By Svenja Flechtner, Jakob Hafele & Theresa Neef
Much has been said about what’s going wrong in development economics – on this blog (for example by Adel Daoud, Ingrid H. Kvangraven, or Jacob Assa) and elsewhere (for example by Angus Deaton, Dani Rodrik, and Benjamin Selwyn), as well as in newspapers. Much has been written, too, about alternative perspectives and approaches to economic development thinking (this recent compilation by Reinert, Ghosh and Kattel gives an overview of many of them). But is it possible to build a coherent pluralist and critical framework out of these approaches? If so, what could a critical and pluralist research agenda for development economics look like?
On a weekend in early June this year, about 20 researchers – development economists in one way or another – from different backgrounds and perspectives gathered in Berlin to discuss these questions under the auspices of the European Association for Evolutionary Political Economy (EAEPE) and the German Institute for Economic Research (DIW) (symposium website; here are a few photos). For us, the organizers, this was quite an experiment: we were not sure which kind of debates we could expect to unfold having a program with Marxist, structuralist, Post-Keynesian, Post-Colonial, complexity, behavioral and feminist perspectives. We knew, for sure, that the participants were open-minded and intellectually curious people, but would this suffice to find a common basis for fruitful discussions? In retrospect, we must say, there was so much to exchange and discuss that we should have taken a week rather than a weekend. Here are a few things that we have learned.
Questioning the dominant development mindsets
Before anything else: does it even make sense to have a field called ‘development’ economics that is concerned with the economic problems of the ‘developing part’ of the world? There is no doubt that there are economically rich and poor countries on our planet. But, as the World Bank categorizes the world into low-, middle- and high-income countries according to arbitrarily set income thresholds, Sanjay Reddy argued these categories may shape our view more than is helpful. For example, talking of a rising global middle-class may seem to suggest that much has been achieved in terms of living standards and well-being, even though statistics and measurements are questionable, and the actual achievements remain unclear. Moreover, categorizations often make us group countries or populations. But the devil is in the detail, and just because two countries are equally poor (whatever this means), they are not necessarily much alike and do not necessarily face the same problems.
For a symposium held by a European association, there is another good reason to question the distinction of ‘development’ economics: if we address economic issues in poor countries, a strong focus should be on the role that our European economies, governments and economic activities play in the whole story. For us, moving towards a pluralist agenda thus means to substitute separate analyses of ‘developing’ countries and their economic issues by global encompassing perspectives.
Learning from History
A second ingredient for a pluralist paradigm is the willingness to learn from history. Erik Reinert reminded us that development thinking has a long and rich tradition, while current lenses are rather narrow. Since the Washington Consensus, Reinert argued, economists have gotten lost focusing on getting prices/ governance/ institutions/ culture/ diseases/ education/ whatever other fad right. Such unilateral approaches are not only problematic because they lose sight of the fact that prices, institutions, culture or diseases exist at the same time and interact in complex ways. Typically, it is also forgotten that economists in earlier times have had interesting things to say about them. A pluralist paradigm reduces the risk of focusing on temporary fads and of forgetting the history of the discipline.
Global and structural perspectives: many trees, no forest?
A considerable part of the weekend was spent discussing the contributions of and relations between different structuralist, institutionalist, and Marxist perspectives. There are many common themes here, first and foremost because all see tendencies of polarization (of income, classes, gender relations, global political power, CO2 emissions, …). On these grounds, there was a common understanding that core-periphery relations and dynamics make it difficult for many countries to simply ‘develop’. For example, currency hierarchies and international trade regulations (this and this give a flavor of this large debate) seal core-periphery positions in the world economy. It is no surprise that there is also a common understanding about the need to bring core-periphery perspectives to the forefront again. Fortunately, these have already enjoyed recent and fresh interest in development circles (see e.g. here). Of course, this is not to say that we should simply revive an old play. Substantial updates could come from new research methods: for example, Claudius Gräbner discussed if and how complexity perspectives on the economy could help to analyze and understand core-periphery dynamics empirically. A second direction for revisiting and enriching core-periphery perspectives is through pluralist analyses of the mechanisms at work. Carla Coburger and Patrick Klösel analyzed the working of financial institutions and consequences for economic dynamics within West-Africa’s CFA-franc zone, bringing together core-periphery perspectives, institutional analysis and structuralist strands of post-colonial studies. Such an approach is far more encompassing than earlier core-periphery approaches that focused on macroeconomic dynamics and constraints.
