By Charles Abugre and C.P. Chandrasekhar

In multiple ways multilateralism, or the coming together of the international community to further global good, is under challenge today. 鈥楥onflicts鈥�, not least among them the genocide in Gaza, are an obvious challenge. But there is in the economic sphere a silent subversion of multilateralism underway that also needs to be stalled and reversed. This is the view that the 鈥渇inancing for development challenge鈥� is so huge and the share of the private sector in the holding and disposal of the world鈥檚 financial surpluses so large, that it is only private initiative that can successfully implement the programmes needed to realise the SDGs and address damaging climate change.

The corollary of that position is that the role of governments is no more to try and move surpluses from private to public hands (through new forms of international tax cooperation, for example) but to use the available public resources as means to unlock private investments and expenditures. The call is to go beyond the recognition that the tasks of realising the SDGs, ensuring the needed carbon transition, and building resilience the world over, are primarily governmental or 鈥榩ublic鈥� responsibilities, and that cooperation among governments (or multilateralism) is the best means to implement those tasks. Pragmatism demands, it is argued, that these tasks and therefore multilateralism, or the conjoint responsibilities of global governments, must be 鈥渙utsourced鈥�.

Nowhere is this view expressed more clearly than in the realm of the financing of sustainable development. A fundamental requirement of multilateralism in the economic sphere is the need to move money from the wealthy advanced nations to the less developed countries to finance mitigation, adaptation and loss and damage compensation; and to undertake the huge expenditures needed to realise the SDGs as a foundation of the struggle for peace. The dimensions of this ask come through, for example, from the estimates of financing requirements for less developed countries being cited at the COP29 summit in Baku, of around $1.3 trillion a year till 2030, which is to flow from the governments of the advanced countries to the less developed countries in the form largely of grants and concessional finance.

The case for flows from the developed to the less developed nations is now well known and well supported. Given the hugely disproportionate historical contribution of the developed countries to the cumulative total of global carbon emissions, and the principle accepted in the Paris agreement of 鈥渃ommon but differentiated responsibilities, and respective capabilities鈥�, the developed countries have to carry most of the responsibility to finance the carbon transition needed to realise the goal of keeping warming below the target ceiling of 1.5掳C or 2.0掳C range.

Moreover, since these expenditures are in most areas unlikely to yield any or significant monetary returns, while delivering large social benefits, interest-bearing borrowing cannot be a viable form of financing. Hence the need for these to be public flows in the form of grants or concessional loans which are in large measure grant-equivalent. This requirement is true of the financing needs for the SDGs as well. It is also true that in both cases鈥攃limate finance and financing for the SDGs鈥攖he requirements are so large that less developed countries, many of which are debt-stressed or have defaulted on their external debt payments, cannot be expected to raise the needed resources domestically.

And borrowing is not an option. They cannot borrow abroad because they are already in a position where chronic balance of payments deficits have made it impossible for them to carry the foreign exchange burden, forcing default in many cases. They can borrow at home more freely, but, in the presence of tax forbearance to incentivise private investment, a corollary of that is a large and rising interest payments bill that draws resources away from expenditures needed to provide social protection for and ensure resilience among already socially deprived sections of the population. In fact, the responsibility of the international community is now not restricted to providing new funds to address the crisis afflicting the global majority, but also to write-off part of the funds provided as credit earlier, on which substantial returns have already been garnered, to provide much needed fiscal leeway to less developed-country governments.

As noted earlier, the tasks set by these problems needing urgent responses must be shouldered by governments, especially, in the developed countries. Those countries carry the primary responsibility for this historically shaped crisis. The social benefits from addressing these problems are not just immense, but also global鈥攖he developed would also derive those benefits, not just the less developed, global majority countries, as UN Secretary General Guterres has reiterated. The private returns are too low and in some cases the risks too high for the private sector to take on the responsibilities, unless they do so as mere implementers contracted by government to a job in return for a fee. But even that kind of apportioning of responsibilities between the State and the private sector is unlikely to work, because the incentives of the two sets of actors are incompatible. Governments want to realise social benefits for the public good; the private sector wants to realise profits to further the agenda of corporate accumulation.

Fortunately, the moment is conducive for aggressive public action. Enough surpluses have been garnered and accumulated by big capital in the last 25 years (and more), and inequality has increased to such unprecedented post-World War II levels, that mobilising resources by internationally coordinated efforts at taxing the private sector can yield with little effort much of the capital required. Multilateralism has a role to play in mobilising resources, and not just in implementing the agenda.

Unfortunately, it is at this time of challenges and opportunities that the developed countries citing their own 鈥渄omestic problems鈥� are withdrawing from a much-needed global financing push. Climate finance negotiations bear witness. Instead, they are making a case to outsource what is clearly a responsibility only governments can bear to the private sector. The G20 as a grouping of the most influential of global actors must jettison this effort to 鈥渙utsource鈥� multilateralism.

Charles Abugre is a Ghanaian Development Economist and Executive Director of IDEAs

C.P. Chandrasekhar is the Global Head of Research and Policy at the International Development Economics Associates (IDEAs)

In January 2023, Luiz In谩cio “Lula” da Silva, leader of the Partido dos Trabalhadores (PT), began his third term as the president of Brazil, the largest economy in Latin America. The economic outlook is promising, with steady growth, controlled inflation, and declining unemployment rate. Despite challenges from a difficult Congress, Lula aimed to revive social and economic policies from his earlier terms (2002-2010). Simultaneously, he is pursuing an active international agenda focused on peace in the Middle East and Ukraine, environmental protection, and reforms in global governance. Brazil’s G20 presidency will conclude in November with a meeting in Rio de Janeiro that is expected to introduce new tax measures on billionaires and initiatives to boost environmental conservation. A Global Alliance Against Hunger will also be launched to tackle global issues.

This article explores the potential for necessary changes to meet Brazilian demands, concerns about the macroeconomic trajectory’s sustainability, and political tensions leading to the 2026 elections. The central argument is that Lula’s external strategy is closely tied to strengthening the internal disputes affected by neoliberal institutions. Success in this approach is vital not only for achieving structural improvements, but also for safeguarding the democratic regime, which faced threats just eight days after Lula took office.

FROM THE PLAN TO ECONOMIC REALITY

Lula’s first years in office have demonstrated promising economic results, surpassing market expectations with a growth rate of 2.9% in 2023 and a projected growth of around 3% in 2024, which is significantly higher than the anticipated 1%. This outpaced both Latin American and global growth averages. Key contributing factors include a substantial increase in exports driven by strong soybean and corn harvests and an increase in household consumption. The recovery of income transfer programs, an 8% increase in the minimum wage at the beginning of 2023, and a decline in unemployment stimulated this consumption. Additionally, successful negotiations in Congress allowed for extra spending, facilitating the resumption of the Bolsa Fam铆lia program鈥擫ula’s flagship social transfer initiative鈥攚hich further enhanced the purchasing power of many families.

Inflation has also declined, dropping from 9.3% in 2022 to 4.5% by mid-2024. This reduction can be attributed to the appreciation of the nominal exchange rate and strategic changes in Petrobras鈥檚 pricing policies, a state-owned oil company. A high reference interest rate, maintained between 10% and 13%, has attracted capital inflows, contributing to the nominal appreciation of the Brazilian real, from six to five reais per dollar. This appreciation has helped ease domestic price pressures, while the abandonment of Petrobras鈥檚 import parity pricing has insulated fuel prices from international fluctuations. Moreover, unemployment rates have improved, decreasing from 8.4% to 6.4%, the lowest level since 2012.

