The word ‘development’ has as many meanings as there are listeners. So begins a book published in 2009 on the subject.
 
At its core the concept of development is a very basic and personal one. Starting from this point, it funnels outward to broader meanings for groups of individuals (be they in a family, community, region, country, or supra-region), for policymakers at all levels of government, leaders in civil society, and for scholars situated in their various disciplines and schools of thought. It suggests progression in nearly every mind, although not necessarily for everyone the notion of economic growth.

Concern over development has been with us for as long as mankind has existed, for it is fundamentally about the improvement of the human condition. But its study as a formal line of enquiry is more recent and best seen in two waves. The first dates back to what W. Arthur Lewis terms the “superstars of the eighteenth century,” the contributions of David Hume, Adam Smith, and James Steuart – and later, John Stuart Mill. The classicists’ ambit was what we would today term questions of economic growth, the distribution of wealth, and the principles underlying personal behaviour and public action.
 
The current discourse on development stems from the end of the Second World War and the accompanying preoccupations with European (and of a different scale and nature, Japanese) reconstruction, maintaining the peace while fighting the Cold War, decolonization and the emergence of newly independent but poor countries. There are antecedents here – the outputs of (mainly) colonial administrators and culturalists who took a fancy (sometimes a dubious one) to the more exotic parts of their country’s empire and, with a quite different orientation, the seminal work during the 1930s and 1940s on economic planning for a post-independent India by the National Planning Committee of the Indian National Congress. It was not until the Marshall Plan that a comprehensive and sustained interest in the study and practice of development emerged as the confluence of fighting poverty, (re)building infrastructure, keeping enemies at bay, and strengthening the institutions of good and democratic government.

As long as money and ideas flowed jointly into the developing world – a hallmark of the post-war multilateral and bilateral aid architecture – the unified understanding of development was one defined in the West and not by the developing world. This was epitomized by the Washington Consensus which crystallized in the late 1980s, with prescriptions for sound policy that might have been coherent on their own terms, yet ignored political and social context.

Inevitably, numerous challenges emerged that critiqued and weakened the tidy (and over-reaching) nostrums of that consensus. These came from within the developing world, from civil society organizations, and from credible institutions such as UNICEF. Just as effective a critique comes from the sustained success of several emerging powers that are less than diligent pupils of the consensus. The recent financial crisis has laid bare the fragility of the economic systems and the capacity of governments in Western countries to manage them. At the same time, the crisis seems to show a new resilience among the emerging powers.

Yet the financial crisis is merely a symptom of a larger crisis of confidence in established ideas. The terminology and language used to describe development is increasingly inadequate to describe the world one sees. The older dichotomies of developed and developing, or North and South, are poorly-suited to a reality where some of the largest and most dynamic economies are also home to the largest numbers of poor people. The nation-state itself is not always the most meaningful unit of analysis. Globalization and emerging powers tie together the fates of many, while the diversity of experiences within borders is often greater than that between flags.

As a result of the current mutability in the field, the time appears right for a new take on development. This approach would recognize the integrative nature of the process of development (across disciplines and values); the increasing accord among scholars and practitioners alike around the constituents of development (if not the weight that might be attached to each); and the existence of a plurality of views on what “works” and what does not, across time and place.

Bruce Currie-Alder, Ravi Kanbur, David Malone, and I have been reflecting on this for some months and are currently in the middle stages of co-editing a book on the subject, to be published by Oxford University Press in 2013. We share three central assumptions regarding development thought that guide our overall approach:

• First, both the generation of ideas of development and their application in practice can be properly understood only within their particular historical, political, and institutional contexts.
• Second, contemporary thinking on development is increasingly generated in a more diverse set of locations, while policymakers are also progressively going beyond the intellectual capitals that loomed large in the past.
• Third, as a consequence, consensus on what constitutes “development” and how to best pursue it may well be a thing of the past.

With over 50 chapters co-authored by eminent academics and practitioners spanning several fields and geographies, we hope to bring to life our core thesis and the progression of thought and practice in a broad range of the dimensions of development.

What a fine way to end my association with IDRC (but also to continue it, in a different capacity). After 20 wonderful years at this organization, I will be moving on to head the Centre for International Governance Innovation. It seems fitting that I devote my last column to a subject that embodies the enduring ethos of IDRC – respecting diversity while establishing rigour, and of progress through knowledge. But in keeping with the opening theme of this post, my take-away about development has been a more personal one. It is of having acquired the value of listening and learning, as Gerry Helleiner terms it in his unpublished memoirs. In the era of impacts and accountability and strategic plans this might seem a quaint belief to hold, but then, development has as  many meanings as there are writers.

Some time on October 31, 2011, the world’s population crossed seven billion. The new year has spawned the usual clutch of press stories, centered in rich countries, about the first baby of the year. Underlying the question of global population size (and the planet’s capacity to support it) is one just as important: the implications of its age profile within and across countries. The National Transfer Accounts (NTA) project, of which IDRC is a part-funder, has produced a book, edited by Ronald Lee and Andrew Mason, that advances our understanding of this subject.

In countries at varying stages of development, the standard lifecycle approach applies. The young (up to the ages of between 20 and 25) and the old (beyond 60) consume more than they earn. The in-between years are the years of high earnings and savings. This pattern yields the support ratio: the effective number of producers to the effective number of consumers. If the working age population grows faster than other age groups, the support ratio rises. The resulting “demographic window” provides opportunities for high economic growth and the resources to invest in the wellbeing of the young and old. On the other hand, advances in income, nutrition, and medical technology increase life spans that, in the absence of changes in norms around retirement, decrease the support ratio.

