Howard Handelman, The Challenge of Third World Development

Howard Handelman, The Challenge of Third World Development Chp 1 Understanding Underdevelopment

Understanding Underdevelopment • Understanding the nature and causes of underdevelopment is a complex task complicated by the fact theoretical debates between scholars and a profusion of terminology. • No agreement on a common name. At one time “underdeveloped nations” was used frequently. Many objected this because of its pejorative connotations (implied these countries are bacward). • Developing nations or areas used instead. This time the problem is that the term suffers from excessive optimism.

Many of the so-called developing nations (in Africa, Latin America etc) have shown few signs of political or economic development. • United Nations and many other international organizations favor the label “less developed countries”. • The term Third World Countries is preferred by many social scientists and is the label most frequently employed in this book. Third World countries are the nations of Africa, Asia, the Middle East, Latin America and the Caribbean that belong neither to the First World (Japan and Western industrialized democracies) nor to the Second World (former communist nations including the Soviet Union and Eastern Europe).

Third World glosses over the many political and socioeconomic differences between its members, placing all of them under one tent. Although Third World suffers from some degree of imprecision, its virtue is that it makes no value judgement or predictions. • The author (Handelman) holds the view that despite their many differences, there are enough commonalities among Third World countries to make the category useful and usable. Of course it may be argued that the collapse of Soviet Communism has made the term Third World rather anachronistic. Since there no longer is a Second World, technically there cannot be a Third World, yet many scholars continue to use the term as it found widespread acceptance in the field.

Third World Commonalities: The Nature of Underdevelopment • Third World nations share a number of common characteristics: • All of them suffer from some aspects of political, economic or social underdevelopment. While some Third World countries are less developed in all major aspects of modernization, other Less Developed Countries are far more advanced in some measures of development than in others. Economic, social and political underdevelopment are closely related to each other, but they are by no means perfectly correlated.

Economic Underdevelopment • Most salient characteristic of most Third World countries is their poverty. This is manifested at the national level by some combination of: • Low per-capita income (technically expressed as low Gross Domestic Product) • highly unequal income distribution • Poor infrastructure (including communications and transportation) • Limited use of modern technology • Low consumption of energy.

Economic Underdevelopment • At the household level, economic underdevelopment connotes widespread poverty, including unemployment, substandard housing, poor health conditions, and inadequate diets. • Researches reveal the tremendous gap in living standards between most First and Third World Countries and the considerable variation among Third World nations. An average American earns about four to five times as much as a typical Mexican or Brazilian. Mexicans and Brazilians earn about nine to ten times more than an average Nigerian.

Economic Underdevelopment • Ultimately, a country’s standard of living is determined not only by its per capita income, but also by how that income is distributed. Check out the graph on page 4 for more details. • In the US, poorest 40% of the population receives 15.7% of the annual national income, whereas richest 20% gets 46.4% of annual national income. • In Brazil, the poorest 40% of the population receives 8% of the annual national income whereas richest 20% gets 63.8% of the annual national income.

Since the 1970s, the economies of some Third World regions performed far better than the others, further widening the gap between LDCs. Despite a major economic setback in the late 1990s, East Asia’s GDP per capita (its economic growth above and beyond population growth) still grew at the phenomenal average annual rate of 6 percent from 1975 to 1999. That means that per-capita income more than quadrupled during that 24 year period. That region also includes such stellar economic performers such as China, South Korea, Taiwan, Singapore, Indonesia. No other region grew anywhere near that robustly.

Economic Development • South Asia (including India, Pakistan and Bangladesh) enjoyed the second fastest per-capita growth rate, averaging 2.3 percent annually. • Latin America, which grew steadily in the 1960s and 1970s, experienced a sharp downturn in the 1980s and early 1990s, thereby averaging only 0.7 percent per-capita annual growth from 1975 to 1999. • Sub-Saharan Africa, one of Third World’s poorest regions in the 1970s, saw GDP per capita decline at an average rate of 1 percent annually during the next 24 years as the result of poor economic management, corruption, civil war and climatic disasters. By 1999, the average African was substantially poorer than he or she had been 25 years earlier.

