1. What is development? Anthony Scaletta November 3, 2009

2. Development theory and practice timeline Post WWII- The Beginning of the Development Era WWII aftermath created a level of global consciousness that had not previously existed Formation of UN: An IGO created to promote peace & facilitate global stability Universal Deceleration of Human Rights (UNDHR) December 1948 Recognizes the “inherent dignity and equal and inalienable rights of all members of the human family” and doing so forms the foundation of freedom, justice, and peace in the world Declaring “Human Rights” laid the groundwork for the idea that development should promote the rights of the individual Modernization Theory (1950s-1960s) Suggested that LDC’s needed to modernize as much as possible and become more similar to MDCs Focused on economic output as primary indicator of development “Experts” telling LDCs what to do: Led to proliferation of monocrop specialization Cold War- Bipolarization of world impeded development practice 2

3. Development theory and practice timeline Dependency Theory (1970s- South America) Critique of Modernization Theory – Belief that it created uneven economic growth Suggests Disassociation from global market: To break the cycle of exporting raw goods and importing finished goods Largely unsuccessful Basic Needs Theory (1970s) Response to Dependency Theory 1st time to look at indicators other than economic growth Promoted development of the poor by addressing “Basic Needs” such as hunger and literacy 3

4. Development theory and practice timeline Neo-Liberalism /Washington Consensus (1980s) Viewed US & UK models of capitalism & democracy as best to follow Promoted Individual Freedoms by calling for less government in an attempt to increase the market through a global push for more free trade Obstacle: Lack of universal business practices Outcome: Massive Explosion of NGOs Today: 1000s founded every month Stepping in and providing rights that have traditionally been guaranteed by the state (e.g.) Access to Water or Health Care Wiggle Room Popular: Seen as a solution, but it is very difficult to measure NGO’s effectiveness compared to that of Gov’t interactions UN’s Human Development Index (HDI) (1990s) No single measure of development Uses Life Expectancy, Literacy, Per Capita Income, & Infant Mortality Rate to better understand global development Still used today 4

5. Development theory and practice timeline Development as Freedom (1990s) Economist Amartya Sen suggests that we take a more holistic view of development People & Communities have options: They should be able to access these options in the context of a world that is sensitive to cultural differences Post-Modernism (1990s) Skeptical PM: There are no universal truths. All truths are culturally and temporally bound- No universal development Model Affirmative PM: Some universal truths but most are specific and change over time * Shift from State-Focused Development Individual-Focused Development 5

7. Jeffrey Sachs Harvard Trained Economist Director of The Earth Institute @ Columbia University The End of Poverty Blueprint for ending all extreme poverty by 2015 Top-Down Approach: Key to ending poverty is the use of foreign aid from the world’s affluent countries “Big Five” Development Interventions Agricultural Inputs, Investments in Basic Health Care, Investments in Education, Investments in Infrastructure, & Access to Safe Drinking Water and Sanitation “Clinical Economics” – newly proposed method for development economics It is akin to clinical medicine = Good economic practices must be rooted in a sound, clinical medicine-style approach Use of “differential diagnosis” to determine “treatment regimen” Use of a Seven-Part Check list Key assessment: Physical Geography as a Handicap Sub-Saharan Africa: Physical ecology creates a prime environment for disease and drought Geographic Isolation: Lack of infrastructure (Africa has 15 landlocked countries ) Forms basis for the Millennium Development Goals (MDGs) 7

8. The UN’s Millennium Development Goals (MDGs) 189 world leaders signed the Millennium Declaration @ 2000 UN Millennium Summit Intention: “Free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty.” Global compact by all the world’s countries and all the world’s leading development institutions to meet the needs of the world’s poor Poorer countries pledged to improve policies and governance and increase accountability to their own citizens Wealthy countries pledged to provide the resources Time-bound Goals are Rigorously monitored through use of MDG National Reports Showcase national progress on each of the MDGs Over 140 Countries Source: http://mbaswithoutborders.org/files/2008/09/mdg_goals.gif

9. William Easterly Professor of Economics at New York University The Ideology of Development & The Poor Man’s Burden Critical of State-led development and Foreign Aid Grassroots Approach – Individualism & Decentralized Markets Developmentalism: Development as an Ideology is Dangerous! Problematic- Suggests there is only one correct answer, a general theory that can be applied universally “One Correct Answer” = Free markets = IMF & World Bank telling countries what to do International Aid Bureaucracy: The “Self-appointed Priesthood of Development” IMF and World Bank’s SAPs of the 1980s (e.g.) These laid the groundwork for Evo Morales to come into power in Bolivia This thinking favors collective goals over the aspirations of individuals (e.g.) Millennium Development Goals Opposite of ideology = Freedom = Let people be free to find their own solutions The ability of societies to be unchained from foreign control The only “answer” to poverty reduction is freedom from being told the answer Let the individual learn from their mistakes : “History proves just how much good can come from individuals who both bear the costs and reap the benefits of their own choices when they are free to make them.” Americans in 1776 had the same income level as the average African today, The US wasn’t being “structurally adjusted and meddled with while it was developing Individualism & decentralized markets produced the Automobile 9

