Ha-Joon Chang: ‘Do as we say, not as we do’

28Mar10

Over at New Left Project David Wearing has a fantastic interview with leading development economist Ha-Joon Chang, discussing the impact of neoliberal development policies on poorer countries and Britain’s record on international development. Here’s a snippet:

So, what’s your assessment of New Labour’s record in this area [i.e. international development]?

I would give credit to the Labour government for keeping the development issue alive in the international arena. Fundamentally, the Americans are not interested in the development agenda, the Japanese are too timid, the Italians couldn’t care less, the countries that really do care about development, like the Scandenavian countries, are too small to make any big impact. So among the major countries, only Britain has been making a noise about this, and I give the Labour government credit for that. But unfortunately, the understanding of what is really going to help developing countries is faulty, in terms of Labour’s policies, because – with some of the rough edges smoothed out – they basically go along with the free trade, free market orthodoxy, and they’re not doing anything fundamental to change that.

I don’t want to dismiss their efforts in bringing about, for example, the HIPC initiative in debt reduction for highly indebted poor countries. Increased aid, debt cancellation – that’s all fine. But these can only play supporting roles. The main thrust of development policy has to be domestic investment, training, productivity growth, and there’s nothing in the dominant development agenda – even the slightly more progressive kind that New Labour has been pushing – that will help these countries to do that. So for example, the way they see international trade, through this free trade paradigm, is to say, “ok, its unjust for us to protect our agriculture so that Kenya and Uganda can not export their way out of poverty”. Well, at one level that sounds great. But lowering agricultural subsidies and protection in the rich countries is not going to help the developing countries very much because the subsidies and tariffs are concentrated on products that these countries already produce; wheat, dairy, meat etc. Most developing countries are not able to export these things. Even according to the World Bank estimates, the main beneficiaries of agricultural liberalisation in the rich countries will be other rich countries with strong agricultural sectors like America, Australia, New Zealand, Canada. Only Brazil and Argentina in the developing world are expected to benefit significantly from these changes. Otherwise, its not going to help the developing countries very much.

More importantly, all these reductions in agricultural protections and subsidies in the rich countries are supposed to be a quid pro quo for a reduction in industrial tarrifs in the developing countries. That’s the central element in the Doha development round. And it sounds great, saying “ok, you guys are better at agriculture, we’re better at industry, so we’ll liberalise our agriculture, you liberalise you’re industry, and we’ll all benefit”. As I said, in the short run, very few developing countries are actually going to benefit from it. But the bigger worry is that in the long run, this is going to prevent developing countries from moving up the technological ladder, so to speak.

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Tags: development, economics, Ha-Joon Chang, international development, neoliberalism, New Labour, New Left Project