My first two postings in this blog have looked at the importance of democracy for development and the relationship between politics and development. Now I will turn my focus to another key debate in development theory and practice; the role of the state in development.
Political debates in both the developed and less-developed parts of the world are often shaped by different views on what role the state should play in the governance of countries. The state’s star has risen and fallen over the years as different political narratives have held sway. As discussed in my first posting, this process has been mirrored in international development theory as the central planning of the 1960s and 1970s gave way to neoliberalism in the 1980s and 1990s. Since then, as interventionist states of both capitalist and socialist persuasion have achieved development progress, theorists have come to realise that the state has an important role to play in facilitating development. In addition, particularly since the events of September 11th 2001, ‘failed states’, state-building and state-sustainability have become core themes of Western foreign and development policy (see Cameron 2010, White House 2010, Mitchell, 2011).
But what is it about a state that makes it an effective driver, rather than an inhibitor of, development? Why are some states with broadly similar structures better able to drive development than others? And what is it that makes some states strong and stable, and others weak and ineffective? I will try to answer these questions with particular reference to the Indian state.
What does it mean to be an ineffective state?
Maureen Mackintosh has drawn out two themes of ideas in critical writing about the states and their impact on development (Mackintosh in Wuyts, Mackintosh and Hewitt, 1992). The unresponsive but invasive state (highlighted largely by those on the political left) is one where the bureaucracy imposes, for example, poor social services on citizens while being entirely insensitive to their needs and preferences. I very much recognise this vision of the state here in India. The government has introduced numerous large scale social sector programmes which are believed to be in the interest of the poor, but there is very little independent rigorous analysis of these programmes’ performance to judge what impact they are really having or how well suited they are to their intended beneficiaries. Without this, it seems to me, such programmes may remain attractive ideological concepts rather than practical solutions to people’s genuine needs. Sen and Grown made a similar critique of India’s social programmes in 1987.
Mackintosh’s second group of criticisms of the state come from the right of the political spectrum and are concerned with the inefficient and restrictive state. Such a view of the state sees governments and as inefficient and self-serving, while state subsidies are market-warping and incentivise the poor to make decisions not in their best-interest (Mackintosh in Wuyts, Mackintosh and Hewitt, 1992). Asking the state to be more active in driving development is, therefore, counterproductive. This basket of criticism shifts the emphasis from a concern with authoritarian tendencies in some states and how this impacts on the poor’s experience of public services, to a fundamental concern with the ability of the state to efficiently allocate resources. In this respect, there are some parallels between the two groups of views, as both consider ‘technocrats’ incapable of making resource allocation decisions for the genuine benefit of the poor. However, the policy recommendations of the two are very different. While (traditionally) those on the political left see potential for improvements in the quality of state services by incentivising state systems and structures to better cater to the needs and interests of citizens, those on the right argue that the best thing a state can do for development is get out of the way.
Reflecting on these differing views of the role of the state and what I have observed during my career, I find that I have more often seen examples of unresponsive but invasive state behaviour. I feel that states do have an important role to play in driving development, but that often the efficacy of state programmes is limited by poor implementation. Sometimes that weakness is caused by inadequate programme design, sometimes by limited availability of information and sometimes by insufficient capacity on the part of officials. For me, these programme weaknesses do not imply that the country would be better off without the programme altogether, but rather that improvements might be made to ensure that it reaches its intended beneficiaries. However, to make broad generalisations about the characteristics of all states seems overly simplistic. Some will portray characteristics that could be labelled unresponsive, invasive, inefficient and restrictive, while others may be none of those things. Some are benevolent, others are patently not.
Public or private interest?
The views classified by Mackintosh are based on some commonly held ideas about the state which have been called the ‘public interest’ view of the state. This view assumes that it is possible for states to identify a single national interest and then pursue that through policy making. In practice, this appears a very simplistic and idealistic view of the nature of states. In the case of India, there is certainly no single national interest; there are complex social structures and hierarchies dividing and classifying over 1.2 billion people or differing socio economic, cultural, ethnic and linguistic backgrounds. Policy reforms may work in the interest of some groups within the country, while they may adversely impact on the interests of others. Furthermore, the Indian state is far from being the well informed, logical actor imagined in the ‘public interest’ view of the state. India’s large social schemes, through which the Indian government invests vast resources, are beset by a dire lack of data meaning that decisions on their reform are often based not on evidence but rather on conjecture, opinion and special interest groups. For me, therefore, there is no true ‘public interest’ state.