10. William Easterly The “4 Unfortunate Lasting Consequences” of Early Development Practice Belief that granting extensive powers to the state is the surest path to progress Loss of faith in spontaneous bottom-up economic development preferring instead development “consciously achieved through state planning” The propagation of an economic philosophy that stresses the volume of investment over the efficiency of using those resources A widespread skepticism about using international trade as an engine of growth The 4 Ways to Avoid the Top-Down Way of Approaching Economic Development Avoid the trap of protectionism Keep the market open by keeping the state-led financial regulations to a minimum Slash away at the enormous red tape that is left over from previous harebrained attempts at state direction of the economy Don’t look to economists to create “development strategies,” and don’t back up such experts with external coercion like IMF and World Bank conditions on loans. History proves that imposing a rigid statist development ideology on the world’s poor has failed miserably The Easterly Solution: Pragmatic use of time-tested economic ideas by individuals, firms, governments, and societies as they find their own success “Revolution from Below” (e.g.) Chung Ju-yung : The son of North Korean peasant farmers that built the Hyundai car company from the ground up Easterly: “It is the ‘Chungs’ of the world that will end poverty.” 10

14. Empowerment through Information & Education"Give a Man a Fish, Feed Him For a Day. Teach a Man to Fish, Feed Him For a Lifetime.” (Lao Tzu)

15. Personal Experiences w/ Development in East Africa WOMEN EMANCIPATION AND DEVELOPMENT AGENCY (WOMEDA) Human Rights and Sustainable Development based Grassroots NGO working toward establishing Equality in the Region Promotes the status of marginalized groups by creating & strengthening Equal Opportunities for Women, Men, & Children Provider of: Socioeconomic and Legal Counseling to Women Community Education Child Protection Bedding, School Supplies & Uniforms 20 Miles = The Average Distance Walked to Obtain Services Rain Water Harvesting Systems Project Identify families affected by HIV/AIDS to lessen burden Goal: Extending Lives through ensuring availability of one of mankind’s most basic resources, Water Sustainable Solution Empowerment Lack of Capital = Poverty Trap 12

16. Microfinance: A piece of the puzzle Definition: Supply of small loans, small savings, and other basic financial services to the poor Addresses a Market Failure: Formal financial institutions were designed to help those who already have financial assets Does Not require definitive assets or collateral that the bank can seize Gives Credit to those who otherwise couldn’t get it Community-Based: Terms of payback are negotiated by the community members Money is distributed by Savings and Credit Cooperatives or Money Sharing Groups: Owned and Operated by the community members/villagers Group Lending: Held accountable by neighbors "Peer pressure" from other members of the group helps to ensure that the loan is repaid Currently Very Popular: Seen as a panacea in for development woes Blend of Sachs and Easterly Criticisms Created a hyper-pluralization of small businesses in communities: How many fruit stands can you have? Some Microlending Organizations don’t require a business plan and the money gets misused Doesn’t reach the poorest of the poor UN Capital Development Fund’s Comprehensive Impact Studies on Microfinance Helps very poor households meet basic needs and protect against risks Associated with improvements in household economic welfare and enterprise stability and growth By supporting women's economic participation, microfinance helps to empower women, thus promoting gender-equity and improving household well-being Development Economics Studies have shown: Women are much better spenders and they invest the money in their family and their home Women: Typically in charge of the cooperative and distribution of funds (e.g.) KADERAS – Governing Board has a minimum requirement that 30% of its members are Female 13 "The power of putting capital in the hands of poor people enables them to create their own wealth and invest in their children." - Maria Otero, president of ACCION International

17. Dr. Muhammad Yunus Father of Modern Microfinance 2006 Nobel Peace Prize Winner Grameen Bank One of the 1st major microcredit institutions Founded in 1974 in Bangladesh, while Yunus was studying the lives of poor entrepreneurs during a famine He began by loaning to groups of women, and his program soon proved that small loans could not only quickly improve lives but were paid back with interest and on time Since 1974 The Grameen Bank has loaned $5.7 Billion $5.1 billion of that has been repaid Recovery Rate = ~ 98.9 % It has made more than 950,000 loans and has 6.7 million members, ~ 96 % are Women Norwegian Nobel Committee: “Ending poverty in the world cannot be realized by means of microcredit alone. But Muhammad Yunus and Grameen Bank have shown that microcredit must play a major part." World Bank Estimates: + 7,000 Microfinance Institutions in operation all over the world 14

18. San Francisco-based, one-of-a-kind microlending organization Has developed a global lending platform using the Web to connect individual lenders w/ individual borrowers in developing countries Kiva’s Mission To connect people through lending for the sake of alleviating poverty Providing access to a brand new source of debt capital Loans of as little as $25 made by ordinary individuals through its Web site @ kiva.org 15 http://www.pbs.org/frontlineworld/stories/uganda601/video_index.html

19. Conclusions Defining Development is difficult because it is a complex issue Hopefully this presentation has helped to shed some light on the issue Development can most accurately be defined as: The process of ensuring that each individual has full access to their human rights There is no single solution Large International Aid Organizations have their limitations: Bureaucracy Many NGOs doing good work Empowerment and Education are better than handouts Grassroots-based initiatives have proven effective Sustainability is the key to future development practice Essay Questions If development is a process of ensuring that each individual has full access to their human rights, how have the various theories, authors, and organizations that we have discussed contributed to or hindered development? Discuss microfinance and whether or not it is a solution for sustainable development in developing countries? 16