental Data Reports of the UN
Environment Programme and by other international agencies.
The negative impacts of "development" are not
confined to environmental issues alone. There is perhaps more
alienation today with the accompanying proliferation of drugs,
crime and violence, often manifested as acts of terrorism and ethnic
aggression which are the daily subjects of newspaper headlines all
over the world. More pervasive though possibly less visible is
the deprivation left behind by the process of development: poverty,
hunger, vulnerability, indebtedness and rapid population growth.
UNDPs annual Human Development Report presents data showing the
decline of social capital, particularly in developing countries, and
the alarming growth in economic disparities throughout the world.
Much of the "progress" we have made has, thus,
been achieved at the expense of natural and social capital which
have diminished precipitously as a result. Unprecedented creation of
wealth has gone hand in hand with unprecedented expansion of
poverty.
International recognition of the gravity of
these issues was first expressed in the convening of the United
Nations Conference on the Human Environment at Stockholm in 1972,
which engendered a two decade long series of world conferences on
environmental and social issues culminating in the Earth Summit at
Rio de Janeiro in 1992. The decade since the Earth Summit has
continued to witness a growing international debate on these and
related issues, including the Millennium Summit in New York in 2000
and the World Summit on Sustainable Development at Johannesburg.
The Context of Development Planning
and Implementation
Experiences with planning and implementation
of development programmes differ, of course, from country to
country. There have certainly been projects over the years that can
be counted, by any standards, as success stories. However, there are
many others that cannot, and it is important that the international
community derive whatever lessons it can to enable it to design more
effective strategies for the future.
A few generalizations are possible regarding
some of the basic attributes of development programmes as practised
through much of the developing world. There exists a broad
consensus, based on analysis of numerous development projects, that
a large part of past development activity can be characterized as
being:
By and through Governments:
In most developing countries, the responsibility for planning and
executing action for national development rests almost entirely with
governments, public sector organisations and external agencies
employed by the government. This often leads to inappropriate design
of development action and assignment of inappropriate roles,
government taking responsibility for activities better done by
others.
Top down:
This means that decisions are often made and legitimized without
adequate participation of the people affected by them.
Narrowly Sectoral:
Designed as projects (see below), most
development activity ends up by having a narrow, short-term focus,
often in conflict with the requirements of sustainable development.
Inflexible:
Organised and executed by
bureaucratic systems that are heavily constrained by poor
professional motivation, fear of innovation, aversion to risk, the
tyranny of rigid budget lines and the artificial deadlines of
financial year-ends, it becomes difficult to introduce much
imagination into development projects.
Externally driven:
Because of both the inadequate
availability of local expertise, and the plentiful availability of
external funding, many governments have relied heavily on expatriate
consultants to formulate their economic development plans.
Moreover, such development activities almost
never leave behind:
Local ownership of assets:
If the local "beneficiaries" have
not contributed to the design or implementation of development
action, it is only understandable that they are often alienated from
the results which they sometimes proceed to undermine or not use.
Capacity for the future:
When there is little involvement of
local people or sense of ownership among them, there is little
possibility for building up local capacity to innovate, incubate or
multiply solutions for their remaining needs.
The Project Mode of Implementation
No matter what the conceptual basis of
development policy is at any time, most development action,
particularly that funded by overseas sources, is implemented in the
form of projects. This, in itself is not always or necessarily
undesirable. The project is an excellent, logical framework for
achieving stated goals. A well designed project clearly defines the
outputs expected and the inputs, in terms of money, resources and
time, needed. Before starting, or even before a decision is made to
undertake the project, the outputs and inputs can be appraised to
determine the worthwhileness of the project. During implementation,
the project documentation helps different actors dovetail their
contributions efficiently and effectively. Well executed projects
can provide for a high level of transparency and accountability,
both essential in any development activity.