In contrast to the ‘public interest’ view, neoliberals have attempted to paint a ‘private interest’ view of the state. This sees employees of the state acting in their own private interest at the expense of all else, including the poor, and implies that the interests of state employees are served by enlarging the budgets of the departments for which they work, protecting their jobs and perks in the process. While there have undoubtedly been examples (from all around the world) of public servants seeking to promote their interests, perhaps at the expense of others in their country, this demonising characterisation of the motivations of all public officials is in my experience, highly misleading. It is quite likely that those working in, for example, a government department concerned with the delivery of poverty-reducing programmes are there because of their own personal commitment to achieving progress in the areas that interest them. In this sense they are seeking to promote the interests of others. This is not necessarily at the expense of themselves, but their own self interest could be a lower priority factor than others’ interests. Basic human empathy is an important factor to consider here!
Perhaps in response to the theoretical positions that have cast the state as the sole solution to, or inhibitor of, development, since the turn of the century, a moderate third position has emerged that has renewed interest in and recognition of the role of the state in development. In development thinking it is now rare for states and markets to “be perceived as polar opposites in the development process” and instead there is increasing recognition that they are “complementary agents of economic advancement” (Matlosa, Mwanza and Kamidza, 2002:1). In place of strong ideological positions on the state, increasing attention has been paid to the idea of developmental states. A developmental state has the power, autonomy, legitimacy and capacity to support the achievement of national development objectives, and urgently prioritises the pursuit of such objectives (Leftwich, 2000). There is no fixed prescriptive model regime type for a state to be classed ‘developmental’, what matters is its prioritisation of developmental objectives.
Matthew Lockwood argues that most African states tend to portray all the hallmarks of a state that a citizen would probably recognise in most countries in the world; they have laws, budgets, a bureaucracy, cabinet and parliament (Lockwood, 2006). What sets them apart, according to Lockwood, and disqualifies them from being considered developmental, is the degree to which personal rule and patronage (or clientalist politics) determine state action (ibid.). Often these two aspects of the state co-exist, with commentators like Kelsall distinguishing between the “shop window” presentation of the state to the outside world and the reality of poor governance behind closed doors (Kelsall in Lockwood, 2006:1). I find myself feeling that I recognise these behaviours to some degree in my observations of some African states. Uganda, for example, is a good example of a state where real development progress has, in recent years, given way to clientalism as President Museveni has sought to entrench himself in power through the creation of patronage networks. Similarly, Rwanda under Paul Kagame has done a good job of presenting an image of a state that countries, donors and the private sector can do business with. However, in recent years, Kagame’s halo has really started to slip as concerns over human rights violations have come to prominence, raising concerns about the reality of his government’s commitment to development. Having said that, I also think that it’s very easy for commentators to criticise governments for displaying such behaviours without fully appreciating the necessities of governing a state. Kagame has repeatedly reiterated his government’s development focus and commitment to democracy, and one might argue that the stability of the country, particularly given its relatively recent experience of genocide driven by social divisions that still remain, necessitates some of the closed door decision making described by Kelsall (ibid.). However, one might equally argue that “there is a real risk that, if left unaddressed” such “shortcomings could exacerbate tensions and ultimately drive broader instability” (Centre for Strategic Studies, 2011:2).
After reading Lockwood’s pessimistic assessment of whether developmental states are emerging in Africa (2006), I found myself dwelling on the question of whether or not India is a developmental state. I think that the current government would like to think of itself as having all of the hallmarks of a state committed to development, but I’m unsure whether the facts bear that out. On the one hand, India’s liberalising reforms in the early 1990s have driven higher rates of economic growth, this growth has been poverty reducing and the government is spending record levels on impressive social schemes. On the other, the spoils of growth have not been shared equally across the country and India is seeing a widening inequality gap. Furthermore, India’s social schemes, while headline grabbing and ambitious, often fall down in implementation and even exclude those who they are intended to benefit, as argued by Supreme Court representative N.C. Saxena in 2012.