At present, support ratios are rising in many developing countries because falling birth rates are reducing the number of children faster than increases in life span are increasing the number of elderly. Countries that are further along in this demographic transition – mainly in East Asia, Europe, and the United States – are seeing large groups of workers reach retirement age. They thus face falling support ratios for decades to come.

This body of work points to a research and policy agenda that is only now being tackled in many countries. For developing countries, I would make these observations:

•  The support ratio affects government finances. At present levels of taxation, spending, and entitlements, of the 23 countries examined by the NTA project, only three – Indonesia, the Philippines, and Thailand – show outcomes favourable to the public purse. Of the myriad of short-term reasons why governments need to be vigilant about fiscal policy, therein lies an overwhelming long-term reason. But most developing countries lack the equivalent of a Congressional Budget Office that dispassionately examines such trends.
• As people live longer and the burden of disease in developing countries shifts away from (mainly communicable) “diseases of the young” to chronic “diseases of the old,” these countries must prepare for the same sort of debate about the size and nature of healthcare systems and their financing that advanced countries are having. As Sonalde Desai puts it, “neither medical ethics nor healthcare financing structures have been developed to address these complex choices.”
• The age profile of the population is an important determinant of the savings rate that, through its interplay with investment rates and the import of capital, determines exchange rates. The consensus about China in some circles is that it is saving “too much,” thus consuming “too little.” Coupled with other forms of intervention in the economy, as a result it is enjoying the fruits of an under-valued exchange rate. Currency appreciation is said to address all bads by privileging consumption over savings, imports over exports, and transparency over mercantilism. But this narrative changes when one considers that China’s support ratio is estimated to fall from 94 in 2010 to 87 in 2030, to 80 in 2050. Under these circumstances, it is perfectly rational for the Chinese and other countries in such straits to maintain high savings rates. What is instead needed is an examination of how financial systems might be more developed to usefully absorb and recycle high savings nationally and internationally. (José María Fanelli is to lead a multi-country project looking at just this question, later this year.)
•  The gender dimensions of this work are in early stages and involve properly measuring the contribution of women in national income accounts; understanding the impact of ageing on adult women who typically care both for their children and elders; and projecting the implications of missing women for the generational economy in the future.
• Although older persons consume more than they earn, in many countries, rich and poor alike, they are net givers to future generations via the bequests they make and, in many cases, transfers to their children and grand-children while they are alive. How these savings are transmitted to future generations provides another entry point to reform financial systems and the laws governing inheritance.

The lens that demography provides to understanding economic policy is an important one, often overlooked precisely because of its subtle, long-term nature. The matter is especially acute in developing countries. The good news is that endeavours like the NTA project are catalyzing the right sort of discussion and action. 

The essence of evidence-based poverty alleviation efforts is to define poverty, measure its various elements, and understand the linkages between poverty and both policy interventions and more exogenous shocks. 

The Poverty and Economic Policy (PEP) Research Network, formed in 2002, focuses on these issues. The network itself is the result of a previous decade’s investments by IDRC in measuring poverty and connecting poverty outcomes to policy and other changes. PEP now counts a half dozen other funders. This is a good thing, not just for the additional financial resources that this garners, but, just as importantly, for the perspectives that accompany them – for example, work on impact evaluation and on infrastructure, two themes of PEP’s general meeting, held in Siem Reap, Cambodia, earlier this month.

This meeting provided an opportunity to reflect on the context in which PEP and other such endeavours will conduct their work in the coming decade. I offer five points for consideration:

• Unlike a decade ago, more people now live in (typically high-growing) middle-income countries than in low-income countries: 73% of the world’s poor live in middle-income countries, according to Andy Sumner. This reorients questions about the “neighbourhood effect” away from issues of cross-country effects and country location to more national concerns about applying policy and transferring wealth within the nation state. Whether this makes the poverty problem more or less tractable is yet unknown, but it does change some key parameters of the debate.
• The headline from the high growth rates in many developing countries should read: “impressive success in reducing income poverty.” However, the rich are getting richer faster than the poor are becoming less poor. With rising inequality, positional concerns – i.e., relative rather than absolute economic and social position – come to the fore. Current evidence suggests that relative position in society is of greater concern as absolute income rises. This fits with my very broad take on the Arab Spring, the Occupy Movement, and the anti-corruption movements in India and China: it isn’t the very poor who are doing the bulk of the protesting, it is the until-recently poor and the middle class. Success in reducing poverty must be accompanied by measures that either address inequality or meet the political and economic expectations of the upwardly mobile poor and what Nancy Birdsall terms “the (indispensable) middle class.”
• At the same time, one or more of the frequency, magnitude, and duration of shocks – particularly those emanating in the financial sector and related to the biophysical environment – appear to be increasing. The evidence is, of necessity, disparate and tentative, but the OECD’s International Futures Programme has marshalled it in a recent report.
• The most recent financial crisis has shown that problems do not uniquely form in the South, and their solutions in the West. But it would be a mistake to assume that this is the new reality – the next crisis might change such perceptions in a hurry. What matters is the ability to detect good ideas wherever they might reside and truly adapt, rather than transplant, them to wherever the problems are.
• It might be the influence of Gareth Stedman Jones’ An End to Poverty and Niall Ferguson’s Civilization: the West and the Rest on me, but I do think creating the environment for change and seizing the moment matter a lot, at least as much as the existence of sound technical solutions to a problem. This, at least, is one strand in their rendition of economic history.

As a global platform of modest size the PEP network is well positioned to apply itself to all these factors, except perhaps the last. But even here, it would be wrong to assume that “moments” that are propitious for change can be seized without options on ways forward known and debated, or that technicians have no role to play in creating the environment within which their work might make a difference.