Of course, thinking and bringing together these different perspectives does not only create harmony. The most fundamental line of conflict, for us, concerned the nature and objectives of ‘development’. While a Postkeynesian perspective would emphasize how difficult it is for a country to achieve full employment and international competitiveness in the light of power imbalances and currency hierarchies, some Marxist perspectives would want to abandon economic growth and global competitiveness altogether, arguing that they are detrimental for labor. Another example concerns the state. It is en vogue to emphasize the role of the state and state power for development processes. But while it is quite common sense that many different forms of state power can generate economic growth, not all of them contribute to human well-being. For example, processes of economic growth in autocratic regimes like South Korea or Singapore have been criticized for being labor exploitative (see also here).
After all, why should we bother about similarities, differences, compatibilities and conflicts between these different approaches? Unilateral perspectives to specific problems and answers to specific questions in development economics are easy to obtain. But the interesting discussion starts when other perspectives complement them. Yes, export manufacturing could be a good strategy to overcome specialization in primary goods for some countries, but what are the implications for women (to name only one aspect)? The feminization of employment in export manufacturing, Thi Anh Dao Trang showed, can actually have detrimental effects on the well-being of women and their families. In this sense, thinking about a coherent, pluralist paradigm for development economics is like maximizing under A LOT of constraints. And to spoil this maximization analogy right away, it also stimulates debates about how to define ‘development’. That’s what makes it so attractive to limit one’s research to one paradigm: it spares you a lot of questions and discussions. But in order to eliminate blind spots and to avoid policy prescriptions that create a whole bunch of new problems, the effort is worthwhile.
What future for behavioral development economics?
All these structural debates have little to do, at first sight, with the micro-focused field of development economics: the enormously rising strand of behavioral development economics and, notably, impact evaluation via randomized controlled trials (RCTs). But are these two worlds really disconnected? Providing a critical discussion, Agnès Labrousse showed that many simple RCTs omit the potential heterogeneity of effects of micro-interventions. To understand better what works and how it works, we need mixed-methods approaches on the one hand and embedded interpretations on the other. Bringing us back full circle to structures and institutions, Svenja Flechtner argued that thinking about individual behavior from both sides is where behavioral approaches get interesting. Smita Srinivas emphasized the importance of connecting cognitive and structural views with institutional approaches to study processes of innovation at different scales (her blog post about the symposium is here). Or take the example of aspiration traps: yes, we can address allegedly too low aspirations arguing that poverty, on average, depresses people’s ability to build forward-looking aspirations. But, we can obtain a better understanding of what’s going on if we ask how societal structures, belief systems, worldviews, racial or gender stereotypes and so on shape aspirations in specific circumstances – and also, how aspirations reproduce these social institutions or not. Rather than just designing behavioral interventions that correct behavioral anomalies or irrationalities, we may use psychology and socio-economics to understand observed behavior. As Robert Lepenies put it, behavioral analysis can be useful, but just because we draw on behavioral analysis, this does not mean we must use behavioral policies.
Towards a critical pluralist agenda: what way forward?
Finding common grounds between structuralists, institutionalists, behavioral economists, complexity scholars, critical political economists and post colonialists is not an easy task. But after a weekend of inter-paradigmatic discussions, we think that the search for a pluralist paradigm is a worthy endeavor. What is more, we think that it is actually possible. Of course, this is due, first and foremost, to the participants’ great openness: they regarded other perspectives as enriching rather than something that is fundamentally flawed in its modus operandi (as we know it from many discussions between neoclassical economists and Keynesians, for instance). This openness is necessary, but not sufficient for productive discussions: we need to find some common ground. At the same time, we are not saying that different approaches must necessarily agree with each other. To understand how this might work, Jakob Kapeller’s and Leonhard Dobusch’s framework of interested pluralism is helpful.
Source: Dobusch and Kapeller (2012), p. 1050
For example, consider the role of currency hierarchies for international economic dynamics. Different approaches could be identical in their take on the issue. They could also be convergent or compatible. Carla’s and Patrick’s analysis of the CFA-franc zone is a good example of compatible approaches that have been brought together fruitfully. The merit, again, is that our potential to learn is larger when we look at the phenomenon from several angles. Finally, we could find out that different approaches produce divergent or even contradictory interpretations of currency hierarchies. In this case, we must be able to engage in critical but constructive discourse. To dissent in a productive way, in turn, we need common meta-ground and some consensus about how scientific knowledge creation works. To figure this out, we need to meet again, for at least a week.
Svenja Flechtner is a Post-doc research assistant at the European University Flensburg.
Jakob Hafele is a Master student of International Development at Vienna University.
Theresa Neef is currently finishing her graduate studies in economics at Freie Universität Berlin and works at DIW Berlin.
The symposium enjoyed financial support by the Fritz Thyssen foundation.