Units of measurment in development and economics

I’m new to blogging and had a lot to say today. Is one allowed to post twice in the same day? I don’t know...

The "great recession" (I only recently heard that that's what they're calling it) showed us that economic powers of the "north" are not unapproachable, while the top-dogs are still struggling to re-attain their pre-crisis GDP levels, many of the "poor countries" are thriving with levels well higher than their pre-crisis situation.

You could have gotten that from the Economist article I referenced in my last post, in much better wording. What they don't mention in this article, is the differentiation of which countries weather the crisis amongst the "poor". While many LDCs (less developed countries) did come out okay and are now growing relative to the richer players, many got hit hard and are continuing to struggle.

While overall, some did better than others, the more important change that occurred because of the recession is the changes within countries. Rather than saying poor COUNTRIES did or did not do well relative to rich countries...its more useful to say the POOR did or did not do well relative to the rich. When you take out the "country" dimension, we see that the poor did take a hit, everywhere.

I was recently discussing aid in a class (Chatham house rules here) when it was noted how Bill Easterly has effectively argued against the concept that aid facilitates growth, noting that statistically speaking, the effects of aid have been negligible. This is problematic, especially given the billions of dollars that have been funnelled into developing countries for this very reason.

However, instead of thinking of development as growth, it might be more helpful for us to think of development as things we need to do for people. That is, rather than looking at the whole picture, we need to think of development as providing a well in one village, or providing a tractor to a farmer, or giving nutritional supplements to infants to prevent stunting. Looking at the unit of the person or community for our unit of measurement is perhaps where we need to go.

Okay…recession…right. My point is that this principle doesn’t just apply to aid and development but needs to apply to our understanding of economics in general. The recession caused some countries to grow (China grew nearly 11 percent in 2008 according to the CIA world factbook) but this says nothing to the poorest people, especially in rural communities who faced astronomical food prices through 2008. The point is, we need to start judging our economic successes in different ways. Not just for the LDCs but even for ourselves, stability in the US financial sector is useless if the millions who lost their jobs, lost their retirement funds or lost their homes aren’t provided for. It requires us to reconsider our assumptions of what is beneficial and why.

The "Third World"

A recent article from the Economist, "Rethinking the 'third world'", addressed some important backdrops for out understanding of global political economy with important implications for how we view aid, development, and the future.

The article starts with a reminder of World Bank President Bob Zoellick`s comment “2009 saw the end of what was known as the third world”. While the article provides a pretty even handed review of what this statement means and, ultimately, reasons why its probably not true, a couple of issues arose in my mind that weren`t explicitely addressed.

I remember the first time I was informed that the term ``third world`` was no longer p.c. I believe it was in my first or second year of university. The negative connotation and cold-war baggage made it an oppresive term, denoting condescencion towards less developed countries. And while the fall of the Berlin wall indicates that its original meaning is now lost, I don`t believe that its usefullness has gone out of style; many academics I still talk to use this term.

but the term has changed, third world still implies an ordering, the concept that the Asian Tigers were just a freak-show of growth is disappearing and a new level of global-political order is emerging. The BRICs (Brazil, India, Russia and China) represent a new `in-between` of the world`s super powers and suggest that positioning in them is no longer permanent. Some move up (China and India) and some are moving decisively down (Russia). This, of course, is primarily an economic analysis but in this environment, economics is important to note, if not the most defining feature in this new global political order.

Ultimately, the concept of "third world" is now addressing power structures of the have and the have nots. And its not all negative, the have-nots are showing force in numbers through international organizations, which are becoming increasingly important. The "third world" has effectively stalled out the Doha round, the "third world has the potential (sceptical as it may be) of creating regional pacts such as African Union, and the "third world" weather this recent economic crisis with much more finesse than the "first world".

While it may not be politically correct, I would argue that the term continues to be a useful descriptor of the reality of global political economy.