The Success of Development is a book I'm working on, that was posted here for a few weeks in the hopes that people would comment on the draft. It worked --I got many useful responses and suggestions, not least thanks to generous links/discussions by Felix Salmon, Matt Yglesias, Tyler Cowen, Todd Moss, Dennis Whittle and Bill Easterly. The book should come out next year, published by Basic Books. I'm working on revising the draft. I'll post about it again nearer the publication date. Again, many thanks to all who commented. Below is a summary. 1. INTRODUCTION: ABANDON HOPE?
A lot of people are depressed about the state of global development. And they are particularly miserable about Africa. There is a widespread belief that the region remains mired in a Malthusian trap, home to many of the ‘bottom billion’ who are living in ‘fourteenth century’ conditions. And many argue that aid has been a dead loss in fixing the problem. According to this view of the world, we’re stuck in a serious crisis of development.
This book explores the bad news and the good news about development. It lays out the evidence on growing income disparities between the global rich and the global poor that are at the heart of a narrative of crisis. And it chronicles the failed search for a silver bullet to overcome economic malaise.
But it also discusses the considerable successes of development. Not least, the evidence for any country being stuck in a Malthusian nightmare is threadbare. The book points to global progress in health, education, civil and political rights, access to infrastructure and even access to beer. This progress is historically unprecedented and has been faster in the developing world than in the developed.
The book argues that ideas and technologies are the driving forces behind progress. And it suggests what the success of development and the importance of innovation to that success mean for policies in and policies towards the developing world.
2. THE BAD NEWS: DIVERGING INCOMES
Despite declining global levels of poverty, poor countries have grown more slowly than rich ones since the Second World War. Harvard Economist Lant Pritchett titles his analysis of the long term global evidence on income trends ‘Divergence, Big Time.’ These trends have left global income considerably skewed in favor of a lucky few. Today, the top tenth of the World’s population is about 100 times richer than the bottom tenth.
The evidence regarding large parts of Africa is particularly stark –stagnant incomes since time immemorial, leaving the continent ever further behind. For example, the United States had a GDP per capita a little more than seven times larger than Senegal in 1960. By 2004, the United States was around twenty-six times richer.
3. THE WORSE NEWS: IT’S HARD TO RAISE GROWTH RATES
East Asia is the one developing region that has managed to sustain economic growth rates higher than rich countries over the last fifty years. This East Asian ‘miracle’ is a topic in numerous academic papers –over 6,500 by one rough measure-- and a subject of lively debate as to causes and policy pointers. Sadly, no consensus has emerged. Those who believe that investment is fundamental to economic growth war against technologists as to the role of capital versus ideas in East Asia’s performance. Dirigistes battle free marketeers as to lessons regarding the state in development. We don’t even know for certain if government policies of any type were central to the process at all. While in East Asia we don’t know who to praise, in Africa we don’t know what’s to blame. And millions of calculations run by thousands of economists haven’t brought us any firm policy conclusions in either case.
But recent analyses of relative economic performance have suggested a central role for history in determining who is rich and who is poor. Scholars now link wealth with influences such as the mortality rate of colonial settlers in the Eighteenth and Nineteenth Centuries, climate natural resource abundance, and the extent of human losses to the slave trade. The impact of such ‘initial conditions’ on long term income performance acts through the strength of government institutions such as legal systems and parliaments. But such institutions are slow to change. So a growing mound of research papers adds to the conclusion that we know much more about the histories that rich countries or poor countries share than we do about the policies that will make poor countries rich.
4. THE GOOD NEWS: THE END OF THE MALTHUSIAN TRAP
Malthus was concerned with what he felt were the excessive breeding habits of the unwashed masses. Populations, he suggested, expanded until a lack of food and resources meant that as many people died each year as were born. Paul Ehrlich’s The Population Bomb updated the same argument for the late Twentieth Century: “the battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death,” he argued. Many people suggest that parts of the developing world remain stuck in such a ‘Malthusian trap’ to this day.
The first bit of good news in this book is that there is little evidence from anywhere that growing populations condemn a country to a declining standard of living. Looking at Africa in particular, while populations continue to expand, there is no link from population growth to declining income and mortality rates are falling, not rising. Even if the institutions which are central to per capita growth develop slowly, the technologies required for greater output –GDP increases-- spread fast. And this is enough to prevent widespread and recurring famine.
Meanwhile, ‘neo-Malthusian’ threats at the global level regarding the use of finite natural resources like fossil fuels or water are a real concern, but responses (should) involve policies that focus on sustainable consumption, not population control. Overall, the jeremiad of a long-dead English parson has little relevance to the developing world in the Twenty First Century.
5. THE BETTER NEWS: THE GREAT CONVERGENCE IN QUALITY OF LIFE
The next bit of good news regarding development is that looking at almost any measure of the quality of life except for income suggests rapid and ubiquitous global improvement. Since 1960, global average infant mortality has more than halved, for example. Nine million children born in 2005 were alive to celebrate their first birthday in 2006 who would have died if global mortality rates had remained unchanged since 1960. And the vast majority of those children lived in developing countries.
