Celebrating 30 years of research for development

The celebration of the 30th Anniversary of UNU-WIDER presented the ideal opportunity to look back, take stock, and plan ahead. Where else can a group of early career researchers have the chance to present at a conference including Nobel Laureates such as Joseph Stiglitz, Martti Ahtisaari and Amartya Sen? So, the stage was set for 600 participants from 75 countries to learn from the founders of the Institute, and to render account for what has been done in development economics over the last three decades.

The programme was very full and content rich. So, whether you could attend or not, we are greatly helped by the online resources from the conference available on the conference website – including presentation slides and videos.  

In this series of three linked contributions, I give a personal overview of the event and some of the highlights. My selection looks first, at the opening panel and gives a general overview of the themes and issues discussed. The second instalment will look into the, regional perspectives debated in the conference. Finally the third article will dive into the thematic of 'mapping the future of development economics'.

The opening panel - the development history of the past half century
Opening panel. From left Kristiina Kuvaja-Xanthopoulos, Ernest Aryeetey, Justin Lin, Nora Lustig, and Deepak Nayyar. © Alexander Zach / UNU-WIDER

​The opening panel on 'Key Ideas and Outcomes in Regional Development' provided an opportunity for Ernest Aryeetey (Africa), Nora Lustig (Central and Latin America) and Justin Lin and Deepak Nayyar (Asia: China and India respectively) to give overviews coloured by their regional perspectives and life experience. In this session, the development history of the past half century was analysed and dissected.

Aryeetey, who is the current Chair of the UNU-WIDER Board, asked whether development economics has run out of big ideas. After the early optimism of independence Africa hit the problems dramatically described as 'the lost decades'. The critique of “high development theory” and loss of confidence in the state’s ability to deliver economic growth and prosperity has now given way to a sober and cautiously optimistic setting in which many African states better grasp their role and see what can be done through the market.

Development Economics 3.0.

Justin Lin presented his New Structural Economics (NSE) as “Development Economics 3.0” after structuralism (DevEcon 1.0) and the Washington Consensus (Dev Econ 2.0).

Key Asian economies, dragons and tigers, have succeeded through a home-grown 'dual track approach' focused on moving up the value chain, manufacturing and exporting. Countries such as China and Vietnam– showed what could be achieved.

New Structural Economics, according to Lin, takes seriously comparative advantage —actual and latent. A country’s industrial structure is endogenous, but by incorporating technological innovation, it can be changed through time.  This needs a dynamic approach to endowments to determine the optimal economic structure. A facilitating state is needed to capture the late-comer advantage, solve coordination problems, and assist the process of industrial upgrading and diversification. Lin also presented the application of the framework to Africa, which needs to 'jump start' manufacturing.

Lin gave a telling example of the development of the Huajian shoe industry in Ethiopia based on Chinese investment and expertise. Discussion of Lin’s WIDER Annual Lecture with Ethiopia’s former President Meles Zenawi helped to convince the latter of the approach which led to great success.

Pragmatic discussion on development easier after the Cold War

Another discussant of the opening panel, Professor Nora Lustig provided a detailed review of the early promise of import substitution and protectionism, followed by the dawning reality of the limitations of industrialization; balance of payment crises, imbalances in the economies, higher inflation and fiscal crises. By the 1980s, debt crises were a recurrent experience for Latin American economies. This was the point at which UNU-WIDER came in to existence – and engaged in detailed work on differing experiences of adjustment and stabilization in one of the early systematic interrogations of the Washington Consensus. One example is the synthesis volume Varieties of Stabilization Experience.

Lustig’s conclusion is that the less ideologically-charged environment since the end of the Cold War means that pragmatic discussion of effective development is easier. She specifically mentioned achievements of UNU-WIDER that it kept in touch with both sides of these debates and provided a forum for alternative views.

By 2030, Asia, Latin America and Africa would enjoy at least half of world GNP

Deepak Nayyar’s presentation sketched an even broader canvas, continuing themes which he had examined in his WIDER Annual Lecture and developed to book length in Catch Up.

Important common features of countries which have enjoyed development success include taking the initial conditions seriously into account, as well as ensuring the activity of enabling institutions and supportive governments. Nayyar’s presentation stressed the Asian development experience and particularly the reassertion of the mega-economies of China and India in the global economy. The rise of the west from 1820-1950 is now being redressed as China and India again ascend to dominant positions in the world economy.

Nayyar predicted that by 2030, Asia, Latin America and Africa would enjoy at least half of world   GNP, world manufacturing value added, and of world trade. He rejects any sense that Africa, in particular, is 'destined for underdevelopment'.

Keynote – The State, the Market, and Development. From left Tarja Halonen and Joseph Stiglitz. © Alexander Zach / UNU-WIDER
Joseph Stiglitz keynote speech – a tour de force

The keynote address by Joseph Stiglitz was a tour de force in which he outlined the costs of some of the economic 'experiments' which have been conducted in recent decades.  He commented in an aside that one could not do a Randomized Control Trial on alternatives to China’s current development —there is no Planet B on which to test it. He made trenchant comments on the impacts of the Washington Consensus, the 'Big Bang' transition in Russia and some other Eastern European countries and was predictably caustic about the consequences of austerity and bailing out the bankers, rather than those dispossessed in the housing and finance crisis from 2008 onwards.

Both the slides from which he spoke, and frequently departed, and also a draft of the speech are available to read. One would be well advised to watch and enjoy the presentation in full on the UNU-WIDER Youtube channel.

Poverty – what next?

The Panel on 'Poverty - What Next?' provided a highly intelligent juxtaposition of three different approaches to the issue. Martin Ravallion addressed the issue of a welfare-consistent measure of poverty which is equally applicable everywhere. He presented a complex argument to show that two poverty lines are needed – a lower line with 'fixed purchasing power across countries' and a 'new upper line given by the poverty line that one would expect given the country’s level of average income'.  The welfare-consistent level being sought lies somewhere between the two lines.

Peter Lanjouw’s presentation showed the merits, and limitations, of being able to return to a much surveyed village, Palanpur in Uttar Pradesh. One can learn a huge amount, but there is great room for diverse interpretations of what the information means. Leading researchers have been conducting surveys in the village for 60 years; in a number of cases collecting material from all households.

Finally in this panel, Santiago Levy provided an overview of developments in Latin America where both poverty reduction and progress towards greater equality have characterized development since 2000.

WIDER Annual Lecture 19 - Three decades of change in development by Amartya Sen. © Alexander Zach / UNU-WIDER
Annual Lecture 19 – a broad interdisciplinary overview

Finally, Amartya Sen’s WIDER Annual Lecture was an exemplary display of his method – a broad interdisciplinary overview, then a trenchant application - in this instance the problem of how to choose energy sources for the secure and sustainable future of development. For me, though, the real masterclass was the expansive way in which he responded, in depth and with deep humanity, to a huge range of questions.

More to follow

The second and third of these pieces will continue to present the major themes and also some of the future perspectives outlined at the conference.