Looking ahead, the projections indicate a slowdown in growth and controlled inflation, although several underlying risks remain. Estimates for 2025 anticipate a modest growth rate of 1%, reflecting the challenges within the neoliberal economic policy framework. The expected agricultural export boom may face obstacles owing to a 20% decline in international prices and severe flooding in Rio Grande do Sul, a crucial agricultural region. Additionally, gross fixed capital formation fell by 3% in 2023, particularly for machinery and equipment, signaling a trend toward productive disinvestment.

Specific tensions persist, especially regarding fiscal policy and proposed changes to public spending rules, along with the Central Bank’s focus on inflation targeting in its exchange and monetary policies. The New Fiscal Scheme (NFS) limits public spending by 2.5% per year and does not provide significant room for large-scale projects, such as the Growth Acceleration Program (PAC) initiated after the 2008 financial crisis. The only way to create additional fiscal space is through tax increases. While newly approved taxes on ultra-wealthy investment funds and simplifications to consumption taxes may boost future tax revenues, they are unlikely to generate sufficient fiscal space for substantial economic initiatives. If inflation projections hold, the new formula for adjusting the minimum wage could lead to real improvements in workers’ living conditions, offering a glimmer of hope for economic growth.

Since June 2024, the international environment has prompted capital outflows and pressure for currency devaluation amid a strengthening dollar against emerging market currencies. This has led to an increase in the exchange rate from 5.10 to 5.85 reais per dollar, prompting government intervention. These exchange rate pressures could lead to higher inflation, and the Central Bank鈥檚 inflation targeting policy might necessitate increased interest rates, potentially dampening consumption鈥攖he sole growth vector thus far. The emerging prospects underscore the restrictive nature of neoliberal institutional frameworks. In a deteriorating international scenario, these frameworks significantly limit policies aimed at stimulating economic growth and job creation, likely undermining popular support for the Workers’ Party (PT).

THE DOUBLE FRONT OF POLITICAL DISPUTE

The first 22 months of Lula’s administration were characterized by two primary fronts of political engagement. The first is Brazil’s re-emergence on the international stage, where Lula’s charismatic leadership has brought attention to pressing global issues. The second front involves internal political struggles marked by negotiations with Congress and the “independent” Central Bank president. This internal conflict has necessitated a delicate balance to defend democracy amid rising tensions. Just eight days after taking office, Lula faced an attempted coup in Bras铆lia by right-wing groups reportedly backed by military elements, political parties, and the former far-right president, Jair Bolsonaro. A strong international condemnation, combined with decisive judiciary intervention, has played a crucial role in preserving democratic order.

Initial assessments suggest notable progress on both fronts, although external achievements have outstripped internal ones. Although Bolsonaro鈥檚 disqualification from elections until 2030 weakened the primary opposition, the threat to democracy remained palpable. The municipal elections last October showed enduring popular support for far-right factions. This dual strategy, addressing both international and domestic issues, acts as a cohesive mechanism; the international agenda creates a vital space for internal maneuvering, pressuring progressive institutional changes, such as implementing higher taxes on the wealthiest individuals. Historical experiences from Lula’s and Dilma’s administrations, particularly the parliamentary coup, demonstrate that meaningful transformation requires addressing more than just internal conflicts, as all parties, especially capital and labor, must benefit from these changes.

Confronting the Western neoliberal consensus is critical to preventing societal demands for transformation from being penalized by international financial markets, which can manipulate credit ratings and provoke tensions in exchange rates, inflation, and macroeconomic instability鈥攅lements that could be perceived as a “soft coup” by market forces. The push for a multipolar international system anchored in initiatives like BRICS is gaining traction, with the inclusion of new partners (BRICS+) becoming increasingly significant. A comprehensive strategy for sustainable growth and development has emerged as a priority, earning Lula invitations to key international events such as COP27 and rekindling relations with G-7 economies. This dual approach exemplifies how international relations can expand domestic political maneuvering.

On the local front, tensions in economic policy highlight two critical aspects of the neoliberal institutional framework: (i) fiscal policy and potential adjustments to public spending rules and (ii) the Central Bank鈥檚 exchange and monetary policy, which is heavily focused on inflation targeting. These tools are central to the functioning of the Brazilian state but often hinder democratic efforts to address urgent social needs, such as building larger schools and universities, improving the water supply in drought-affected regions, expanding healthcare coverage, and fulfilling other social commitments. Instead of resorting to street mobilization or constitutional referendums to break congressional gridlock, as seen in Colombia and Chile, Lula aims to foster a new international consensus to counter the global rise of anti-democratic ultra-right and fascist movements.

PERSPECTIVES FOR THE PT鈥橲 POLITICAL PROJECT

Emerging prospects can be framed in three possible scenarios.

1. Advancement of International Patterns: This scenario envisions a continued mandate for Lula or a successor, enabling deeper transformations that significantly enhance the quality of life of the majority. Economic results would ideally follow a path of gradual improvement, partially satisfying the basis of popular support and facilitating continuity through the vote in 2026.
2. Political Blockage: In this scenario, the outcome of Lula’s third term may fall short of maintaining popular support. This could create a political space for conservative sectors to promote a candidate from the economic and financial establishment, not necessarily linked to the ultra-right or Bolsonaro movement.
3. Polarization and Discontent: This scenario posits a complete disagreement with the results of Lula’s third term, leading to increased polarization between PT’s ideological supporters and a new leadership emerging from the extreme right, possibly figures such as S茫o Paulo Governor Tarc铆sio de Freitas, or members of Jair Bolsonaro’s family.

Currently, the trajectory appears to lean between scenarios one and two. However, history reminds us that “unexpected” geopolitical, health, and climatic events can swiftly alter the course of events.

Sergio Martin Paez is Professor of Macroeconomics and Economic Development at the Institute of Urban and Regional Research and Planning (UFRJ-Brazil) and postdoctoral researcher at the same university with financial support from FAPERJ.

The Gender and Trade Coalition was initiated in 2018 by feminist and progressive activists to put forward feminist trade analysis and advocate for equitable trade policy.

This article is the fourth in a series of short, Q&A format 鈥榚xplainers鈥� unpacking key trade issues produced for the Gender and Trade Coalition by Regions Refocus. It was written by Erica Levenson (Regions Refocus) with inputs from Maureen Penjueli (PANG), Adam Wolfenden (PANG), and Ranja Sengupta (Third World Network). The authors give their thanks to Mariama Williams (Global Afro-Descendant Climate Justice Collaborative), who reviewed various versions of the article and provided helpful feedback. Read the full article and catch up on past explainers .

