Kicking Away the Ladder. Development Strategy in Historical Perspective

It therefore seems quite plausible to argue that, during the period 1960-1980, partly thanks to their better institutional foundations compared to those possessed by the NDCs at comparable stages of development, the currently developing countries grew much faster than the NDCs had done, because they were being allowed to pursue ‘bad policies’. However, when such policies were discontinued in the 1980s, better – and presumably improving – institutions were not enough to allow them to notch up better performances than those of the NDCs in the early days of their development, not to mention letting them improve over their own performance of the 1960-1980 period.[14]

What do all these mean for the ‘kicking away the ladder’ argument? I would agree that, if done in a realistic way and if combined with the right policies, international pressures for institutional improvements can play a positive role in the developmental process. However, the current push for institutional improvements in developing countries is not done in this way and is likely to end up as another ‘ladder-kicking’ exercise.

By demanding from developing countries institutional standards that they themselves had 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.[15] For example, maintaining ‘global standard’ property rights and corporate governance institutions would require the developing countries to train (or even worse, to hire from abroad) a large army of world-class lawyers and accountants. This means that they will inevitably have less money (their own or donors’) to spend on, say, the training of schoolteachers or of industrial engineers, which may be more necessary given their stages of development. In this sense, the NDCs are ‘kicking away the ladder’, not only in the area of policies but also in the area of institutions.

However, the picture in relation to institutions is more complicated than that in relation to policies. Unlike in the case of policies, many of the institutions that are recommended can bring benefits to the developing countries, although their exact forms do matter. However, these potential benefits can only be fully realized when combined with the ‘right’ policies. There are, too, genuine costs to institutional improvements. Therefore, whether the campaign for ‘good institutions’ will in effect turn into an act of ‘kicking away the ladder’ greatly depends on the exact forms and quality of the institutions demanded, and.on the speed with which such demands are expected to be met. On both accounts, the current push for institutional reform does not look very positive for the developing countries.

4.4. Possible Objections

There are at least three objections that could be raised against my argument in this book. The first, and most obvious, is the argument that developing countries need to adopt the policies and institutions recommended by developed countries whether they like them or not, because that is how the world works – the strong calling the shots and the weak following orders.

At one level, it is difficult to deny the force of this argument. Indeed, my discussion in section 2.3 of Chapter 2 on the ‘pulling away’ tactics used by the NDCs in earlier times (e.g., colonialism, unequal treaties, bans on machinery exports) provides ample support for this argument. There is, too, plenty of evidence that even in the present age, when colonialism and unequal treaties are no longer acceptable, the developed countries can ·exercise enormous influence on developing ones. The NDCs exercise direct bilateral influence through their aid budgets and trade policies; they also maintain collective influence on developing countries through their control of the international financial institutions, on which developing countries are dependent. And they have disproportionate influence in the running of various international organizations, including even the ostensibly ‘democratic’ WTO, which is run on the one-country-one-vote principle (unlike the UN, in which the permanent members of the security council have veto power – or the World Bank and the IMF where voting power roughly corresponds to share capital). Moreover, during the last two decades or so, the collapse of the Soviet Union, which had provided some counterbalance to the power of the developed countries, and the demise of the so-called ‘nonaligned’ movement among developing countries, have further weakened the bargaining positions of the developing countries.