Despite the demonstrated value of the project
as a means of working towards development goals, however, and the
long-standing reliance of most development agencies on it, one must
also recognize the limitations of this approach. Some of these
limitations can, unfortunately, pose severe barriers to the
attainment of goals critical to making development sustainable.
Whether these limitations are general inherent and integral to the
project as a device for implementation or are specific to a
project for example, simply the result of poor project formulation
they are so pervasive that one must accept them as inseparable
from the very idea of a project.
Although the project mode of implementation is
amenable to participatory decision making, it is often carried out
by governments and businesses in a way that is seen to be autocratic
and arrogant. This can reduce the value of both its outcome and its
impacts significantly.
Even with the sophisticated quantitative
techniques evolved by welfare economists to include an ever wider
array of benefits and costs in the appraisal of projects, actual
calculations are subject to a wide range of interpretations. At the
heart of the calculations lies the discount rate, which is supposed
to reflect the time preference of consumers and producers for the
benefits they receive from the project. Given the nature of the
exponential function used in such calculations, it turns out that no
realistic discount rate can at the same time reflect the imperatives
of sustainability. Any discount rate that could be chosen is either
too low for the consumer or too high for nature. This means in
practice that benefit-cost analysis almost always overvalues the
immediate economic benefits of a project and undervalues the
environmental, social and other costs, particularly in the long run.
With all their advantages, for certain
purposes projects suffer from severe limitations. As mentioned
above, their reliance on centrally conceived, highly focused,
narrowly designed processes can help achieve results but not
always of the kind needed. For sustainable development, longer time
horizons and more intangible side benefits are needed than can
usually be addressed by projects.
Limits of Current Development Strategies
Although not everyone would necessarily agree
with each detail, there appears to be a widespread perception that
the outcomes of current development strategies are not commensurate
with the inputs that have gone into them. Among the shortfalls, the
most commonly mentioned are:
Implementation gap:
Even when development projects
achieve their output targets, a large proportion never achieve the
full impacts they were designed for.
Accountability gap:
The mechanisms for holding project
authorities responsible for achieving their goals are weak,
primarily because the local stakeholders are not adequately involved
or do not have the requisite watchdog skills.
Continuity gap:
Development projects intended to
have long term continuity often wind down or close up once the
project funding comes to an end.
Replicability/scalability gap:
Development programmes that serve
as exemplary models which are adopted by others for replication and
scaling up are not as common as should be expected, given the
quality of resources that go into their planning and implementation.
Multiplier gap:
Real economic transformation occurs
when development activity leads to leveraging positive impacts
outside its own domain and yields positive side benefits which
produce multipliers that can resonate through the economy. Projects
in the past have often led, on the contrary, to negative impacts on
the environment and to disruptions in traditional practices that
previously were at least viable.
Sustainability gap:
Most development projects are based
primarily on economic criteria and often have negative, unintended
consequences on social and environmental issues which could have
been avoided or minimized through proper consultation with the
stakeholders. In any case, despite extensive development effort,
inequity and injustice, marginalization and social exclusion
continue to remain at unacceptably high levels and the quality of
the environmental resource base is heading toward unacceptably low
ones.
In addition to these, there are some
opportunities, crucial to building the capacity of a society
to design its own future, often missed by international development
initiatives, leading to missing links in society such as:
Technology gap:
Development programmes,
particularly those that are largely driven by external consideration
often lead to inappropriate technology choices and considerable
waste of capital resources. Often their biggest failure is to leave
behind little or no "technicity", or the ability to master
technology and appropriate it for use suited to local needs and
resources.
Institutional gap:
Although development programmes
have occasionally led to the establishment of effective institutions
for innovation, incubation and delivery of solutions, the
achievements over the past fifty years falls far short of what is
needed.
Leadership gap:
Perhaps the greatest failure of
international development is its poor record in build local leaders
who can help their societies make informed decisions and design
development strategies more in tune with their own aspirations and
resource endowments. Rather, in many places it appears to have
contributed to an acceleration of the opposite process, the brain
drain.