1. How is Trade Connected to Climate Change?

For the past 500 years in which capitalism has been the dominant economic system, continuing profit accumulation has been dependent on the unsustainable use, commodification, privatization, and destruction of natural resources on the one hand, and exploitation of human resources on the other. While natural resources have always fueled the metaphorical fire of capitalism, the Industrial Revolution greatly increased the ease and speed with which they could be destroyed. It is scientifically proven that greenhouse gas (GHG) emissions are the main cause of climate change, with carbon dioxide (CO2) that results from the burning of fossil fuels as the number one source of warming and methane (largely emitted by the industrial agriculture sector) at number two. [1] Trade in particular has contributed to climate change: international trade alone accounts for an estimated 20鈥�30% of annual GHG emissions.[2]

The current structural configuration of the economy, with trade at the center, is fundamentally incompatible with the reduction of GHG emissions. Free trade aims to expand the volume of trade in terms of production as well as consumption, so as to increase the potential gains to countries from

participating in international trade鈥� as established by Ricardo鈥檚 theory of comparative advantage.[3] But this theory pays no attention to the distributional impacts of free trade, or its environmental impacts. Trade-related production activities are often hugely detrimental to the environment and come at the price of forever contaminating or destroying essential ecosystems. Since all modes of transport鈥� air, land, sea, and train shipping鈥� are fossil fuel-dependent, an increase in consumption necessarily means an increase in GHG emissions. Gasoline and diesel power every form of shipping; maritime transport, fueled by diesel, makes up the majority of international trade in terms of both volume and value.[4]

Widespread trade liberalization has facilitated the consolidation of economic power, leading to worsening wealth inequality that directly corresponds to unequal responsibility for the climate crisis. Rapid and uneven economic growth over the last ~200 years has come at the cost of the environment and the majority of people: 157 multinational corporations (MNCs), the majority of which are based in the Global North, are responsible for up to 60% of global industrial emissions, and 20 fossil fuel corporations have contributed more than one third of total GHG emissions.[5] These corporations also hoard wealth: owned and managed by some of the richest people on the planet, they systematically exploit workers, consumers, and states to increase their own profits. The wealthiest 1% of people contribute as much to GHG emissions as the poorest 66% of the global population.[6]

Despite impending climate disaster, trade (dominated by MNCs) continues to be oriented towards increasing profit, consumption, and market control via liberalization and export promotion.[7] In the meantime, socioeconomic inequality is continuing to grow, and the situation of women and girls is drastically worsening, especially those living in developing countries (least developed countries [LDCs] and small island developing states [SIDS] in particular), as structural gender inequality intersects with both economic inequality and worsening climate change to further marginalize women. Critically analyzing the intersection of climate and trade from a feminist lens points out structural issues with the governance of both regimes, and highlights the urgency to take action on the 鈥渢win challenges鈥� of worsening climate change and inequality. [8]

2. What is the Role of Corporations in Trade and Climate Governance?

Global governance systems have been set up to enable the continuing access of MNCs to markets and resources in the Global South so they can continue producing in the South for consumption in the North. As such, a key defining feature of both trade and climate governance is corporate capture by Northern-based MNCs and the Northern private sector more generally. Transformative climate policy agendas have been derailed by Northern MNCs, the private sector, and their governments, who want to continue with business as usual to preserve their profits and financial dominance even in the face of rapidly accelerating climate change.[9] These profits are built on the back of some of the world鈥檚 poorest women, whose labor forms the foundation of intricate global value chains (GVCs) and special economic zones (SEZs), two pillars of 21st century economies. Meanwhile, for decades, progressive economic agendas put forward by both states and civil society have been buried by these same actors for the very same reason. As a result of these stalled agendas of progress, both climate and trade policy have been widely criticized as ineffectual, the former for failing to bring about meaningful action to meet emissions targets, and the latter for failing to fulfill promises of shared prosperity and development.[10]

MNCs鈥� continued dominance would be gravely threatened by any legislation that takes meaningful action on either trade imbalances or climate change. The widespread mandated adoption of trade liberalization and related asymmetrical policy packages in the Global South has completely opened up markets to MNCs so they can dump cheap, industrially produced exports, albeit eliminating local producers across goods and service sectors.[11] Loss of livelihoods has caused poverty to increase, but chronic revenue shortfalls created by massive debt servicing and trade liberalization preclude government stimulus and investment in productive transformation, including climate action measures such as investing in renewable energy technology development. The investment protection and facilitation provisions contained in trade agreements have enabled natural resource grabs (including land, water, critical minerals, and agricultural raw materials) by corporations, and threatened both domestic value addition and trade on the one hand, and conservation and climate measures on the other. A lack of jobs relative to job seekers enables MNCs to get away with pervasive labor rights violations and provides them with a steady flow of cheap labor. On the climate legislation side, voluntary emissions reporting requirements and lack of systematic regulation shields MNCs from having to face accountability, allowing the cycle to continue repeating.

International financial institutions (IFIs) such as the World Bank have argued that 鈥渢rade can help shift production to areas with cleaner production techniques,鈥� and that trade 鈥減romotes the spread of critical environmental goods and services that can help reduce emissions and improve environmental management.鈥�[12] These claims propose no changes to the volume of trade while only slightly altering the composition, which barely scratches the surface of trade鈥檚 GHG emissions. Moreover, a key obstacle standing in the way of trade prompting any positive change on climate mitigation and adaptation is intellectual property rights (IPRs) legislation that is meant to safeguard profits through restrictive patents.[13] Given that most climate-related technology (especially renewable energy) has been patented by Northern corporations, technological innovation in the South has been limited if not impossible in most contexts.[14] So, while North-South technology transfer through trade is possible in theory, practical and regulatory barriers (such as the TRIPS agreement) have prevented it. Even in climate discussions, the transfer of necessary technology has proved to be the biggest barrier of all.

The dominance of the private sector in both climate and trade governance has replaced public priorities with private ones. The small changes to the economy currently being proposed pay lip service to the threat of climate change while doing nothing to address inequality (either between people or between countries) and repackaging the 鈥渟ame old approach of high consumption of goods, services, and energy.鈥�[15] Also referred to as green industrialism or green colonialism, most existing proposals for economic reforms to mitigate climate change use climate concerns to entrench and exacerbate existing power imbalances in the economy. Structural changes urgently need to be made to both trade鈥檚 volume and composition; yet these are not on the table at the multilateral level.

3. What Trade-Related Environmental Measures Exist?

A growing number of climate measures are being incorporated into the trading system, supposedly to respond to concerns about the environmental effects of particular trade activities or agreements. Without significantly adapting their own production or consumption methods, or acknowledging their own historical climate debt, developed countries scapegoat the relatively low GHG emissions of developing countries as the main cause of climate change. A crucial way this fallacy is supported is through trade- related environmental measures (TREMs), which protect Global North interests under the guise of climate mitigation.

When TREMs were first introduced at the WTO shortly after its establishment in the 1990s (purportedly to address climate change), trade fundamentally changed.[16] The pollution haven hypothesis developed by heterodox economists draws a link between the migration of 鈥榙irty鈥� industries to developing countries and environmental regulation in developed countries, which has created a systemic dependence of developing countries on pollution-intensive industries.[17] Since Northern demand for these 鈥榙irty鈥� goods never went away, environmental regulations simply displaced their production. At the same time, TREMs proposed by Northern member states have sought to impose 鈥榮ustainability standards鈥� which penalize developing countries for producing these goods while favoring Global North corporations who can produce and comply with those standards. Such frameworks are now being pushed into the WTO and in bilateral and regional trade agreements.

The concept of distinguishing between products based on processes and production methods (PPMs) was one of the first TREMs introduced at the WTO by Northern member states, but has ultimately not succeeded since it has been argued by Global South member states that PPM clauses would violate the WTO principle of non-discrimination.[18] Adopting criteria related to PPMs would give trading partners license to discriminate between otherwise identical products, and given the unequal distribution of 鈥榗lean鈥� technology and 鈥榙irty鈥� production, would have disproportionate negative impacts on Global South countries. Similarly, the 鈥榝ood miles鈥� controversy in the mid-2000s saw Northern member states argue that producing food for export (which accounts for a large portion of Global South countries鈥� trade) was resulting in excess pollution, which justified levying tariffs on food imports.[19] On the contrary, most food exports from the Global South have smaller carbon footprints even with added emissions from shipping than food industrially produced in the Global North, and the countries who account for the bulk of food exports have very small overall carbon footprints, often exponentially smaller than those of the importing countries.

