The adoption of the neo-liberal policy agenda has raised problems with this paradigm, however, because, in spite of huge international efforts to apply the ‘tiger’ model, few countries have come even close to ‘catching up’ with the west. This is not for lack of effort, since neo-liberal institutions have loaned the underdeveloped world billions of dollars. In 2000 alone the World Bank lent $16bn to underdeveloped countries to aid them onto a path of stable, sustainable and equitable growth. Why have no underdeveloped states apart from the Asian tigers achieved economic take-off? This is a question which modernisation theory is ill-equipped to answer. Can systemic accounts of the current world system provide an adequate answer to this question?
Critical analysts, including those associated with World Systems Theory, neo-Gramscianism and postcolonial theory; suggest that underdevelopment is actually a problem of dependency, arising within a world system operating as a whole. Underdeveloped societies are not in the position they are in due to internal inadequacies, but because of an ongoing history of dependency, economic exploitation, political subordination and military violence. Whereas the mainstream analysis suggests that any and all underdeveloped societies can in principle “catch up” with the west through the adoption of development-led (typically neo-liberal) policies, critical theorists suggest that such a “catch-up” cannot happen in a world dominated by the developed societies. Any improvement in the status of the underdeveloped societies would require a radical transformation of the entire world system, including the position within it of the developed societies. It could not take the form of a “catch-up”, but only of a general structural transformation. This is because the position of developed countries is itself a product of the world system and requires the continued existence of underdevelopment to sustain it. One can see in this division a replication of Andrew Linklater’s distinction between problem-solving and critical theories in I.R., in which the former concentrate on identifiable empirical issues within a framework of acceptance of the broad outlines of the status quo, whereas the latter problematise the overall system with an aim of giving voice to the oppressed and excluded or of challenging and replacing the system as a whole.
Despite significant differences, critical approaches share the view that “[t]here exists a world structure in which dominant interests located in the advanced industrial world dominate and exploit the rest of the world using economic, political and military means.” Andre Gunder Frank has attempted to explain the world system using a spatial metaphor. “The global system is a whole chain of metropolis-satellite relations. Each metropolis dominates, exploits and draws wealth from its satellite or satellites”. This chain, with northern societies at the top, keeps societies in Africa, Asia and Latin America at the bottom of a global system. Frank sees surplus exported upwards and outwards from the bottom of the chain to the top. For Frank, development is not possible without a complete break from the system. Once a state has become a satellite, it can only develop when its ties with the metropolis are broken or weakened, for example in times of war or recession. In this view “[d]evelopment is always dependent development”, and a “catch-up” is ruled out. Any context in which development occurred would involve the construction of a new international economic order which, far from conforming underdeveloped societies to models set in the north, would alter economic relations in a manner which would transform developed as well as underdeveloped societies.
Insights similar to Frank’s have been developed by numerous other authors. For instance, Immanuel Wallerstein argues that “as more and more states have been drawn into the world economy a single worldwide division of labour has been created” between core, periphery and semi-periphery. Semi-peripheral countries such as the four tigers are not on a path of development, but rather, play a crucial structural role in protecting the core from the periphery. Wallerstein suggests that the world economy is tied together by a complex network of global economic exchange. Thus underdeveloped societies are not independent states but “dependant cogs in this larger world system”. Neo-Gramscians such as Leslie Sklair have analysed the emergence of a transnational capitalist class which constructs global relations of control impeding development possibilities. “The insertion of the nation-state into the global capitalist system is facilitated by the transnational capitalist class through the discourse of global competitiveness”. While some neo-Gramscians reject the idea of a world system because of the crucial transnational role of classes and social forces, they share World Systems Theory’s scepticism towards state-centred development approaches, suggesting that poverty and crisis are built into global capitalism. In Sklair’s words, ‘[g]lobalization is not a “Western” but a globalizing capitalist ideology, whose discourses and practices are necessary to negate the growing class polarization and ecological crises characteristic of this latest stage in the long history of capitalism’. Postcolonial theorists have suggested that underdevelopment is discursively necessary for development itself, so that catch-up is an illusion. They claim that “development is an Enlightenment creed that pronounces some places as what Dipesh Chakrabarty has called ‘not yet’ and others as ‘now’”. The theme unifying such approaches is their rejection of the idea of “catch-up” and the related linear rendition of the issue of “development”. Instead, interactions within the world system, from world trade patterns to wars, express dynamic core/periphery relations through which western elites impose their control. By thinking of underdevelopment in terms of global structures entwining across developed and underdeveloped alike, they question the idea that development can occur aside from broader challenges to global capitalism.