Economic Development • Despite its financial crisis in 1997, East Asia has emerged as the Third World’s most economically advanced region. Despite its relatively strong economic growth in the past 25 to 30 years, South Asia still includes some of the world’s poorest countries (Afghanistan, Bangladesh and India). Most Latin American nations fall in the United Nations’ middle-income category, though there is a wide gap between the region’s least affluent nations (Bolivia and Honduras), and the most developed ones, such as Chile and Mexico. Finally, Sub-Saharan Africa includes most of the world’s poorest countries, such as Ethiopia, Tanzania and Sierra Leone.

Economic Development • Most of the poorest countries in Table 1.1 (India, China and Egypt) have comparable or slightly more equitable income distributions than does the United States. The more industrialized nations in the table, have the most concentrated income patterns, supporting earlier research that indicated that the initial transition from low to mid-level economic development actually increases inequality. Although Brazil is far more industrialized than Egypt and has nearly twice its per-capita income, the richest 20 percentof its population earns an extraordinary 63.8 per cent of the nation’s income, compared to only 39 per cent for that group in Egypt.

Economic Development • Several factors seem to influence a country’s or region’s income distribution pattern: • The level of industrialization. Countries moving into the middle and upper-middle levels of development generally experience a growing gap between the middle to upper classes and the poor, as a new class of businessmen emerges with higher incomes. • A second factor is the historical pattern of land ownership. Regions or countries that were colonized by the Spanish or the Portguese, such as Latin America and the Philippines, saw land ownership concentrated in a relatively small number of hands. By contrast, most Asian countries have historically allowed less concentration of land ownership.

Economic Development • Government policies on land ownership, taxation, welfare programs, and the like can either reduce or intensify income inequality. Countries with large and open educational systems, agrarian reform policies and progressive taxation can reduce income gaps. Former communist countries such as Mongolia and the Slovak Republic has amongst the lowest levels of inequality. Depending on these different actors, some Third World countries suffer from wide gaps between rich and poor, while some do not.

Social Underdevelopment • Poverty and poor public policy adversely affect social conditions in the Third World, thereby narrowing opportunities for human development. (check Table 1.2 on page 7). • Low levels of education and literacy rates are among the Third World’s greatest challenges. • An educated work force- contributes to higher labour productivity. • Indicators of social development: • Human Development Index (HDI), life expectancy, adult literacy.

Social Underdevelopment • HDI: a composite measurement of educational level, life expectancy, and income. The highest possible HDI score may achieve is 1.000 and the lowest .000. Canada has the world’s highest HDI (.935). India with 0.563 ranks the 128th country on the list. Interestingly, Cuba with 0.793 ranks the 40th on the list. • Life expectancy is greatly influenced by the availability of health care, adequate diet, and clean drinking water, the second indicates the accessibility of education.

Social Underdevelopment • Government social policy determines what share of the country’s economic resources is invested in education, sanitation and health care- hence how much translates into social development. • Cuba’s high HDI indicates that the country’s social indicators are higher than its per capita income would lead us to expect, presumably because of a strong government commitment to health, education and economic equity. Conversely, a strongly negative score (such as Kuwait’s, Brazil’s and Egypt’s) indicates the government’s failure to translate adequately its available economic resources into an improved quality of life.

Social Underdevelopment • Fortunately, despite substantial economic declines in Africa and Latin America during the 1980s and early 1990s, and despite East Asia’s recent economic crisis, developing countries as a whole have made considerable progress in social development during recent decades. From 1965 to 1995 alone, adult illiteracy in developing countries was cut in half, falling from nearly 60 percent to 30 percent. Improved health care and sanitation helped reduce infant mortality rates by a remarkable 60 percent.

Social Underdevelopment • Still, as an aggregate, less developed countries continue to lag considerably behind the developed world. Third World adult literacy rates trail the industrialized nations by 33 percent, while life expectancy and calorie consumption are both 20 percent below First World levels. While impressive progress have been made in some regions, others continue to lag, most notably Sub-Saharan Africa and South Asia. And despite overall gains in the LDCs, the absolute gap between the First and Third Worlds continues to widen.

Political Underdevelopment • There is not much of a consensus on what constitutes political development and political underdevelopment. • When Western political scientists began to study the Third World seriously, they eventually recognized that evaluating political systems in very different cultural and socioeconomic settings from their own was particularly challenging. Recognizing that most Western European countries did not become meaningfully democratic until they were well along the path to industrial development, scholars were often reluctant to criticize the authoritarian systems that prevailed in many barely industrialized nations of the Third World.