Even though PPMs, 鈥榝ood miles鈥�, and other similar proposals have not been incorporated into legislation at the WTO, individual member states have sidestepped the WTO by adopting legislation which enforces these principles in all but name. The EU鈥檚 Carbon Border Adjustment Mechanism (CBAM), for example, imposes a tariff on carbon-intensive products including cement, iron and steel, aluminum, fertilizers, energy, and hydrogen imported by the EU. The EU claims that the intent of the CBAM is to 鈥渆ncourage industry worldwide to embrace greener technologies.鈥�[20] The US followed suit, introducing its own version of the EU鈥檚 CBAM through national legislation in 2022.[21] Despite the CBAM鈥檚 growing popularity in the North, governments of the least developed countries (LDCs) have contended that given their specialization in carbon-intensive primary commodities, their economies will be disproportionately affected. According to UNCTAD, a $44 per ton carbon tax would result in a $2.5 billion increase in developed country incomes and a $5.9 billion decrease in developing country incomes.[22] The CBAM is just the latest in a long string of Global North countries鈥� transparent attempts to manipulate the global economy for their own benefit.

The supposed goal of the CBAM is crucial to achieve in order to mitigate climate change and could be legitimately achieved through direct finance and technology transfer. Technology remains an important part of the solution but implementing the CBAM without lifting IPR restrictions will produce chronic revenue shortfalls that further curb investment in development and fail to produce structural change because the necessary adaptation technology is patent protected. Moreover, the EU鈥檚 clean energy transition is dependent on carbon-intensive mineral extraction from the Global South (especially lithium and cobalt)鈥� meaning that their demand for these products plays a major role in their production and related GHG emissions, which the CBAM is penalizing.

4. How Have Trade and Climate Governance Impacted Food Production?

Food insecurity is one of the most devastating manifestations of global economic inequality and is significantly worsening in the face of the climate crisis. The intrinsic importance of access to nutritious, affordable food has been overridden by the desire to accumulate wealth: trade in food was worth $1.7 trillion as of 2021, yet 783 million people are food insecure worldwide.[23] Trade in food is dominated by MNCs located in a small group of developed countries (鈥榓gribusiness鈥�); these MNCs are some of the richest in the world, and the single largest methane emitters.^{[i], [24]} Many of the most profitable food products for MNCs, including coffee, cocoa, and tea, are intensively farmed in the Global South by smallholder farmers; these farmers provide the raw materials that form the first link of trillion dollar value chains, yet the majority live in poverty and food insecurity.[25] Combined with chronic state underinvestment in smallholder productive capacity, rural economies鈥� with women as the main economic agents in them鈥� have been devastated by free trade. The livelihoods of hundreds of millions of smallholder farmers, along with agricultural production for domestic consumption, have been decimated by MNCs. Their continued dominance and profits have come at the cost of the health of the environment and created food insecurity and poverty across the Global South.

Smallholder farmers manage 60% of global food production and 80% of total arable land.[26] In Africa, 70% of the economically active population is engaged in small-scale agriculture but this labor contributes an average of only 25% of national GDPs; as an average across Africa and Asia, small-scale agriculture provides an estimated 80% of domestic food production.[27] As an average across Latin America and the Caribbean, smallholder farmers contribute an estimated 50% of domestic food production, and in rural areas an average of 55% of the economically active population is engaged in small-scale agriculture.[28] Despite the crucial role they play, smallholder farmers in the Global South are some of the poorest people in the world, especially women smallholder farmers, who make up more than half of the small-scale agricultural workforce and who tend to produce less than male farmers due to their caring responsibilities.[29]

With markets pried open by trade liberalization and related inequitable policy packages, cheap imports of industrially produced, heavily subsidized food from the Global North have been systematically dumped into the South, suppressing the price of food and preventing farmers from receiving fair prices for their crops.[30] At the same time, agriculture is one of the most climate-vulnerable sectors, as climate change impacts such as changes to atmospheric makeup, water availability, and weather patterns determine soil health and crop yields.[31] Government subsidies in developing countries that could support both production and livelihoods have been targeted and constrained by WTO trade rules and agreements, including the Agreement on Agriculture (AoA), leaving farmers and farming economically vulnerable. Without government support and sufficient financial resources, smallholder farmers can do little to mitigate the impacts of climate change on their crop yields, leading to worsening poverty rates and food insecurity, with women being the most impacted. Unilateral 鈥榮ustainability standards鈥� being imposed (such as the CBAM) further exacerbate these challenges for the Global South.

Similarly, fisheries across the Global South are already seeing significant decreases in fish stocks due to overfishing driven by MNCs which is compounded by climate change impacts such as biodiversity loss, ocean acidification, rising sea temperatures, and coral bleaching.[32] This is particularly an issue in SIDS where small-scale fisheries have traditionally provided a source of livelihood for many of the poorest people, as well as a traditional component of local diets. Although women account for less than half of the people involved in small-scale fishing activities, they are disproportionately informally employed in the sector, leading to higher rates of job and food insecurity among women, as well as systematic discounting of women’s contributions to and challenges in the sector.^{[ii], [33]} Across the Global South, it is women farmers and fisherfolk who are disproportionately impacted by changing productive capacities of land and oceanscapes, in both their paid and unpaid work.[34] These are the people who would benefit the most from subsidies and preferential treatment provisions; as such, they are the most impacted by continuing injustice in WTO trade rules and recent negotiations on a fisheries agreement which would place similar constraints on developing countries鈥� subsidies to domestic fisheries.

In the case of both agriculture and fisheries, reductions in food production across the Global South due to climate change are further exacerbating dependence on industrially produced food imports.[35] Dependence on imports has huge macroeconomic effects as it makes states extremely vulnerable to external shocks and fluctuations in commodity prices, whether due to inflation or to economic crises. This leads to a cycle of debt creation at IFIs so states can pay for basic necessities such as food imports, that then leads to loan conditionalities which call for trade liberalization and pave the way for privatization, which in turn increases inequality, especially gender inequality.[36] Without intervention in the form of progressive trade legislation, this cycle endlessly repeats, as the loans and conditionalities were never intended to 鈥榮olve鈥� any problems but rather to lock in and exacerbate existing ones.

5. Strategic Policy Proposals

As trade liberalization continues to accelerate, deepening inequality and ushering total ecological collapse closer and closer, multilateralism is flailing. There is a lack of willingness on the part of the Global North to engage with historical injustices, including the financial and climate debt they accumulated during colonialism and during their own industrialization processes. Despite the widely publicized 鈥榳in鈥� constituted by establishment of the Loss and Damage Fund, there have been major issues in capitalizing the fund, including disagreement over previously agreed yearly targets. Even contested spaces such as the WTO are losing their power as member states feel emboldened to sidestep multilateral precedents, processes, and rules altogether and implement unilateral measures. Poverty, climate change, food insecurity, economic inequality, and gender inequality are all worsening, while a select few continue to get richer. To breathe new life into stalled climate and economic agendas of transformation, progressive policy measures need to be passed and implemented within a challengingly short period of time. As such, policy recommendations include:

1. Abandon trade liberalization as a blanket policy goal. By prying markets open before domestic industries have been sufficiently nurtured鈥� which has in developed countries consisted of significant subsidies and protectionism, antithetical to the current model of trade liberalization being pushed by the same countries鈥� developing countries have faced unfair competition from foreign products and been systematically deprived of trade revenue. Lack of policy space due to unfair trade rules has restricted their ability to improve their terms of trade, and precluded necessary investments in productive transformation, economic diversification, decreasing gender inequality, and climate adaptation and mitigation. Abandoning trade liberalization as a blanket policy goal facilitates a balanced pursuit of all three dimensions of sustainable development鈥� economic, social, and environmental鈥� through trade policies.
   
