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Friday, 15 March, 2002, 22:31 GMT
Why development matters
Are there new models of development?
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By Evan Davis
BBC Economics Editor
Gordon Brown has said it in Washington; Bill Clinton has said it in London; the World Health Organisation has said it to anyone who'll listen.

In the wake of September 11th, the relatively successful war in Afghanistan and the anti-globalisation movement, there seems to be a new appetite for tilting the benefits of the global economy towards the poor.

It's hard to say why it is now that the rich countries have become so interested in the process of development.

Perhaps it is guilt, perhaps it is the need to win the peace as well as the war against terrorism, perhaps it is the need to show that globalisation is a just process in order to secure widespread public support for it. Who knows? But at least the rhetoric has changed this year.

Where are we now?

So how optimistic should we be that anything substantive will come of this apparent conversion to global redistribution?

Some might remember the Brandt Commission, named after the former German Chancellor, back in the early 1980s, which dreamed up a long shopping list of demands on rich countries, to redistribute resources to the poor.

It gathered dust on the shelves of the chattering classes for a few years afterwards. Is that where we are now? Maybe. But things could be a little different this time. To see why, consider the evolution of thinking in this area.

New thinking

In the 1960s, there was a na´ve view that by simply channelling some resources to poor countries, development would follow.

That view was based on the success of the Marshall plan, when the United States contributed to the rebuilding of Europe after the second world war by sending money over.

But in the 1960s, aid didn't seem to work as planned.

The installed infrastructure of human and social capital in poor countries - pompous phrases for well educated, un-corrupt citizens, and institutions such as accounting standards, company law, competition policy and fair taxation - were just not developed enough to exploit the aid that was sent over.

By the 1980s, the intellectual and political climate had swung to the opposite extreme.

Aid was seen as a waste of time; successful development required good government.

Free trade was seen as a pre-requisite, plus a strong property law, plenty of inward investment from private companies, and above all, the eschewing of any kind of belief in socialism.

Balancing act

In truth, this approach was also a bit disappointing. Some countries flourished, others did not. It seems that private investment flows do have the power to uplift a nation, but private investment tends to flow to a select elite of nations.

It doesn't seem to spread itself out much.

Countries get trapped in vicious or virtuous circles depending on whether they are in the elite group or not. The countries that are not, struggle to improve their human and social capital, because the resources to do so are never quite there.

Now the main reason to optimistic today is that there seems to be an understanding that constructive development requires a combination of both the 1960s and the 1980s approaches.

And support for development is proceeding on several fronts: extra trade (a whole process to promote development-friendly trade was launched at the WTO trade talks in Doha late last year); better government in poor countries; and more aid, (especially aid that is not directed to building big dams or road schemes, but to improving human and social capital).

Extra aid

And it's generating the extra aid which is what the Monterrey meeting is all about.

It's too soon to say the world has changed.

It's too soon to say the West will increase aid enough to make a difference, or that the poor countries will absorb that aid constructively.

But it may not be too soon to say that signs of the beginning of a change are observable.

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