Need for Evolving Better Development
Approaches Building Capacity
Given the significant gaps described above
between the expectations from 50 years of international development
practice, and the actual outcomes, it was only natural that by the
early 1990s there would be a growing demand for new approaches to
development. This demand grew in urgency as the imperatives of
competing in a rapidly globalizing economy became apparent in even
the poorest countries. And, with worldwide communications beginning
to bring new messages to every home, creating rising expectations
for such values as better quality of life, participation and
environmental management, this demand became increasingly widespread
and pressing. By the time of the Earth Summit at Rio de Janeiro,
there was a broad-based concern among both donors and recipients
that international development strategies needed to be redesigned.
Out of the Rio process came an understanding
that, in addition to redesigning conventional, project based
development activities to close the gaps identified above and make
them more sustainable, much more emphasis is needed on a particular
new form of development cooperation: the building of local
capacity.
Simply defined, "Capacity" is people who have
the ability, backed by the decision systems and infrastructure they
need, to identify, formulate and analyse the problems of high
relevance to their societies and design effective strategies to
solve them. To be effective, such capacity needs to be built up in
all sectors of society government, business, academia, media,
civil society with opportunities for strong collaborative
experiences leading to a tradition of dynamic interaction among
them. To play its fullest role, capacity in this sense has to be
built up at all levels of society: the national, provincial and
local. It is only when a local community acquires capacity to design
and create its own future that genuine development can take place.
Basically, capacity is synonymous with leadership, informed
leadership in all walks of life.
A country or a community with the requisite
capacity should be able to choose among different technology options
and adopt those most appropriate for local markets and conditions.
Capacity also enables societies to implement solutions and learn
lessons from experience so as to redesign future solutions even more
effectively. Above all, capacity is needed in each country to
recognize issues of self-interest, advocate more sustainable
policies and negotiate effectively in bringing these about.
In time, capacity grows with the building of
institutions and infrastructure and is reinforced by infrastructure
of all types social, physical, financial and communication. Such
local institutions must be able to integrate economic, social and
environmental issues into the development process at the national,
provincial and local levels.
These local institutions and experts will need
to be able to design strategies with longer time horizons that lead
to development multipliers by creating public awareness and
potential for meaningful participation in decision making. This
means strengthening their ability to deal with increasingly complex,
"harder" issues such as those concerned with technology, innovation,
structures of governance, economic and trade issues and to design
new development strategies that are more appropriate to local needs.
It also means encouraging national counterparts to confront vested
interests, attack business-as-usual mindsets and evolve strategic
alliances with others working towards the same overall goals, not
always easy tasks for an international agency to undertake.
At the national and local level, countries
need to create a new cadre of people with a sense of national
purpose, a sense of excellence and a sense of commitment. In order
to achieve this, they must evolve better understanding of the
inter-relationships between economic, social and environmental
issues such as the poverty population marginalisation cycles and
the pitfalls and opportunities offered by emerging issues such as
global change, CDM, trade and WTO. At the local level, Capacity
Building programmes would have to address such issues as empowering
the marginalised, particularly women, and the need for participation
and building up a sense of ownership among communities.
International Efforts to Build Capacity
Although there had been some earlier effort by
a few donors (such as the Ford and Rockefeller Foundations and some
bilaterals and multilaterals) to build capacity, especially in the
form of institutions for skill building, it was only in the early
nineties, around the Earth Summit at Rio, that the international
community began to focus on this concept as an important type of
development intervention.
With its Capacity 21 Programme, UNDP set out
to assist Developing Countries and Countries in Transition achieve
their goals of sustainable development. The task assigned to
Capacity 21 was, thus, to undertake systemic programmes in selected
countries to build the capacity of local institutions to integrate
economic, social and environmental issues into the development
process at the national, provincial and local levels.