   
2. Revise relevant trade rules and agreements, including the WTO鈥檚 AoA, to allow developing countries to provide subsidies to their agriculture and fisheries sectors. As food production plays a major role in the economies of developing countries, as well as global food security, states must have the policy space to provide subsidies to their farmers and fisherfolk, most of whom are smallholders. Subsidies will improve not only the livelihoods of small-scale producers, and therefore their food security, but also their productive capacity and their ability to invest in sustainable technologies and productive assets. This is particularly necessary for small-scale women producers, who are burdened by unequal responsibility for care work and struggle to produce as much as men. If combined with investment in increasing domestic productive capacity, more food can be produced for domestic consumption, and reliance on food imports from the Global North can decrease. This would have broad stabilizing effects across national economies, making balanced, gender-responsive development possible. At the same time, industrial agriculture and fishing need to be disciplined by future agreements to prevent further loss and damage in the Global South.
   
   
3. Invest in public services. This will raise the general wellbeing of the entire population but will be particularly transformative for women as it will decrease their burdens of unpaid care work which are growing as they face rising poverty, food insecurity, and displacement in the face of climate change. Furthermore, MNCs have begun privatizing what should be state-led processes such as adapting food systems to meet the changing needs of populations in light of climate change, presenting the danger that corporations will cement their hold over the Global South once and for all through the climate crisis. Only an active state can discipline corporations and prevent what is sure to be a disastrous course for the Global South, and particularly for women.
   
   
4. Waive IPR restrictions, including the commitments under the TRIPS Agreement and bilateral and regional trade agreements, on climate-related technology. Such a waiver has been a long-standing call of developing countries in various multilateral fora, as it is crucial to ensuring necessary technology transfer from developed to developing countries.[37] Although the need for transfer of climate- related technology is included as a binding requirement in the 2016 Paris Agreement鈥� and in various non-binding multilateral agreements including the 1997 Kyoto Protocol and the 2001 Doha Ministerial Declaration鈥� in practice developed countries have not shown willingness to engage in non-commercial technology transfer, meaning beyond the expectation that such transfer will occur through trade.[38] Since stringent IPRs are the main obstacle standing in the way of technology transfer, waiving IPR restrictions on climate-related technology is necessary to enable fulfillment of existing commitments, both binding and non-binding.
   
   
5. Integrate common but differentiated responsibility (CBDR), which is a well-recognized principle in climate negotiations, as a core principle in all trade agreements and policymaking. Developing countries have historically contributed very little to climate change and therefore should not be the primary targets of trade-related environmental sustainability efforts. It is developed countries who continue to be the largest emitters and the largest consumers, and their adaptation must be the subject of regulation. Developing countries have the right to develop their economies in light of climate constraints at their own pace and in their own ways, while addressing social concerns. Integrating CBDR into all trade negotiations鈥� in particular to negotiations on agreements that involve environmental sustainability as an objective鈥� would act as a countermeasure against unilateral TREMs passed by member states which unfairly penalize developing countries and disregard historical climate debt.

Notes 

^[i] Methane is the second-largest contributor to climate warming, after only carbon dioxide. Atmospheric methane levels have more than doubled in the last 200 years, which is estimated to be correlated to 20-30% of total warming. See NASA 2024 for more information.

^[ii] There is a long-standing debate about how 鈥榝isheries鈥� are defined, as a more narrow definition tends to exclude fishing activities women are overrepresented in. See FAO, Duke University, and WorldFish 2023 for further discussion.

[1] IPCC 2023.

[2] WTO 2022.

[3] Rodrik 2018.

[4] Balogh and Mizik 2021.

[5] Haddad, Steenbergen, and Saurav 2023; Taylor and Watts 2019.

[6] Khalfan et al. 2023.

[7] Fremstad and Paul 2022; Williams and Bandele 2019.

[8] Khalfan et al. 2023, ix.

[9] Christensen et al. 2023; Gunderson, Stuart, and Petersen 2018.

[10] See for example: Gilbert, Beladi, and Oladi 2015; Gunderson, Stuart, and Petersen 2018; Orasche et al. 2024; Siddiqui 2015.

[11] Hormeku-Ajei 2018.

[12] Brenton and Chemutai 2021, ix.

[13] Littleton 2008; Khor et al. 2017; Yu 2009; Zhou 2019; 鈥榯 Hoen 2016.

[14] Hutchinson 2012; Khor et al. 2017; Littleton 2008; Taubman and Watal 2010; Yu 2009; Zhou 2019.

[15] Feffer 2023; Greenwood 2021.

[16] Khor 2010; Third World Network 1994.

[17] See for example: Akbostanci, Tun莽, and T眉r眉t-Asik 2007; Feffer 2023; Mani and Wheeler 1998.

[18] Khor 2010.

[19] Lewis and Mitchell 2014.

[20] European Commission 2023.

[21] Reinsch and Duncan 2022.

[22] UNCTAD 2021.

[23] UNCTAD 2024; WHO 2024.

[24] Changing Markets Foundation and IATP 2022; Greenpeace 2023; Gura and Meienberg 2013.

[25] Jain 2023; Khalfan et al. 2023; Liu, Semrau, and Hanley 2021; Oxfam 2023.

[26] Loukos and Arathoon 2021.

[27] Odiwuor 2022.

[28] Loukos and Arathoon 2021.

[29] Ibid. See also: Jafry 2012.

[30] Banerji and Willoughby 2019; Murphy and Hansen-Kuhn 2017.

[31] Arora 2019; Malhi, Kaur, and Kaushik 2021.

[32] FAO, Duke University, and WorldFish 2023; Wolfenden and Sengupta 2021.

[33] FAO, Duke University, and WorldFish 2023.

[34] Cohen and van der Meulen Rodgers 2021; Goldsworthy 2010; Jafry 2012.

[35] Clapp 2009.

[36] Meijers and Brachet 2021; Williams and Bandele 2019.

[37] Khor et al. 2017.

[38] Ibid.

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“Europe鈥檚 new external investment strategy needs to reconnect with historical business models we are going back to white elephants of 1970s 鈥� because that鈥檚 what partners want“

– G7 official in a speech on Trade and Finance.

“The era of Western dominance has indeed definitely ended“

– Josep Borrell (2024).^听

On 28 January 2024, three members of the Economic Community of West African States (ECOWAS), Niger, Mali and Burkina Faso, announced their withdrawal from ECOWAS.  Created in 1974, ECOWAS is a regional economic community serving as a large trading bloc, to enhance the regional integration and economic cooperation of its 15 member countries.  The three countries鈥� decision to leave the trade-bloc so forthrightly, was related to a series of ECOWAS-imposed sanctions on their military governments and the countries鈥� objection to French influence in the bloc. Long-standing dissatisfaction with the ECOWAS was also an overarching factor; member countries include some of the most resource-rich nations, but on the whole members barely made any progress on socio-economic indicators linked to the ECOWAS promise of prosperity through regional integration.

