Limits of modernisation and dependency theories for policymaking in today’s globalised world
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| Photo by Chris LeBoutillier |
India’s effort at modernization has largely been successful. GDP growth rate has managed to stay above 3 percent in one of the worst of times – the 2008 financial crisis. GDP per capita (current prices) has increased from $303.06 in 1991 to $2104.15 in 2019. (World Bank) Urbanization has increased from 25.72 percent in 1991 to 31.16 percent in 2011. (Census of India) Primary completion rate has increased from 71.55 percent in 1995 to 91.66 percent in 2019. (World Bank) Teledensity has increased from 3.58 percent in 2001 to 93.27 percent in 2018. (Department of Telecommunications) If we go by growth as propounded by Lewis dual sector model – of labour transition from subsistence sector to capitalist sector, we have fared well. Employment in agriculture as a percentage of total employment has fallen from 62.56 percent in 1991 to 41.49 percent in 2020. At the same time, employment in industry has increased from 15.72 percent to 26.18 percent and employment in services has increased from 21.71 percent to 32.33 percent.
India’s 1990 crisis was a moment of reckoning. The balance of payments problem and the dwindling foreign exchange reserves demanded redefining dependency. Transnational investment, trade and technology became imperative. Emergency loans from the IMF was a shot in the arm but the conditionality imposed made us question the narrative of self-reliance and Nehruvian model of import substitution and command economy. Was India dragged into a core-periphery relationship – enrichment of the powerful at the expense of the weaker, in this situation? (Frank 1966) India’s Debt-to-GDP ratio was 50.01 percent in 1991. As of 2013, it is 50.31 percent. (World Bank) India’s foreign exchange reserves is $501.7 billion as on June 5, 2020 as opposed to $5.8 billion in March 1991. (Reserve Bank of India) In a purely economic sense, the economic reforms of 1991 didn’t result in exploitation despite significant dependence on aid.
Despite strides in modernization and being dependent gainfully, there are wicked problems which still plague the society. These problems limit us to reach full potential of development. Thoughtful policy intervention is crucial to alleviate them. Here is a selection of some of the most persistent burning issues:
Inequality
The Gini index of India has increased from 31.7 in 1993 to 35.7 in 2011. (World Bank) This signifies growing income inequality in the society in which the poor get poorer and rich get richer. Persistent inequality creates fissures in society which destabilizes social cohesion and undermines faith in institutions of a welfare state. In the worst case, people take to the streets – as we have seen in the Occupy Wall Street movement of 2011. There is an ongoing debate to consider introducing highly progressive property tax and income tax; to raise revenues for funding social safety nets or universal basic income, and change the status quo. (Piketty 2020)
Climate change
CO2 emissions (metric tons per capita) in India has increased from 0.738 in 1991 to 1.818 in 2016. Such a quantum leap is unsustainable and puts immense pressure on the carrying capacity of the planet; leading to catastrophe and impaired quality of life. The report ‘Climate Change: Perspectives from India’ highlights key perspectives for India in the context of climate change. First, a property rights framework is needed which encourages cooperation. Second, a country can have both growth and less carbon emissions. Third, food security in India is under threat. Fourth, women are especially vulnerable. Fifth, small-scale industries emit substantial greenhouse gases and have the potential for saving huge amounts of energy. (United Nations Development Programme)
Limited capabilities
Development is highly related to increasing capabilities i.e. what individuals are able to do. (Sen 1999) Since human aspirations evolve when exposed to new choices and opportunities, we need a dynamic framework of evaluating capabilities. In this context, the difference between basic capabilities and enhanced capabilities is pertinent. Enhanced capabilities build on basic capabilities while concentrating on agency, sustainability and quality. For example, resilience to recurrent shocks is a basic capability while resilience to unknown new shocks is an enhanced capability. (United Nations Development Programme) The impact of Covid-19 is an eye opener in this case. India's GDP shrank 23.9% in the first quarter of FY'21. (Ministry of Statistics and Programme Implementation) The pandemic being an extreme event and growth uptake post-lockdown elicits confidence. Nevertheless, our resilience is questionable when other major economies have done better. (India Today)
Gender gap
