Kicking Away the Ladder

Cambridge professor of development studies, Ha-Joon Chang, is likely more known is the 'Global South' than within universities in North America or Europe – mainly because his writing takes a different approach, sometimes rather boldly so. Of his long list of publications, "Kicking Away the Ladder: Development Strategy in Historical Perspective" (2002) is the most cited. The book explores policies and institutions that were used by 'now developed countries' in order to reach their current position, and compare that with what the international development community recommends / demands of currently developing countries. In many ways, Chang challenges an entire sector with this book – the findings "will undoubtedly disturb many people, both intellectually and morally" (p. 12), as assumptions and myths are busted. In this review I focus on policies (the institutions component is also good, but has been developed by others significantly since – to be explored in future posts).

The author summarizes the objective, and the main finding, in the first two pages, writing: "There is currently great pressure on developing countries from the developed world, and the international development policy establishment that it controls, to adopt a set of 'good policies' and 'good institutions' to foster their economic development… As we shall see later in the book, there have been heated debates on whether or not these recommended policies and institutions are in fact appropriate for today's developing countries. Curiously, however, many of those critics who question the applicability of these recommendations nevertheless take it for granted that these 'good' policies and institutions were used by the developed countries when they themselves were in the process of developing" (p. 1). "This book pieces together various elements of historical information which contradict the orthodox view of the history of capitalism, and provides a comprehensive but concise picture of the policies and institutions that the developed countries used when they themselves were developing countries. In other words, what this book is asking is: 'How did the rich countries really become rich?' The short answer to this question is that the developed countries did not get where they are now through the policies and the institutions that they recommend to developing countries today. Most of them actively used 'bad' trade and industrial policies" (p. 2).

The title of this book comes from Chang's description of how nations gain advantage, and then seek to disable other nations from attaining a level of comparative status to prevent competition. Change writes "the current policy orthodoxy does amount to 'kicking away the ladder'. Infant industry promotion (but not just tariff protection, I hasten to add) has been the key to the development of most nations, and the exceptions have been limited to small countries on, or very close to, the world's technological frontiers, such as the Netherlands and Switzerland. Preventing the developing countries from adopting these policies constitutes a serious constraint on their capacity to generate economic development" (p. 10). The basis of the argument draws from the fact that "virtually all NDCs [now developed countries] actively used interventionist industrial, trade and technology (ITT) policies that are aimed at promoting infant industries during their catch-up periods" (p. 18), but current 'good' policy bars such policy.

What role do the interventionist policies play? Primarily they serve to level the playing field. Chang writes "the common problem faced by all the catch-up economies is that eh shift to higher-value-added activities, which constitutes the key to the process of economic development, does not happen 'naturally'. This is because, for a variety of reasons, there exist discrepancies between social and individual returns to investments in the high-value-added activities, or infant industries, in the catch-up economies. Given such discrepancies, it becomes necessary to establish some mechanisms to socialize the risk involved in such investments" (p. 126).

The main finding of the book – that currently recommended policies for developing countries are not what now developed countries used to develop – begs an important question: "aren't the developed countries, under the guise of recommending 'good' policies and institutions, actually making it difficult for the developing countries to use policies and institutions which they themselves had used in order to develop economically in earlier times?" (p. 3). Chang further explains: "Once a country gets ahead of other countries, it has a natural incentive to use its economic and political powers to pull ahead even further. Britain's policies, especially those of the eighteenth and nineteenth centuries, are the best examples of this. What is disconcerting is that these policies have so many parallels with those pursued in our time by developed countries in relation to their developing counterparts" (p. 51). "The plain fact is that the Neo-Liberal 'policy reforms' have not been able to deliver their central promise – namely, economic growth. When they were implemented, we were told that, while these 'reforms' might increase inequality in the short term and possibly in the long run as well, they would generate faster growth and eventually life everyone up more effectively than the interventionist policies of the early postwar years had done. The records of the last two decades show that only the negative part of the prediction has been met. Income inequality did increase as predicted, but the acceleration in growth that had been promised never arrived" (p. 128).

Chang does not leave readers to read between the lines in suggesting parallels with current and colonial practices. "By demanding from developing countries institutional standards that they themselves never attained at comparable levels of development, the NDCs are effectively adopting double standards, and hurting the developing countries by imposing on them many institutions that they neither need nor can afford' (p. 135). The author concludes that "the currently recommended package of 'good policies', which emphasizes the benefits of free trade and other laissez-faire ITT policies, seems at odds with historical experience" (p. 127) and that in numerous accounts the 'good' development policy is, in fact, 'kicking away the ladder' and hindering economic growth in developing countries.

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Post-Doc: Development Economics

Centre for Studies of African Economies, Blavatnik School of Government, Radcliffe Observatory Quarter, Woodstock Road, Oxford

People often do not take up programmes or interventions, even if these might have high returns or improve their wellbeing. Psychological constraints may form part of an explanation for this pattern. These psychological constraints may be particularly severe among poor people in low-income countries.Kate Orkin and Stefan Dercon are collaborating with economists and psychologists from Princeton and Duke Universities, the University of Cape Town and IFPRI to build a large-scale programme of research in this area. 

Research will examine (1) if psychological interventions can alter poor people's subjective expectations, sense of their capabilities and preferences in developing world contexts; (2) whether these changes alter economic behaviour and outcomes; and (3) whether integrating psychological interventions into existing anti-poverty programmes enhances the effect of these programmes.This is a fixed-term post for 2 years, based at the CSAE, Blavatnik School of Government. Applicants must have been awarded, or are nearing completion of, a doctoral degree in a relevant discipline. 

