In Defense of Political Economy: new ideas on development from the World Bank

Posted: April 30th, 2011 | Author: | Filed under: Economics, Foreign Policy | Tags: , , , , , , , , , | No Comments »

A new blog post at Foreign Exchange, finally. This one’s on a new report from the World Bank that makes some strong points about the relationship between conflict, security and economic development:

The central argument of the report is that economic development is imperiled, or even undermined, by political instability and conflict. That’s not a new line, but historically, it’s a line that has been deployed by critics of foreign aid or development spending: given that poor countries are also warring states or corrupt states where aid dollars often fail, the critics say, aid dollars are wasteful at best, and detrimental at worst.The answer, historically, has come from organizations devoted to solving conflicts or protecting the rule of law as ends in themselves, who often try to remind donors of the economic dividends of their work.  Development institutions meanwhile have defended their work by the argument that economic investments can solve political problems and therefore that the politics need not be tackled, or even engaged with, first. [That’s why, for example, the central development document of the last decade, the Millennium Development Goals, doesn’t include benchmarks for democracy and good governance.]

The new answer is that aid dollars should be spent directly on solving these ‘political’ problems, that in fact there are no problems in the developing world today with purely economic or political character, that this is a chicken-or-egg debate in which neither factor actually comes first.

This has much to do with the changing nature of conflict.

Read the rest here.