By Andy Sumner, King’s College London
Yesterday’s blog listed five areas of change related to global poverty and economic development in developing countries. What do these changes mean for development co-operation?
First, development co-operation needs to adapt to the new polarisation within the developing world. More precisely, the old model of supporting ‘stuck’ and ‘ODA-dependent’ developing countries needs to be complemented with a new model of collaborating with ‘moving’ and ‘post-ODA’ developing countries.
Second, development co-operation to support expanding social welfare regimes and social protection systems focused particularly on children is important to disrupt the inter-generational transmission of poverty, especially given that under 18-year olds make up half of global poverty.
Over 100 developing countries have already established cash transfer schemes, which indicates that these systems are already being built, and systematic reviews concur on poverty reduction impacts. A global knowledge bank on building social welfare and social protection systems is thus one potential area for post-ODA development co-operation.
Third, development co-operation needs to consider the ‘productive’ side of economic development as a supporting structure to the ‘social’ side. This is because one of the greatest challenges facing many developing countries is the potential for undesirable patterns of structural transformation. Development co-operation needs to view this issue as a global challenge and understand the importance of the massive expansion of economic infrastructure that is required to support economic development. Long-run concessionary development finance is likely to be increasingly important for post-ODA countries to sustain that economic development, as infrastructure is often expensive and economic returns from infrastructure investment take generations to be fully realised.
Additionally, a focus on more spatially inclusive economic development supported with infrastructure investment could realise what Arthur Lewis called ‘trickle along’ economics. This entails connecting traditional sectors to growth poles and the modern sectors, connecting regions, and connecting countries. A stronger focus on spatially inclusive economic development (not just economic growth) would also address the fact that global poverty remains rural, albeit, in countries where data is available, up to half of poor households have no member working in agriculture.
In sum, a new polarisation within the developing world is emerging and much of global poverty is concentrated in moving and post-ODA countries. At the same time, economic development is getting harder as deindustrialisation is raising questions about future employment and productivity growth, and by extension future poverty reduction. Consequently, rather than winding down development co-operation as countries exit ODA, international support for inclusive economic development must adapt to a new era.
Sumner, A. (2019) Global Poverty and Inequality: Change and Continuity in Late Development. Development and Change50(2): 410–425