Shalmali Guttal

By Shalmali Guttal Development Equals Economic Globalisation

The first Preparatory Committee (Prepcom) Meeting for Financing for Development (FFD), held in the United Nations (UN) headquarters in New York from February 12 – 23, seemed unable to move beyond an over simplified equation between development and economic globalisation. Going by the discussions at the Prepcom, it seems clear that unless fundamental changes are brought about in the international financial system, architecture, institutions and governance in favour of poor and developing countries, these countries are likely to pay a far higher price for development than before. What would make it more expensive? Further speeding up and consolidation of the processes, structures and institutions of economic globalisation parading as development.

By Shalmali Guttal  
Briefing notes o­n New Forms of Debt at the Asia Pacific Assembly o­n Debt and Development Bangkok, Thailand, October 8-12, 2000

One of the most distinct characteristics of economic globalisation in developing and transitional countries has been the gradual withdrawal of the state from acting o­n behalf of the public interest; structural adjustment policies and the entire package of neo-liberal reforms that gained currency at the o­nset of the debt crisis in the 1980s have been intended to minimise the role of the state in regulating and protecting the domestic economy, and providing essential goods and services o­n which majority populations depend.
This has involved a range of measures: privatising public goods, services and state assets; deregulating markets; restructuring/removing subsidies for health, education and basic food items; slashing social spending; introducing and increasing user charges for basic services/utilities, dismantling mechanisms for labour and environmental protection; decreasing or completely eliminating minimum wages; liberalising trade, investment and finance, etc. But o­n closer examination, it is not so much that the role and power of the state has been diminished; rather, it is that its role and power has been redefined and reconstructed to protect a different group of interests: those institutions and actors that advocate the unfettered expansion of a free market that has some imagined ability to allocate resources more efficiently than the state, and that will somehow create wealth and prosperity for all.
The argument offered by promoters of the neo-liberal and free-market agendas is that the state has neither the management capability, nor legitimate authority to run the economy: state planning, ownership of industries, provision of social and welfare programmes, regulation of wages and of national economic policy undermine entrepreneurial activity and lead to inefficient use of resources.

By Shalmali Guttal

What's New at the ADB?

The Asian Development Bank (ADB) now asserts that poverty reduction is its overarching institutional goal. It claims that all its other strategic objectives--economic growth, human development, sound environmental management and improving the status of women--will henceforth be pursued in such a way that they directly contribute to poverty reduction.
But the ADB has no clue how to reduce poverty. In adopting the poverty reduction rhetoric, it is merely following the lead of the World Bank and its other multilateral peers who successfully negotiated the transition in their rhetoric a long time ago. A relative "laggard" in the development business, the ADB is the last of the multilateral institutions to declare full and complete dedication to the reduction of poverty. And in so doing, it hopes to divert attention away from emerging evidence and criticism of its abysmal failure as a bank as well as a development institution. It now talks about sustainable human development, gender equality, environmental protection and participation, but it is clearly at a loss as to how these terms can be translated into action.
The ADB's Poverty Reduction Strategy proposes nothing new in terms of understanding, or tackling poverty. What it does is use poverty rhetoric to dress up the only business it knows: market based economic growth, liberalisation of trade and investment; deregulation, or minimising the role of the State in governing the economy' and privatisation, with an ever expanding role for the private sector in the production and delivery of goods and services. The strategic goal of these initiatives has not been poverty reduction, but the rapid integration of local and national economic activities into the global market economy. Far from reducing poverty, the ADB's version of development has contributed greatly towards the impoverishment of people in the Asia and Pacific.
The poverty rhetoric is important to the ADB from the point of view of institutional survival. The ADB needs the discourse of poverty. By committing itself to research and documentation about poverty ("expanding the knowledge base") it attempts to sets itself up as a poverty expert, and the key producer and disseminator of knowledge about poverty and development in the region. Through such a discourse it can exercise influence about how poverty is perceived and approached, and in the design of anti-poverty programmes. The poverty discourse thus serves the ADB in two critical ways. One, it provides a moral-ethical cloak for it's poorly conceived and destructive development policies and practices. Second, it ensures that there will always be a steady supply of "poor" to keep it in business.


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