Main duties include managing a large RCT; contributing to and/or collaborating on other research projects and engaging in original, world-class research in an area relevant to this programme; and managing a small group of research assistants. Applicants must demonstrate evidence of developing a track record of publications; the ability to carry out independent quantitative research; and experience working in developing countries. Previous experience in designing and conducting lab and/or field experiments is desirable.

Vacancy ID :123266

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An Introduction to International Development

Looking for an introductory book to share or use in an undergraduate course? Radelet's 2015 The Great Surge is worth considering, particularly for the economics side of development. He introduces readers to key thinkers and books, supporting some and disputing others. Very readable. From the book;

  • 'We live at a time of the greatest development progress among the global poor in the history of the world. Never before have so many people, in so many developing countries, made so much progress in so short a time in reducing poverty, increasing incomes, improving health, reducing conflict and war, and spreading democracy." (p. 1)
  • "In my view, widespread development progress requires three factors to work together in concert: the creation of favorable global conditions to development, the formation of meaningful opportunities for individuals and communities to make economic and social progress, and the development of the right skills and capabilities to take advantage of those opportunities – one of the most important of which at a national level is leadership." (p. 16)

On the future of development:

  • "One scenario is that the development transformation continues: sustained growth, smart investments and policy choices, continued advances in technology and ideas, stronger health and education systems, and deepening democracy lead to growing prosperity and improved welfare in the coming decades … A second future is one in which development progress slows considerably. China's rapid economic expansion decelerates, the US and European economies remain sluggish, and economic growth and job creation begin to weaken across many developing countries. More nations follow Thailand and Venezuela and step backward in democracy… A third scenario is that development progress is derailed: population pressures, resource demand, climate change, environmental degradation, and growing conflict and war combine to halt and in some countries reverse development progress." (p. 22-23)
The book details development progress, challenges, and potential futures
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The Mystery of Capital (2000) de Soto

Talking with undergraduate and graduate students has led me to believe that fewer people are investing their time in books. Wikipedia provides the long version, and Twitter keeps us up to date. One important thing that we have lost, in development studies and generally, is a more grounded understanding of where ideas came from and how they developed over time (beyond that Wiki link). In the practice of international development, I believe this is part of the reason we tend to see ideas be recycled (it appears we are not passing those lessons learned on very well). Hence, this series of "Thought Provoking" quotes from books. These posts may not encourage readers to pick up the books discussed, but I hope they broaden our vision of what knowledge is available to us.

This posts presents an essential read in development economics: The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (2000) by Hernando de Soto:

Setting the stage:

  • "Capitalism stands alone as the only feasible way to rationally organize a modern economy. At this moment in history, no responsible nation has a choice. As a result, with varying degrees of enthusiasm, Third World and former communist nations have balanced their budgets, cut subsidies, welcomed foreign investment, and dropped their tariff barriers. Their efforts have been repaid with bitter disappointment. From Russia to Venezuela, the past half-decade has been a time of economic suffering, tumbling incomes, anxiety, and resentment; of "starving, rioting, and looting," in the stinging words of Malaysian prime minister Mahathir Mohamad." (1-2)

The problem:

  • "…if people in countries making the transition to capitalism are not pitiful beggars, are not helplessly trapped in obsolete ways, and are not the uncritical pioneers of dysfunctional cultures, what is it that prevents capitalism from delivering to them the same wealth it has delivered to the West? Why does capitalism thrive only in the West, as if enclosed in a bell jar? In this book I intend to demonstrate that the major stumbling block that keeps the rest of the world from benefiting from capitalism is its inability to produce capital." (4-5)

The solution:

  • "In the West, for example, most formal property can be easily used as collateral for a loan; as equity exchanged for investment; as an address for collecting debts, rates and taxes; as a locus point for the identification of individuals for commercial, judicial, or civic purposes; and as a liable terminal for receiving public utility services, such as energy, water, sewage, telephone or cable services. While houses in advanced nations are acting as shelters and workplaces, their representations are leading a parallel life, carrying out a variety of additional functions to secure the interests of other parties. Legal property thus gave the West the tools to produce surplus value over and above its physical assets." (51)
  • "Many of these dwellings are not worth much by Western standards… But there are a great many such dwellings, and collectively their value dramatically outweighs the total wealth of the rich." (33)
  • "The lack of legal property thus explains why citizens in developing and former communist nations cannot make profitable contracts with strangers, cannot get credit, insurance, or utility services: They have no property to lose. Because they have no property to lose, they are taken seriously as contracting parties only by their immediate family and neighbors. People with nothing to lose are trapped in the grubby basement of the precapitalist world." (56)
  • "Government programs to give property to the poor have failed over the past 150 years whether they followed the bias of the right (private property rights through mandatory law) or of the left (protecting poor people's land in government-run collectives). The crippling political agendas of "left versus right" are largely irrelevant to the needs of most people in developing countries. These people move out of the law not because the law has privatized or collectivized them but simply because it does not address what they want." (169)

Ideas worth discussing:

  • "Everyone will benefit from globalizing capitalism within a country, but the most obvious and largest beneficiary will be the poor." (190)
  • "… in a developed country, the farmer's son who wishes to follow in his father's footsteps can keep the farm by buying out his more commercially minded siblings. Farmers in many developing countries have no such option and must continue to subdivide their farms for each generation until the parcels are too small to farm profitably, leaving the descendants with two alternatives: starving or stealing." (57)

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Logan Cochrane

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