Participation of women in the labour force has decreased from 30.28 percent in 1990 to 20.34 percent in 2020. (International Labour Organization) Following factors are offered as explanation - 1) rising educational enrolment of young women; 2) lack of employment opportunities (gender-specific constraints); 3) effect of household income on participation (income effect and change in preferences); and 4) measurement (exclusion of domestic work). “Women continue to face many barriers to enter labour market and to access decent work and disproportionately face a range of multiple challenges relating to access to employment, choice of work, working conditions, employment security, wage parity, discrimination, and balancing the competing burdens of work and family responsibilities. In addition, women are heavily represented in the informal economy where their exposure to risk of exploitation is usually greatest and they have the least formal protection.” (Verick 2014)
In order to set things right, first and foremost, we need to revisit what development means. Stages of economic growth gives us a linear understanding of development as a gradual process which leads us to an age of high mass consumption. (Rostow 1959) This conception is very problematic as it tethers our vision of development to maximum consumption as a goal. Expansion of production facilities to satisfy increasing consumption needs through global value chains are proving detrimental to the health of the planet by scale effects. (World Development Report 2020) Values of development need to need to account for social costs – which are often discounted. Going forward, principles of degrowth need more debate if we want to progress sustainably. These discourses are possible only if there is a greater thrust for ESG (Environmental, Social and Governance) investing – either through legislation or judicial norms.
The world-systems perspective divides the world for analysis into core countries, semi periphery countries, and periphery countries based on division of labour. (Wallerstein 1974) Divisive view of the world facilitates a structuralist approach of understanding a phenomenon. At the same time, it warps the ability to understand the world as a whole and reinforces caustic identities and boundaries. History provided a testament to this fact when cultural and religious identities became a source of conflict in the post-Cold War period. (Huntingdon 1993) Intractable problems like the refugee crisis, environmental pollution and spread of infectious diseases become difficult to tackle when there is a disregard for a unified view of the world. Hitopadesha, an anthology of folk wisdom has succinctly captured this thought –
“This is mine, and this is not -
Thus do the small-minded see.
The large-hearted have always thought
The world itself is a family.”
On many occasions multilateral negotiations and persuasions have enabled mitigation of catastrophes. One landmark example is the Montreal Protocol on Substances that Deplete the Ozone Layer – which resulted in the phase-out of 99 percent of nearly 100 ozone-depleting chemicals. (National Geographic) Such an example proves the possibility of international cooperation for concerted action. Shared and sustained development requires coordinated and nuanced efforts which are realizable by adoption of good policies. Such policies derive their substance from multidisciplinary understanding of development, openness to criticism and timely revision.
References:
Frank, A. G. (1966). The development of underdevelopment. Boston: New England Free Press.
Piketty, T., & Goldhammer, A. (2020). Capital and Ideology. Belknap Press: An Imprint of Harvard University Press.
Narain, S. (2009). Climate change: Perspectives from India. New Delhi: United Nations Development Programme, India.
Sen, A. A. K. (1999). Development as freedom. Oxford: Oxford University Press.
Desk, I. T. W. (2020, August 31). Pandemic shocker! India’s GDP shrinks by 23.9% in first quarter of FY2020-21. India Today. https://www.indiatoday.in/business/story/gdp-data-for-first quarter-financial-year-2020-21-1717103-2020-08-31
Verick, S. (2014). Women’s labour force participation in India: Why is it so low. International Labor Organization.
Rostow, W. (1959). The Stages of Economic Growth. The Economic History Review, 12(1), new series, 1-16. doi:10.2307/2591077
World Bank, 2020. "World Development Report 2020," World Bank Publications, The World Bank, number 32437, June.
Wallerstein, I. (1974). The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis. Comparative Studies in Society and History, 16(4), 387-415. Retrieved November 27, 2020, from http://www.jstor.org/stable/178015
Huntington, S. P. (1993). The Clash of Civilizations? Foreign Affairs, 72(3), 22. https://doi.org/10.2307/20045621
Without the Ozone Treaty You’d Get Sunburned in 5 Minutes. (2017, September 25). National Geographic. https://www.nationalgeographic.com/science/article/montreal-protocol-ozone-treaty-30-climate-change-hcfs-hfcs.
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