Political uncertainty in the trade-bloc further deteriorated in mid-February 2024, when the Senegalese President Macky Sall, unilaterally postponed the country鈥檚 presidential elections and was later ousted. Faced with such existential challenges, ECOWAS lifted sanctions on Niger and other countries within a month of their imposition. While the potential breakdown of ECOWAS and the general trajectory of some African countries into authoritarianism, may not seem like a radical shift in the continent鈥檚 history, the incendiary global context, which compelled ECOWAS to lift sanctions is unprecedented. The neo-colonial drivers of the current crumbling political order in Sudan and the Congo as well as the ongoing genocide in Palestine, indelibly expose the reality that we are entering into an era of naked colonial violence. Backlash to US-centred imperialism is growing. In March 2024, Niger suspended all military relations with the US, citing issues related to US encroachment upon its sovereignty. Embedded in this evolving situation, the episodic and ad-hoc de-linking of Global South countries from Global North countries and their dominance in blocs such as the ECOWAS is representative of a broader shift in Africa鈥檚 resistance against political and economic subordination to G7 countries.

Against this background, the Western powers鈥� new and evolving development strategy in Africa offers important insights into how the G7 countries are failing to register the transformative changes in Africa.  In a closed-door speech on investment, trade and finance forum, a G7 official described Europe鈥檚 new external investment strategy as one that harkens back to the White elephants of the 1970s. While the speaker was using the term 鈥榃hite Elephant鈥� to signify the EU鈥檚 interest in funding hard infrastructure, imbued with a promise of investment and growth for recipient countries, he clearly failed to grasp its meaning. A 鈥榳hite elephant鈥� is an overly expensive infrastructure asset, which fails to generate value for the economy.

Considered in light of the correct definition of the term, the West鈥檚 new development strategy does seem to be going towards expensive infrastructure projects, spurred by a reactionary, performative but ultimately imagined competition with China. I make this point through a comparative analysis between the G7s contemporary development strategy vis-脿-vis the Chinese development model as it unfolds within the broader demise of US-led imperialism.

Delineating Origins: Historical Imperialism vs. Bipolar World Order

Most comparative literature on Western and Chinese development strategies in Africa, fails to ground the colonial and neo-colonial reality of African development. This central omission engenders a hollow comparison, which ultimately forgoes the question of temporality and the historical nature of a unipolar imperial world order. Centring the agency of African countries entails a historical mapping, which not only connects the past to the present but is also cognizant of when and how path dependencies are ruptured. Three facts are key to any comparative analysis of Western-Chinese competition in Africa.

Firstly, China鈥檚 current global developmental model, which can be continuously traced to the early 2000s cannot compare to the 100-year history of European imperialism in Africa.  This temporality is central to the analyses, not a mere addendum. This is because Europe never left Africa. Chinese engagement with African countries took place in conjunction with European and Western economic and political interference in the region. China鈥檚 rich history of supporting anti-imperialist struggles in Africa as well as leading South-South cooperation initiatives under Mao Zedong have been extensively documented and present a very different vision of development rooted in third world solidarity.  However, this historical analysis is completely ignored in most mainstream analysis and China鈥檚 engagement with Africa and the Global South since the 2000s is placed on par with the Western imperialist model.

As others have argued more concretely, the notion of imperialism is embedded in a historical structure of global capitalism, which cannot be abstracted and selectively applied to the new bi-polar world (Capasso & Kadri, 2023; Ajl 2024, Yeros 2024). While Chinese investment projects must be subject to scrutiny and critique, the notion, context and nature of imperialism, old and new, must be based on the systemisation of global capitalist extraction. A starting point here is to note that China鈥檚 鈥榞oing out鈥� or external investment strategy emerged in the aftermath of its remarkable achievement of alleviating domestic poverty. The Chinese development experience was thus not predicated on a model of imperial extraction, which has been the modus-operandi of most Western developed nations.

Secondly and aligned with the first point, the nature and scale of Chinese investments in Africa within this short period has been transformational in its focus on infrastructure and emphasis on the systemisation of productive capacities in African countries. The Chinese state-led 鈥榞oing out鈥� strategy, approached development from a holistic perspective, centring productive investment and infrastructure as the key to enabling inter-sectoral and cross-sectoral linkages. This was possible owing to China鈥檚 capacity to maintain control over the entire value chain of development: from providing financing through its state banks to the mapping, completion and execution of projects.

This model of development-investment has not been the nature of Western investments, which have largely focused on 鈥渟oft development鈥� since the late 1990s (explained below). Most importantly, countries categorised as low-income and least developed were considered extremely risky for Western capital and therefore not a desirable investment destination. The huge influx of Chinese investment into these countries in fact addressed this obstacle for Western capital. China鈥檚 risk-taking capacity engendered and facilitated other investment strategies. Therefore, the rise of Western infrastructure connectivity projects- such as roads, bridges  must be located as derivative of China鈥檚 鈥榞oing out鈥� strategy.

Thirdly and building upon the two points above, while the very purpose of a comparative analysis is to juxtapose differences and similarities between approaches, mainstream analysis听a priori听assumes an overlap between Chinese and Western development strategies based on a superficial semblance. This assumption can be observed in the equivocation of two very different financing models in journalistic reporting as well as mainstream academic literature. A forced similitude between a neoliberal financing model (US/EU) and a state-led financing model (China) thus reverberates endless confusion as opposed to producing any real analysis. As Samir Amin (2018) reminds us:

“Deng Xiaoping said that you should start from looking at actual facts. It is exactly what the conventional professional 鈥渆conomists鈥� 鈥� all of them, including the Chinese 鈥渆xperts鈥� trained in the USA and brainwashed 鈥� do not do.”^听

To overcome this limitation, the analysis must start from comparing the nature of Chinese and Western development strategies.

Calibrating Development and Conditions

A basic definition of 鈥榠nternational development鈥� is the financial and technical transfer of resources from some countries to others, to the ends of empowering the latter. While the 1948 Marshall Plan for Europe was premised on the reconstruction and the reorientation of European markets to be better aligned with the hegemony of US capital, the evolution of Western development strategies in the Global South took on a markedly different form.  The 1980s was the beginning of this transformative period, whereby Western development strategies and aid models laid an exclusive emphasis on targeting social indicators in Global South countries. Public goods such as health and education were major recipients of soft grants, however, these grants were often conditioned on the implementation of a privatisation roadmap as well as harmonising tools of liberal democracy such as 鈥楪ood Governance鈥�, exclusive funding for initiatives such as transparency, as well as monitoring and reform of electoral processes.

In addition, this financing model remained unaccompanied by investment in public spending, fiscal consolidation to promote developmental policy making, industrialisation in productive sectors and the reform and deepening of the financial sector to achieve financial autonomy. This created an artificial wedge in the very meaning of development: aid-led dependency was designed to separate and prioritise 鈥榮oft infrastructure鈥� at the expense of 鈥榟ard infrastructure.鈥� Donor dependency based on the soft development agenda accompanied by a marketization of public goods therefore accelerated the hollowing out of many Global South countries.  Privatisation successfully transformed the political model of governance in these countries: converting citizens into consumers.