UNDP itself has operated the Small Grants
Programme on behalf of the Global Environmental Facility (GEF) for
the past ten years. In addition, GEF has the Medium Sized Project
fund largely for this purpose. The World Bank and the International
Finance Corporation also manage several capacity building Trust
Funds on behalf of various bilateral donor agencies, including those
of Japan and the Netherlands. Several bilateral agencies, including
the SDC (Switzerland), DFID (UK) and JICA (Japan) have significant
capacity building funds, many of them operated through host country
intermediaries. Sizable capacity building funds are also available
from International and National NGOs and from Foundations
Beyond Capacity 21 A Vision for the Future
The experiences of UNDPs Capacity 21 and
other related initiatives offer many valuable lessons for the
future. First, that fundamental change is needed to make development
processes sustainable and such change is possible.
Second, there exist effective and powerful
development strategies that do not necessarily follow existing
approaches. Examples include: greater reliance on local initiatives
involving people to people interaction; emphasis on institutions and
decision processes rather than on hardware; and the value of
alliances among government, public agencies, civil society and other
sectors.
Third, there are no short cuts to sustainable
development but the process can be speeded up by using the type of
process used by Capacity 21, involving a succession of stages from
Demonstration to Validation to Institutionalisation to
Mulitiplication.
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Evolution of Development Theory and Praxis |
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D uring
the more than five decades of international development
cooperation, multilateral and bilateral agencies have spent
large amounts of money in the hope of accelerating the expansion
of developing country economies. The resources mobilized by the
recipient countries themselves for this effort were even larger,
often by one or two orders of magnitude. Yet, with a few
exceptions, of the countries that had large populations living
below the poverty line at the end of the 2nd World War the bulk
are still poor today. Worse, many of them now face the double
jeopardy of having lost a large part of their natural and social
capital as well.
Much of this "development" effort was
influenced by theories of societal change formulated within the
discipline of neoclassical economics. These theories, which at
any given time largely reflected the doctrines prevailing in the
Bretton Woods institutions, have evolved through many cycles
over this period. Unfortunately, they have rarely been enriched
by a larger understanding of societal, cultural and political
processes a shortcoming that has in many cases led to failure,
sometimes total failure, in achieving their stated goals.
Evolution of Development Theory
Starting around 1950 and fortified with
the theories of underdevelopment, such as those of Rosenstein-Rodan,
and of the staged evolution of economies, such as those of
Gerschenkron and Rostow, armies of expatriate consultants went
forth to help transform the economies of the poorer regions of
the world. In the early days, the emphasis of the policies and
interventions they advocated was, in the manner suggested by
economists such as Harrod and Domar, largely on increasing
savings rates and improving the productivity of industrial
capital. Other consultants, such as those who followed the
theories of Lewis, promoted investments in industry as a means
of creating higher incomes among urban elites whose savings
could in due course be expected to trickle down to the poor in
the other, mostly agricultural, economy. Still others pursued
the theories of economists such as Myint, Haberler
and Viner, focusing on international trade as the engine
of development.
Some (eg, Prebisch, Singer, Baran,
Sweezy, and Amin) advocated more government
intervention, others (eg, Bauer, Little, Balassa, Krueger
and Johnson) strongly urged less. Some advocated highly
centralized planning systems, others believed in more or less
complete laissez faire. All of them had powerful, if not
seemingly flawless arguments to support their theses. All of
them put more faith on their mathematically elegant if narrowly
conceived theories than on the empirical facts that often
refuted these theories. And all of them had numerous, loyal
disciples working out in the field.
Welfare economists such as Little, Adelman,
Lal, Marglin and others, devised methods to evaluate the time
streams of benefits and costs entailed by a proposed development
activity. They also evolved rudimentary techniques for
quantifying social and environmental variables that could in
principle be included in project decision-making. Such
benefit-cost analyses, even though they often had to be based on
somewhat unrealistic assumptions regarding discount rates and
shadow prices, were widely recognized to be better than no
analysis at all and became quite fashionable for appraising
development projects.
