What Do You Mean By Economic Development?

Development: So often mentioned, yet so rarely defined or discussed in concrete terms. The idea of economic development is fairly simple: Essentially, the international improvement of the quality of life and economic capacity of people around the globe. Encompassing both economic as well as social advancement, global development is extremely complex, and there are a myriad of conflicting strategies on bringing about such change. Central to this discussion is the notion that global development can be brought about by international intervention. Development is not a passive process; rather, it is pursued by nations of the world. International intervention dominates the scene, with the primary tool being economic. With the vast majority of development challenges dependent on economic factors, financial intervention can be a powerful tool. Driven by International Financial Institutions (IFIs) such as the International Monetary Fund (IMF) and the World Bank, these economic intervention strategies are both incredibly influential and controversial.Both provide economic assistance to nations seeking their help, providing large-scale national loans. In order to receive the loans, the countries in question must follow certain conditions set by the institution in question. These conditions, called Structural Adjustment Policies (SAPs) vary by the situation of the particular country, but could include the following:

• liberalization of trade and investment policies
• anti-competitive agricultural policies
• removal of exchange and price controls
• reform of tax policies
• increased privatization of domestic industries.

These prescriptions are among what is commonly called the “Washington Consensus,” a set of policies used to address economic structural problems in target countries. These policies have been highly criticized, as will be discussed below, but they remain the most readily available and accessible economic resources for global development. The challenges associated with IFIs primarily have to do with the criticisms associated with the conditions required for loans. Many see the SAPs as being neo-colonial impositions on borrowing countries without them having a choice, resulting in little permanent change as a result of the lack of specificity in the policies. Overall, the problem lies in the inability or unwillingness of these institutions to address the unique structures of borrowing nations and instead simply relying on the overarching structure of the Washington Consensus policies when financing global development. As a result of the inappropriateness of these policies for the situation, countries have found themselves in an even worse situation, with a lower standard of living or with more structural problems than when they started. Perhaps individual wealthy nations giving aid to poorer nations could more effectively create a situation for global development; however, due to the semi-monolithic status of these institutions as well as the fact that many wealthy nations invest in the IMF and the World Bank, it is not happening as of now.Significant progress has been made in terms of global development, using the Millennium Development Goals as one measure of progress (link here to MDG page). Yet, a good deal of progress still needs to be made. The global economic crisis of 2008 substantially slowed progress, in some cases causing significant backslide in progress that was made prior to the crisis. Taking that into account, as well as the problems many see in the policies of IFIs, underscores the necessity of re-evaluating and restructuring economic policies. Part of the solution must lie in mobilization and renewal of commitment to the Millennium Development Goals as well as to overall global development.

The Borgen Project is a wonderful resource for more about development, poverty, and foreign aid, and explains this and many more topics in depth.