In contrast, from the very beginning, China鈥檚 鈥榞oing out鈥� strategy in the 2000s was premised on the strengthening and expansion of productive investments and public services, making no artificial distinction between 鈥榟ard鈥� infrastructure and 鈥榮oft鈥� infrastructure. The primary focus was on the construction of infrastructure project tools including bridges, hospitals and roads albeit complemented by transfer and sharing of knowledge such as in medical training, civil service training for public bureaucrats and strengthening of public institutions. China鈥檚 emphasis on skill development, technology transfer and knowledge sharing is often ignored by most accounts comparing Chinese and Western development strategies. The fact that such knowledge sharing comes outside of the framework of Intellectual Property governance became much more visible after China鈥檚 distribution of Covid-19 vaccines to Global South countries during the Covid-19 pandemic. The distribution of vaccines as a public good was also accompanied by humanitarian assistance to some countries, highlighting the necessity of an alternative approach to development especially as western pharmaceutical companies enjoyed quadrupling profits through the sale of their vaccines.

An important and often repeated point of comparison between the Western and Chinese model is the specific nature and role of conditionalities. While the construct of 鈥榗onditionality鈥� as a necessary requisite for development assistance including grants, concessional flows and technical assistance is explicitly associated with Bretton Woods Institutions and Western bilateral development strategies emerging in the late 1990s, it has deeper roots in colonialism.

Western development strategy has been conditioned towards ensuring that the West remains distant from its historical past: in Africa鈥檚 case this essentially means the evasion of the Western countries鈥� reparative responsibility to African countries. Germany鈥檚 agreement to pay reparations to Namibia in 2021 was a historic shift but the modality and actual implementation of these reparations remains contested as some consider it 鈥榯okenistic鈥� in nature. Beyond this case, Western development policies, exemplified by the EU have been explicitly conditioned upon Africa鈥檚 compliance in enabling the free trade of resources, goods and commodities to the EU whilst simultaneously curbing African migration through the externalisation of European border militarization.

In comparison, albeit without colonial baggage, China鈥檚 contemporary development model is also concerned with access to commodities, raw materials and market creation for the absorption of Chinese surplus. However, unlike Western development strategies, this model is not linked to demands for better governance, interest in regime change for better compliance with Chinese investments, the implementation of sanctions and the imposition of penalties when conditions are not met. While select conditions are attached to China鈥檚 project procurement and contracts for goods and services as well as in cases of debt restructuring, the pattern which emerges in the impact of these conditions is markedly different from conditions embedded in the West dominated global financial architecture. China鈥檚 approach to conditions is largely concerned with ensuring the longevity and guarantee of economic investments and has produced both positive as well as adverse results for Global South countries.

However, these conditions are not egregious enough to immobilise countries, such as those observed in the historical and on-going impact of IMF and World Bank conditionalities.  The incompatibility of conditionalities in both Western and Chinese development strategies does not absolve a criticism of China, however it is equally important to ascertain the nature and context of Chinese conditions in Global South countries. The global impact of Western sanctions, rise of Western protectionism and competition between the West and China, in every possible realm has certain repercussions for China including in the realm of multilateralism and debt reform.  These need to be carefully researched.

In summary, a comparative analysis between  western development strategies and the Chinese development model necessitates rigour in differentiating between the historical and structural origins of their approaches. Western conditionalities have ultimately resulted in the gradual erosion of  sovereignty in Global South countries, repressing any avenues of third world solidarity and South-South cooperation.  China鈥檚 development strategies do not replicate this model.

The new Scramble for Africa: By Whom and How?

The comparative grounds for Western and Chinese development in Africa have gradually taken a new turn through a competing series of infrastructure connectivity models.  These models have some variation in their discrete proposals however the aim is to mobilise private finance and invest replacing traditional aid and concessional finance. More importantly, the strategies are traditional alliances between 鈥榣ike-minded partners鈥�, including the US, South Korea and Japan. US commercial investors and multilateral development institutions under the auspices of the US-led Partnership for Global Infrastructure and Investment (PGII) ensure the continuation of the failing US-led neoliberal order.

While different models now focus on enhanced coordination between Export Credit Agencies (ECAs) to effectively create an environment for domestic  investments to be subsidised through export credits and development financing it is important to note that China鈥檚 development model has always combined financing and trade with China鈥檚 Eximbank being at the centre of its global investments. The Western turn towards hard 鈥榠nfrastructure鈥�, use of export credits for development suggests a superficial emulation of characteristics which mark the Chinese development. This is because beyond cosmetic shapeshifting, the Western corporate sector remains the determinant factor shaping the new development strategies, while the Chinese development model remains state-led under the direction of the Chinese communist party. While China continues to face a combination of different internal and international pressures, the Chinese State supersedes China鈥檚 domestic iteration of the private sector. In contrast, vessels like the EU are not simply promoting the interests of the EU private sector but strengthening the private sector of G7 countries to the ends of ensuring the continuation of the US-led neoliberal order.

This is most starkly visible in the EU鈥檚 recent attempt to balance its multiple goals of controlling migration through claims to 鈥渟ecuring鈥� its borders, supporting the genocide in Gaza and broader colonization of Palestine and partnering with US-aligned Gulf capital to extend neoliberal policies throughout the region. In March 2024, the EU provided a 鈧�7.4 billion ($8.06 billion) funding package to Egypt for the period 2024-2027. The EU support complemented the IMF鈥檚 expanded $8 billion loan deal with Egypt in the same month and was also complemented by a $35bn investment deal between Egypt and the UAE for developing the Ras al-Hekma peninsula. Egypt is therefore a site for the West鈥檚 new unfolding development agenda, which seeks to securitise EU borders against African and Palestinian migrants as the EU and the West continue to support Israel militarily.

As the Western order declines, the EU and developed countries are under pressure to invest and deliver on greater distributional gains, especially when it comes to serving Global South elite interests. From this perspective, China鈥檚 developmental model is also not entirely immune to the contradictions of capitalist development. These contradictions must be analysed from the duality of China鈥檚 national or domestic experience as well as its external development model. China continues to experiment with select liberalisation and privatisation with an overarching retention of state ownership.

China鈥檚 experimentation with Public-Private Partnerships (PPPs) on a domestic level and the initiation of PPPs in recipient countries is one such example. Other examples include the nature of Asian Investment and Infrastructure Bank (AIIB) investments in Global South countries, China鈥檚 adoption of private finance instruments created by Bretton Woods Institutions and China鈥檚 role in reforming the sovereign debt architecture. The pressures of operating in a neo-liberal world order, playing on the 鈥榦penness鈥� of countries, which have free trade agreements with Western markets and integration into the development finance architecture creates a host of issues for China and recipient countries. These issues require scrutiny, critique and reform especially concerning their impact on Global South countries.

A critical approach to Chinese investment also means a concrete understanding of China鈥檚 global rise, which initiated as an interplay with the existing hegemonic order but has been subject to China鈥檚 vigilance in disciplining its companies and curbing rentierism, both at the national level as well as in its international projects.  In 2021, China launched the Global Development Initiative (GDI), which is designed to complement the BRI but embeds a vision of development based on China鈥檚 own development experience with an enhanced focus on knowledge sharing, technology transfer and South-South development. The initiative is free of patents and dominance of intellectual property rights and rent seeking. Although it is too early to predict the developmental impact of the GDI, China鈥檚 focus on a more communal approach to development, such as in the case of Covid-19 vaccine distribution needs to be contextualised and reflected in the GDI model. China continues to adapt, evolve and regulate its economic rise. Nonetheless, it is ideologically, structurally and materially a different development model, which necessitates engagement on its own terms, even when these terms appear superficially comparable to the development models of traditional imperial powers like the US and the EU.