Incentives for reform
Unsworth has argued that a key cause of weak or fragile states is “the lack of elite incentives to create effective public authority” (Unsworth, 2010:17). She argues that perverse incentives exist for elites which mean that it is in their interest to maintain the status quo. For example, elites who control access to raw materials and the high returns they offer, have no incentive to change a system that helps to keep them very rich. Moore’s work on earned and unearned sources of income also reaches some interesting conclusions about how different types of income create incentives for different types of state behaviour (2001). He argues that where a state has access to a large volume of income from sources such as oil or minerals (or aid) it does not have to do anything to collect those resources. Earned income, in contrast, requires organisational and political effort to collect and requires significant engagement, interaction and bargaining with taxpaying citizens and businesses. Where a state has significant sources of unearned income it has a much weaker incentive to listen to its citizens or create an efficient public service to collect taxation and administer the government – it instead serves as a source of patronage opportunities (ibid.).
I find this interpretation of the impact of unearned income rather simplistic and would argue that states with high unearned income levels are not necessarily more likely to behave in the ways Moore suggests. There are example of countries – such as DRC and Nigeria – where natural resource windfalls have not been converted into developmental progress and may have created a disincentive for the state to cultivate a strong ‘earning’ relationship with its citizens. However, Botswana is a good example of a developing country that has been able to derive significant return from its unearned income from diamond reserves while also being praised for maintaining a strong economic growth, good governance and democratic track record (Lockwood, 2006).
Why Nations Fail
Acemoglu and Robinson make the argument – contrary to the views of many others in development – that we know what makes a state ineffective or effective. They put developmental success down to the existence of inclusive political and economic institutions and argue that where such institutions are extractive, states are likely to be ineffective (Acemoglu and Robinson, 2012). Were Acemoglu and Robinson to leave their argument there, I would a gross over-simplification, but they do not. They also look at the historical and political context in which states are located to explain their developmental position. This means taking account of factors such as countries’ colonial experience or regional stability as well as the existence or otherwise of institutions.
While some – like Bill Gates and Jeff Sachs – have criticised the book for its simplicity, I find the clarity of their position attractive. Broadly I would agree that inclusive political and economic institutions can help to drive development. However, there are two particularly clear outliers that demonstrate their theory doesn’t always hold; China and India. Chinese growth has been achieved without the kinds of institutions they refer to, although they argue that it was precisely the creation of inclusive economic institutions under Deng Xioaping that enabled China to embark on its impressive growth journey. At the same time, one might argue that India has created precisely the sort of inclusive institutions they recommend and has not achieved the remarkable growth that should follow. In my view, India has made some remarkable developmental progress in recent decades, but it also remains home to a large proportion of the World’s poorest people so there is still a long way to go. Despite being the World’s largest democracy one might argue that the quality of its institutions is actually holding back faster progress. Indeed, Arvind Subramanian of the Centre for Global Development has written that he sees no correlation between institutional performance and growth in India, arguing “there does not seem to be evidence of improvements in the average quality of [Indian] institutions over time; if anything, the evidence leans in the other direction” (Subramanian, 2007:1).
Acemoglu and Robinson (2012) Why nations fail: The origins of power, prosperity and poverty.
Cameron, D. (2010) Statement on Strategic Defence and Security Review. (Online) http://www.number10.gov.uk/news/sdsr/ (8th February 2013)
Centre for Strategic Studies (2011) Rwanda: Assessing risks to stability. (Online) http://csis.org/files/publication/110623_Cooke_Rwanda_Web.pdf (27th May 2013)
Lockwood, M. (2006) The state they’re in: An agenda for international action on poverty in Africa. Rugby, Intermediate Technology Publications.
Matlosa, Mwanza and Kamidza (2002) The Role of the State in Development in the SADC Region: Does NEPAD Provide a New Paradigm? (online) http://www.africavenir.org/uploads/media/KamidzaNEPAD.pdf
Mitchell, A. (2011) Britain set to increase aid to Somalia (Online) http://www.dfid.gov.uk/news/latest-news/2011/mitchell-increased-aid-to-somalia-will-help-save-lives-and-make-britain-safer/ (8th February 2013)
Mackintosh, M. (1992) “Questioning the state”. In Wuyts, Mackintosh and Hewitt (Eds.) Development Policy and Public Action. Oxford, Oxford University Press. pp. 61-89.
Moore, M. (2001) ‘Political underdevelopment: What causes bad governance’.
Sen, G and Grown, C. (1987) Development, Crises and Alternative Visions. Earthscan Publications: London.
Subramanian, A. (2007) The Evolution of Institutions in India and its Relationship with Economic Growth (Online) http://www.piie.com/publications/papers/subramanian0407b.pdf
Unsworth, S. (2010) An upside down view of governance
White House (2010) US National Security Strategy (Online) http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf (11th February 2013)