Political Underdevelopment • Conscious of such land mines, some prominent social scientists despaired of defining political development. Others offered a set of standards that they believed were relatively free of ideological and cultural biases. • Political development, they maintained, involves the creation of specialized and differentiated government institutions that effectively carry out necessary functions, such as collecting tax revenues, defending national borders, maintaining political stability, stimulating economic development, improving the quality of human life, and communicating with the citizenry. In addition, developed governments must be responsive to a broad segment of society and respect the population’s fundamental freedoms and civil rights. Presumably, any government satisfying these

Political Underdevelopment • standards would enjoy a reasonable level of legitimacy (i.e citizens would recognize and accept its right to govern), leading individuals and groups to purchase their political objectives peacefully through established political institutions rather than through violent or illegal channels. • Recently, political scientists began insisting that democracy and some degree of social equity must be integral parts of political development. Democracies tend to offer more political stability because they are relatively immune to revolutionary insurrection and are less prone than dictatorship to other forms of mass violence.

Political Underdevelopment • Only a relatively restricted number of developing countries conform closely to the standards of political development, including Trinidad, the Bahamas, Uruguay and Costa Rica.Others such as Brazil, India, South Korea and Taiwan currently satisfy most of the criteria. Most Third World countries though, fall short on democratic practices.

Some Relationships among the Components of Development • It seems logical to assume that political, economic and social underdevelopment are interrelated. More economically advanced countries can better educate their populations and provide them with better health care. An educated citizenry, in turn, contributes to further economic growth and participates in politics more responsibly. Responsive and legitimate governments, constrained by competitive elections, are more likely to educate their people and to make responsible economic decisions. Wealthier LDCs tend to have greater life expectations, higher literacy rates and more stable and democratic governments.

Some Relationships among the Components of Development • But these correlations are not absolute. For example, a country’s literacy and infant mortality rates depend not only on its economic resources but also on government policies in the areas of education, public health, and welfare. Elitist government policies in some countries have contributed to social indicators (HDIs) that are far lower than those of other nations with comparable economic resources. This is most apparent in the petroleum rich states but holds in countries such as Brazil and Egypt as well. Governments in Cuba, Costa Rica, Grenada and Vietnam, with strong commitments to social welfare programs, have generated much higher life expectancy rates and educational levels than their economic resources alone would lead us to predict.

Some Relationships among the Components of Development • Both economic and social development tend to correlate with political development. Wealthier, more educated countries such as Barbados, Chile, Costa Rica and Taiwan tend to be more politically stable, more responsive and more democratic than poor nations such as Mozambique, Haiti and Cambodia. Third World countries are very unlikely to become democracies unless they have attained a minimal threshold of socioeconomic development. That does not imply that wealthier countries are assured of becoming democratic. Economic threshold is a relative necessary, but not sufficient condition for democratization.

Some Relationships among the Components of Development • Moreover, there is no linear relationship between economic and political development. Countries do not become more democratic or stable when countries become more economically developed. • Huntington’s observation: the richest countries in the world (Switzerland, Japan and Canada) are politically very stable, and the poorest countries (Afganistan, Congo and Haiti) are generally very unstable, countries that are still in the process of moving from economic underdevelopment to greater development often actually become more unstable as they pass through the intermediate stages of economic growth. (Some of Latin America’s most economically advanced countries (Argentina, Brazil, Chile and Uruguay) experienced internal conflict and political unrest in the 1960s and 1970s followed by military dictatorships that toppled democracy.

Some Relationships among the Components of Development • Huntington’s explanation was that as countries modernize, the spread of modernization, education and mass media consumption produce an increasingly political aware and mobilized society whose citizens make far more demands on the government. All too often, however, political institutions, particularly political parties cannot be strengthened quickly enough to channel and respond to this rising tide of demands, and the system becomes overloaded and unstable.

Some Relationships among the Components of Development Guillermo O’Donnell posited another reason for the rise of extremely repressive dictatorships in South America’s most economically advanced and modern nations during the 1960s and 1970s. He suggested that as those countries reached a more advanced stage of industrial growth, they required extensive new investment that could only be secured by attracting foreign capital. That, in turn, required controlling the countries’ militant labour unions and keeping down the wage levels of industrial workers. To achieve these goals, the nations’ business leaders and technocrats turned to repressive military rule. • Hence the relationship between political, economic and social development are complex. While the three often go hand in hand, they don’t always progress at the same rate.

Howard Handelman, The Challenge of Third World Development