World trade is a prime example. If there is to be a “catch-up”, underdeveloped societies need economic growth and diversification. Gibson and Tsakalotos argue that “for a country to develop it needs access to capital in order to be able to invest”. However, peripheral areas have little capital to invest and, since their commodities are often sold cheaply, capital cannot be accumulated through trade in international markets. Due in many cases to a history of colonial subordination, most underdeveloped societies are heavily dependent on the export of a small number of primary commodities, usually cash crops or extracted goods such as oil, gas, copper and gold. Such commodities are vulnerable to changes in world markets and are often undercut by unfair trading practices by northern corporations and governments. For example, northern states often place tariffs, quotas and restrictions on imports from the south, viewing these as “a threat to Western markets”.
The sugar trade is an instance of this. The European Union (EU) releases subsidies of “$1.6bn a year to the sugar barons in East Anglia and the Paris basin. This generates surpluses that deprive countries such as Thailand, Mozambique and Malawi of markets”, which flood markets and push down prices, to the detriment of underdeveloped countries. A spokesman from Oxfam argues that “Mozambique loses almost as much as a result of EU sugar policy as it gets in European aid.” Similarly, in 2002 the US paid out “$3 billion in subsidies to cotton farmers. This is equivalent to 100% of the market value of cotton output”. This seriously undermines West African cotton markets. Therefore, underdeveloped societies are unable to gain access to capital or to accumulate revenue. This in turn increases their reliance on the very commodities which leave them vulnerable and dependent. In this context, it is hard to see how one can seriously consider a “catch-up” to be a possibility.
While the EU and U.S undermine the position of underdeveloped societies through protectionism, subsidies and other means (including, for instance, the arms trade), they seem only to offer underdeveloped states more aid and loan packages. As the peripheral states are kept out of international markets and as the prices of their commodities are pushed down, they come to rely on bank loans (mainly from the World Bank and IMF, and tied to liberalisation) and foreign direct investment (FDI) by transnational corporations (TNCs). However, while these institutions are a source of resources in the present, they are not likely to induce development. In an already weak economy, the main beneficiaries of free trade are the more competitive (and subsidised) western companies and products. Similarly, the main reasons for FDI are the exploitation of cheap labour (usually in sweatshops located in special export processing zones, at levels of pay which barely cover subsistence and do not transfer resources to underdeveloped societies) and the purchase at cheap prices of the familiar cash crops and extracted resources. Congo, a resource-rich African country, is a good example, because western corporations have incited warfare in an attempt to defend exuberant concessions granted by the former dictator. The United Nations Group of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Congo has declared that resource exploitation has led to the creation of a predatory network of elites, including TNCs and US and UK agencies. In such a context of international exploitation, the critical perspective on development seems more plausible than the idea that internal changes will lead to a “catch-up”.
The debt trap is another reason why “catch-up” is a myth. In the 1970s, “western banks lent money hand over fist so that cash strapped countries could pay their export bills.” Compound interest rates, poor exchange rates and unfair trade practices mean that indebted countries are unable to repay this debt. As Strange points out, “aware of the mounting difficulties of third world debtor countries, banks did not stop lending. Instead they lent more and lent on shorter terms”. This is what Susan George has dubbed the debt boomerang. Banks and lending institutions routinely seize this opportunity to exploit underdeveloped states, imposing structural adjustment policies (SAPs) and other conditions beneficial to western companies. SAPs, particularly favoured by the IMF, are set as conditions on loans, ostensibly to ensure that underdeveloped states meet their debt repayments. SAPs encourage countries to increase their export earnings by implementing large-scale export production of cash crops. They also tend to mandate reduced public spending, the redirection of public money into debt repayments, free trade and privatisation. Far from encouraging development, this harms the standard of living in underdeveloped countries. For example, when “Tanzania was forced to charge for hospital visits and school fees, hospital treatment fell by 53% and the illiteracy rate soared. In Ecuador, the IMF ordered 26,000 jobs cut along with a halving of real wages for the remaining workers. Meanwhile, it demanded the sale of the water system to foreign owners and an 80% increase in the price of cooking oil.” In addition, the emphasis on exports increases the problems related to reliance on a single main export. The polices implemented by the IMF keep the periphery poor, stagnant and dependent on Western finance, revealing that any “catch-up” is unlikely within the present world system.
The process of globalisation and rise in global technologies has had a profound impact on underdeveloped countries. Advocates of globalisation frequently draw attention to its effects in terms of growing access to information, technological exchange and a decline in experienced distance between places and cultures. However, the benefits of such processes are mostly exclusive to the north. The main effect of globalisation for the remaining three-quarters of the world has been increased vulnerability to the demands of northern states and TNCs. This is clear from the growing opposition to globalisation which expresses itself in resistance movements across the global south, from the Zapatistas in Chiapas to the Karnataka State Farmers’ Association in India, from the strikes against oil companies in Nigeria to the revolutions in Argentina, from mobilisations against privatised electricity and water suppliers in South Africa to nationwide strikes and factory occupations in South Korea. Globalisation is very much a case of what Trotsky called ‘combined and uneven development’. There is a clear digital divide between the North and South. For example, industrialised countries with only 15% of the world’s population are home to 88% of all internet users. Less than 1% of people in South Asia are online even though it is home to one fifth of the world’s population. This issue is of growing importance since much of the world’s economy is computerised, and since economic dependency is being supplemented by informational and media dependency. The industrialised north holds the monopoly on technological innovation and knowledge, and this is proving to be a powerful instrument for transnational corporations in their quest to control global affairs. In the contemporary world system 2/3rds of international trade is under the control of a meagre 500 corporations. The U.S is home to the largest number of TNCs and thus receives 55% of the profit from world trade.