Countries in every region of the World, from the poorest to the richest, with stagnant or vibrant economies, have all seen improvements in average levels of health and education over the past half century. Most countries, regardless of economic performance, have seen forward strides in gender equality, civil and political rights. And progress in quality of life has been particularly rapid in countries previously the furthest behind. There are concerns –the picture regarding global violence is mixed, the quality of education in particular remains extremely low in many developing countries, and recent progress on health has slowed, not least due to the crisis of AIDS. Nonetheless, the overall picture from the last fifty years is of a planet with a growing number of people living a better quality of life.
6. THE GREAT NEWS: THE BEST THINGS IN LIFE ARE CHEAP
As suggested by the global reach of improvements in the quality of life, income growth has not been a requirement for improvements in health or education or civil rights. Even most countries that have seen per capita income decline over the past thirty years have seen health, education and civil rights observance considerably improve. This is the greatest success of development. The last century has seen a dramatic (and literal) decline in the cost of living.
Take child health, for example. No country in the World saw much more than ninety percent of children survive their first year of life in 1900. The United States saw an infant mortality rate of nearly fifteen percent. This was despite an income per capita that was one of the highest in the World at the time --a little above $4,000 measured in today’s dollars. It did not matter how rich a child’s parents, the state of health technology placed a significant upper limit on an infant’s chance of survival. Today, the country with the highest recorded infant mortality in the World is Sierra Leone. That mortality rate is seventeen percent --only two percent higher than the rate in the US a century earlier. Yet income per person in Sierra Leone has dipped as low as $404 in the recent past – or one tenth the level of the United States a century ago. Countries as poor and wretched as Haiti, Burma and the Congo have infant mortality rates today that are lower than any country in the World achieved in 1900.
And rapid income growth doesn’t guarantee faster progress. Two things that do increase in line with GDP per capita are consumption and pollution. But across countries, there is little or no relationship between rates of GDP per capita growth and progress in health, education or human rights.
7. DRIVERS OF THE BETTER LIFE: INNOVATION, IDEAS AND INSTITUTIONS
If not money, then what? Global improvements in quality of life have been fostered by the spread of technology and ideas. Very cheap health technologies that can dramatically reduce mortality have spread rapidly across the world. The proportion of the world’s infants vaccinated against diphtheria, pertussis and tetanus –the DPT shot—climbed from one fifth to nearly four fifths between 1970 and 2006. And ideas that save lives –wash your hands, don’t defecate in the fields you eat from—are increasingly accepted.
People around the world are also more ‘informed consumers’ than they used to be. They demand not only soap to wash their hands, they want schools to educate their girls, and they want governments which respect their rights. The increasing demand for education in particular is an important part of the story behind climbing primary enrollments –less than half of primary-age kids worldwide were enrolled in school in 1950, by the end of the century the figure was closer to nine out of ten. Valuing ABCs and getting DPTs –these are the forces behind global improvements in quality of life.
The spread of technologies and ideas explain a strong global pattern to quality of life improvements with countries rich and poor, tropical and temperate, seeing similar rates of progress over time. The shocks of AIDS and state collapse explain most of the (limited) variation from that global pattern in the case of health. And a similar story applies to measures of education –if less so to human rights.
At the same time, a country’s relative standing in terms of quality of life appears to be connected to the same historical factors that explain present-day relative income performance. Even if global inequality in quality of life has fallen, countries that started earlier in the provision of health and education services, or began with a greater respect for human rights, remain ahead to this day.
8. POLICIES FOR THE QUALITY OF LIFE
The fact that income appears to be a poor proxy for overall changes in the quality of life suggests the need for a broad focus –a broad definition of development—for policymakers. Given that it is not clear exactly which policies at which times will promote growth, and the tenuous nature of the connection between income growth and quality of life, the first rule for economic policymaking should be ‘do no harm.’ The grail of economic growth does not justify the degradation of health, education or civil rights.
Regarding support for improvements in the broader quality of life, policies might include aiding the spread of ideas through approaches that increase demand for good health and education. Communications programs and payments for school attendance or clinic visits have a role here. In addition, with the quality of service provision increasingly important to outcomes, reform of the institutions of health and education should also be a central concern.
9. THE GLOBAL AGENDA
There is a moral case for attempting to provide minimum levels of health or education across countries, based on the same principles that push for a minimum quality of life within countries. But that moral principal only applies if rich countries can actually help improve quality of life outcomes in poor countries. This chapter argues that they can.
A range of rich country policies could help. Not least, more generous immigration quotas focused on the poorest countries and more equitable trading regimes that protect the transfer of the technologies of the quality of life would both have significant impacts. And even if the record of aid in fostering economic growth or the development of institutions is mixed, it has played a part in improving quality of life outcomes. Aid might be an even more powerful tool if it focused more on global technology development and the spread of ideas. One option would be the creation of a global technology bank that directly funded research, or put up prizes for advances in technology that would particularly benefit the World’s poor.
10. CONCLUSION: REALISTIC OPTIMISM
Realistic optimism is the right attitude with which to face the issue of development. This is based on a recognition of the challenges still facing the world –significant progress to be made, limits to the likely speed of that progress, and concerns with sustainability. But we should also acknowledge that the rapid and unprecedented improvement in global quality of life over the past fifty years provides some significant grounds for hope about the future. Understanding the causes of this success, and building on existing progress, is a vital part of ensuring that it is sustained.