A few economists, including Seers, Chenery,
Singer, Sen, Ul-Haq, Streeten, Daly and Henderson, questioned
the heavy reliance of development theory on purely
growth-related factors. Some of them went further and tried to
include issues of equity and social welfare in their decision
models. But most of these attempts did not get incorporated into
mainstream development practice.
Evolution of Development Praxis
Emerging from long and sometimes painful
colonial experiences, the host countries had their own optics of
national interest and chose from a wide spectrum of economic and
political frameworks that ranged from Marxist and socialist on
the left to outright capitalist on the right. |
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Often, to raise financial capital for their development plans,
they had to accept the advice of external policy consultants and
adopt development models that were at significant variance with
their own policies. The results, in a large part of the
developing world, were highly confused and quite dysfunctional
economic interventions, often lacking in coherence and
occasionally leading to mutually counteracting outcomes,
stagnant economies and social conflict.
In the course of the next three or four
decades, the developing world thus went through a rapid
succession of fashions in economic policy. First there was
import substitution. When that did not show adequate results,
export promotion (mainly of primary commodities and rudimentary
industrial goods) took over. And when neither of these worked,
the neo-liberals became more dominant with their advocacy of
greater emphasis on international trade. Five Year Plans for
capital investments were common during this period.
Substantively, the precise sequence of emphasis varied from
country to country but in many it went from core industries to
infrastructure to agriculture to industry to trade. In some it
went the other way.
This phase was followed by a shift into
strengthening physical infrastructure and financial
institutions. And, in parallel to these, there was the constant
refrain calling for structural adjustments in monetary and
fiscal policies and for privatization of the ownership of
productive assets. In many cases, this was followed by
imposition (for example, as conditionality for obtaining
financing from multilateral institutions) of fiscal measures
such as reducing social expenditures to balance national budgets
or lowering of tariff barriers to improve the competitiveness of
national industries in global trade. More recently,
international donors have also expressed increasing concern for
issues of "good governance", participative decision-making and
greater involvement of civil society in development planning.
The role of centralized economic planning gradually withered
away, though in many countries the bureaucracies in charge of
this function continue to remain in place.
A parallel trend in recent years has been
the gradual realization of a need for investing in social
capital such as health and primary education. There also appears
to be increasing interest in strengthening local economies
through the creation of livelihoods and provision of microcredit.
However, these trends remain somewhat marginal: the growth of
these types of development intervention is, perhaps, limited by
the fact that neither government nor big business has any
comparative advantage in providing them.
Throughout this period, the main actors in
the design and implementation of development programmes were
seen to be government and the public sector, gradually over time
giving way to the private sector and, more specifically,
corporate businesses. Civil society was seen to be a good ally
for carrying out surveys, creating awareness and undertaking
"social mobilization", but not for much else.
Yet, the economies of most developing
countries are not where, by any objective measure, they should
be after so many decades of thoughtful effort. Even the World
Bank, the champion of cutting edge thinking on development
economics admits that these theories and approaches have not
worked satisfactorily.
There is, undoubtedly, some truth and
possible value in all such theories. But a national economy is a
complex system and the world within which it operates is a
system of even greater complexity. For most poor countries,
development means transforming a highly inefficient, inequitable
and imbalanced economy operating at a low level of transactions
to one that is growing rapidly, equitably and sustainably. To
succeed in bringing about sustainable development, the
interventions must match the complexity of the problems they
have to deal with. Often, the approaches listed above have not
been able to deliver such interventions.
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UNEP
Sasakawa Environment Prize 2002 |
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Dr.
Ashok Khosla President, Development Alternatives has won
the United Nations Environment Programme Sasakawa Environment
Prize for 2002 for his contributions in the field of
Environment. The Award will be presented in New York on November
19, 2002. |
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