Technological advances such as biotechnology and genetics have also been detrimental to the underdeveloped world. They have opened the door to biopiracy and the further marginalisation of underdeveloped economies. One example is Kenya’s pyrethrum daisy, valued as an export commodity because of its role in the production of insecticides. Due to advances in genetic engineering, however, the Kenyan market is under threat from a modified version produced by the American TNC Agrodyne. This could ruin the Kenyan economy. Here as elsewhere, a few American biotechnology companies have a stranglehold on new technologies. Western patenting laws often protect biopiracy, allowing TNC’s to patent products which have been used for years elsewhere, or to create alternatives, such as genetically engineered pyrethrum, which can be patented and withheld from competitors. Far from catching up, therefore, the poor are becoming poorer.
. TNCs through IMF encouragement of FDI have also exploited large sectors of developing states populations, with low wage policies and poor working conditions. As mentioned above, neo-liberals have praised Malaysia, recognising that it is striving towards economic growth. Dependency theorists would argue, however, that this has been achieved to the detriment of the Malaysian working class; FDI has brought low wage policies along with poor working conditions, deunionisation and child labour. The Malaysian Census Report estimated there were 40,000 child workers in 1990. Current estimates range from 70,000 to 200,000. Many Western corporations are responsible for sweatshop labour, for example Disney, the Gap, Phillips, Sony, Ralph Lauren and Nike. Nike pays its factory workers in Indonesia a meagre $1.25 a day. This process is reinforcing underdevelopment and global inequalities, especially given that trade unions and minimum wage policies still operate in most northern societies. Again, the pattern is less one of catch-up than of an increasing gap occurring in the context of an integrated global system.
One of the reasons for pay differentials between north and south is the concentration of so-called “human capital” – skills, education and the like – in northern countries. Can underdeveloped countries “catch up” by educating their own populations? Even where this is possible (keeping in mind IMF demands for public spending cutbacks), it is unlikely. The north has been accused of poaching teachers from underdeveloped nations to solve the problem of staff shortages in the West; in 2002 the Jamaican government complained that 600 teachers moved abroad to work, mainly in Britain and the US. This is also happening with doctors. “Seven thousand South African doctors are now on the permanent register of the UK’s General Medical Council, equivalent to half the number working in South Africa’s public health service”. The industrial nations woo foreign professionals with generous wage packages and benefits offering no concern or compensation to foreign governments. Undoubtedly this is causing depletion of much needed resources in the periphery. Once again, the logic of the world system impedes any move towards a catch-up.
Of course, this leaves open the possibility of development outside the current system. Of this possibility, however, several things should be said. Firstly, it is by no means obvious that western ways of life provide an inherently attractive model for the rest of the world, aside from their promotion in the present world system. It is not clear, for instance, that Bangladeshi peasants actually want the kind of society offered by international institutions pursuing “development”. Secondly, a world system, or a desystematised world, constructed outside the present framework would necessarily transform developed as well as underdeveloped societies, not generalise western models. Thirdly, the reproduction of the present resource-consumptive western model across the world is impossible for ecological reasons. This is not to rule out the possibility, once the present world system is overthrown, of constructing a world in which all are free from problems such as famine and preventable disease (i.e. what is sometimes termed “alternative” or “sustainable” development). It is simply to suggest that such a world would have to arise outside of the capitalist model, and therefore outside of the framework implicit in the ideas of “development” and “catching up”.
The answer to the question “can developing countries catch up?” is no, or at least, not in this present world system. The evidence makes clear that capitalism and the world system it creates are the causes of underdevelopment and the main barriers to development. The new class of entrepreneurs Rostow predicted would result from economic liberalisation has emerged only in the parodic form of comprador elite parasitic on FDI. The main effects of years of IMF restructuring have been greater poverty, the destruction of the social infrastructure and the emergence of a new “underclass” reliant on sweatshop labour and various shadowy survival strategies. Capitalism thrives on exploitation and a few get rich at the expense of the majority. The structure of the capitalist world system has allowed northern corporations to economically exploit the periphery, at the same time as spreading cultural domination. To treat this system of control and exploitation as if it were a case of comparing different states is to mistake a systematic process of resource extraction and violence for a simple comparative relationship between distinct entities. If modernisation theory were correct, statistics would show a trend towards a more egalitarian world in the context of widespread neo-liberal restructuring. In fact, the evidence is in the opposite direction, tending to confirm the suspicions of World Systems Theory and other critical approaches. Underdeveloped countries can never catch up with developed countries, because capitalism is arranged as a global system and depends on the reproduction of relations of dependency and structured underdevelopment.
Bibliography Secondary Sources
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George S (1992) The Debt Boomerang How Third World Debt Harms Us All London Pluto Press.
Gibson & Tsakalotos, Industrialisation and Development p27 in Allen T & Thomas (2000) A Poverty & Development into the 21st Century Oxford; Oxford University Press.
Gunder Frank, A (1980) Crisis in the World Economy Homes & Meier publishing.
Mohammadi A (2002) Globalisation or Recolonisation The Muslim World in The 21st Century London Ta-Ha publishers.
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CIA world fact book (2002) available at URL 15/10/03.
This approach was initially set out by Smith A (1723-1790) The Wealth of Nations, and has been expressed in monetarist economics and neo-liberal theories such as those of Milton Friedman (1985), The Tyranny of the Status Quo Harmondsworth: Pelican Books.
Corbridge (1995) Development Studies A Reader UK Edward Arnold Publishers pg 3
Rostow W.W (1960) The Stages of Economic Growth: A Non-Communist Manifesto Cambridge Cambridge University Press pg 7.
Walker (2000) Taiwan’s economy the tiger survivor available at URL < > 15/10/03
Anon The Asian Tiger Economies available at URL <> 15/10/03.
Anon (2001) Interview with Mahathir Bin Mohammad available at < >15/10/03
World Bank Development Effectiveness: New Studies show the effects of development assistance over last 50 years’ Press Release available at URL 17/10/03.
Pank Phillip (September 4th 2001) The World Bank The Guardian
For examples of critical approaches, see Gunder Frank, A.(1980) Crisis in the World Economy Homes & Meier publishing; Escobar, A. (1995), Encountering Development: The Making and Unmaking of the Third World, Princeton, NJ: Princeton University Press; Chomsky, N. (1973/1987), “Vietnam and United States Global Strategy”, in J. Peck (ed.), The Chomsky Reader, London: Serpent’s Tail; Rupert, M. (1995), Producing Hegemony: The politics of mass production and American global power, Cambridge: Cambridge University Press.
Nicholson M (1998) International Relations A Concise Introduction London Macmillan Press pg 4
Taylor et al (1995) Sociology in Focus Lancs Causeway Press ltd pg575
Shannon (1996) An Introduction to the World-System Perspective USA Westview Press pg 210
Booth & Smith (1995) International Relations Theory Today Oxford Blackwell Publishers pg73
Sklair L (2000) “The transnational capitalist class and the discourse of globalisation” p. 6.
Sylvester C (1999) “Development studies and postcolonial studies: disparate tales of the ‘Third World’” Third World Quarterly vol. 20 no. 4, pp. 703-721, p. 712.
Gibson & Tsakalotos, Industrialisation and Development p27 in Allen T & Thomas (2000) A Poverty & Development into the 21st Century Oxford; Oxford University Press.
George S (1988) A Fate Worse Than Debt London Penguin Books p48.
Anon (August 18th 2003) Kicking the Subsidies Third World Farmers Need a Fair Deal The Guardian pg1.9.
Anon (2003), “Congo: Capitalist mineral lust fuels bloodshed”, Direct Action 28, pp. 16-17.
Evans R (1989) A Debt Trap With No Way Out Geographical Magazine October 1989 pg 12
Strange S (1988) States & Markets London Pinter Publishers Ltd pg 107
George S (1992) The Debt Boomerang How Third World Debt Harms Us All London Pluto Press
The Guardian (September 7th 2001) Special report Globalisation, The IMF available at URL 21/10/03
E.g. Ohmae K (1990) The Borderless World London: Collins.
For an extended list of examples of such resistance, see the World Development Movement’s States of Unrest report, at 21/10/03.
United Nations Development Publications 200 available at URL 21/10/03
Mohammadi A (2002) Globalisation or Recolonisation The Muslim World in The 21st Century London Ta-Ha publisher’s pg62.
The Money Programme (1995) Genetics in Agriculture BBC 22/1/1995.
Sinniah, B Working Children in the Commercial Sector in Malaysia available at URL , <> 21/10/03
Woodward( 29/30/ 2002) Schools Robbing the Third World of Trained Teachers The Guardian
Allen (October 7th 2003) Concern Grows Over Poaching of Doctors BBC News Report available at URL < > 17/10/03
Spivak, G C (1994), “Responsibility”, Boundary 2 vol. 21 no. 3, 19-64.