Conclusion

As Western blocs such as the EU transform into a full-fledged war economy strengthening NATO, proposing the use of its public banks like the European Investment Bank (EIB) to lend to the defence industry as well as exploring the option of a new EU army, it is becoming increasingly clear that the Western constructs of 鈥榙evelopment鈥�, 鈥榠nvestment鈥� and 鈥榮ecurity鈥� can no longer remain in their siloed guises.

This is not merely a turn towards Keynesian warfare 鈥� it is a continuation of Western history and a symbol of the West鈥檚 political woes, as its countries succumb to domestic fascism. Meanwhile China continues its strategy of deepening the Belt Road Initiative (BRI) at a pace of its own, subject to the contradictions of capitalist development including dealing with issues of problematic projects in recipient countries. The paradigm of development as a comparative ground for Western and Chinese is not external to these formations but embedded within these changes. As detailed above, the grounds for a comparative analysis between the West and China must extend from their historical engagement with Africa to the current situation of escalating violence and the decline of US-led Western order.

African agency between such powers lies in securing the interests of its people through a combination of strategies including stronger criteria for partnerships, de-linking with US-led imperial conduits and an enhanced focus on perpetually increasing its bargaining power through strengthening its domestic productive capacities.

Farwa Sial is a Research Associate at the Department of Economics, School of Oriental and African Studies (SOAS).

Featured Photograph: China mall on the spintex Road, Accra, Ghana ().

This article was first published on the ROAPE blog.

Notes

Borrell Josep (2024) Munich Security Conference: the four tasks on the EU鈥檚 geopolitical agenda . .

 The sanctions first implemented on Niger and then applied selectively to Mali and Burkina Faso included trade bans, freezing of financial transactions, closure of borders between the ECOWAS and the three countries as well as travel bans on select individuals.

Al Jazeera (2024) Niger suspends military cooperation with US: Spokesman. 

 The Group of Seven (G7) is an informal forum that brings together the advanced industrialised economies of Italy, Canada, France, Germany, Japan, the United Kingdom and the United States of America. The European Union also participates in the group. The G7 is home to 776 million people and the aggregate domestic product (GDP) of G7 member states represents about 30 percent of the global economy.

 Yu, G. T. (1977). China and the Third World. Asian Survey, 17(11), 1036鈥�1048. ;  Mao Zedong (1959) Africa鈥檚 task is to struggle against imperialism. Available at the Wilson Centre Archive ; Taylor, I. (2018) 鈥楳ao Zedong鈥檚 China and Africa鈥�, Twentieth Century Communism, 15, 47+, available: 

 Capasso, M., & Kadri, A. (2023). The imperialist question: A sociological approach. Middle East Critique, 32(2), 149鈥�166 ; Ajl, M. (2024). Palestine鈥檚 Great Flood: Part I. Agrarian South: Journal of Political Economy, 13(1), 62-88. ; Yeros, P. (2024). A World Will Only Be Possible by the Intervention of the 鈥淪ixth Great Power鈥�. Agrarian South: Journal of Political Economy, 13(1), 14-40. 

 Samir Amin (May 2018) 鈥� Financial Globalization: Should China move in? Defend Democracy press. 

 New Arab News (2024) Egypt economic crisis: What is Ras al-Hekma and why is Cairo 鈥榮elling it鈥� to UAE? 

 Lydia Jones & Michael J. Bloomfield (2020) PPPs in China: Does the Growth in Chinese PPPs Signal a Liberalising Economy? New Political Economy, 25:5, 829-847, DOI:10.1080/13563467.2020.1721451

 China South Global Project (2024) China Could Fund Kenyan Rail Through Public-Private Partnership: Kenyan President  

 Ministry of Foreign Affairs of the Republic of China (2022) Jointly Advancing鈥倀he Global Development Initiative and Writing鈥俛 New Chapter for Common Development.  

 Somdeep Sen, NATO and the global colour line, International Affairs, Volume 100, Issue 2, March 2024, Pages 491鈥�507, 

Euractiv (2024) EIB ready to 鈥榮tretch鈥� lending criteria as it prepares for EU Council鈥檚 call to arms 

Defensenews (2024) EU member countries push back on Italy鈥檚 call for European army 

Every year the Nobel Prize is awarded to different disciplines including Economics. And each year it generates a wave of euphoria and hype. But unlike literature and natural sciences, economics is the only social science where the Nobel is awarded. Even critical voices within the discipline get swayed by the hype of Nobel. Notwithstanding the problem of absolute marginalization of Blacks, Women and economists critical of Capitalism among award winners, there are other serious problems with Nobel Prize in Economics.

First of all, the Nobel Prize in Economics is not actually a Nobel Prize. The award in Economic sciences was not among the original set of disciplines included in the Nobel Prize in 1901. It was established by the Central Bank of Sweden (Sveriges Riksbank) in 1969, after 68 years, rather than by the Nobel Committee itself. The greatest irony is that this fact is mentioned even on the Nobel Prize website, which states, 鈥淭he prize in economic sciences is not a Nobel Prize.鈥� (NobelPrize.org, 2018). Hence contrary to all other Nobel prizes in different subjects/fields, the Nobel Prize in economics is called by the special name 鈥淪veriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel鈥�.Initially, members of the Nobel committee (including family members of Alfred Nobel) strongly objected to naming the prize given by the Central Bank of Sweden as the Nobel prize (Offer & S枚derberg, 2016). To quote Alfred鈥檚 great-grandnephew Peter Nobel, “Nobel despised people who cared more about profits than society’s well-being. There is nothing to indicate that he would have wanted such a prize”, and deliberate association of Nobel prizes in Economics is “a PR coup by economists to improve their reputation” (The Local – Nobel Descendant Slams Economics Prize, 2005).

The prize initiated and awarded by the Central Bank of Sweden and falsely dubbed as the Nobel in Economics has acted as an institutional vehicle to endorse and establish Neo liberal ideas (mostly Free market fundamentalism) within Economics (Offer & S枚derberg, 2016). In fact,  member of the Nobel Award Committee for Economics are known to be affiliated with the notorious Mont Perlin Society (Mirowski, 2020). Notably, eight Mont Perlin Society members including Friedrich Hayek, Milton Friedman, George Stigler, Maurice Allais, James M. Buchanan, Ronald Coase, Gary Becker and Vernon Smith, have won Nobel. Economics, like other social sciences, such as, Political Science, Sociology, Philosophy, and Anthropology has diverse schools of thought and approaches to analyze and study the modus operandi of capitalism often euphemistically referred to as the 鈥楨conomy鈥�. In the last 68-years of its existence, not a single economist conducting rigorous theoretical and empirical research in the Marxian school of political economy has been a recipient of the award; such as, Paul Marlor Sweezy, Maurice Dobb, Samir Amin, Oskar Lange, Josef Steindl, Micha艂 Kalecki, John Roemer, Anwar Shaikh, Prabhat Patnaik and similar others. The fact that the most deserving post-Keynesian economist Joan Robinson was never awarded the Nobel prize is not surprising. In contrast, that very Nobel Prize committee was generous enough to award it to researchers beyond economics including psychologist Daniel Kahneman, mathematician Lloyd Shapley and political scientist Herbert A. Simon. Such acts of exclusion by the selection committee demonstrate their entrenched ideological bias and built-in censoring mechanism against any scholarship critical of capitalism. The selective recognition of economists mostly from the schools favouring capitalism marginalizes all other schools critical of capitalism within the discipline of Economics.

Furthermore, the pseudo鈥揘obel Prize in economics unnecessarily creates 鈥楽pokesperson(s) of the subject鈥� when ideally, they shouldn’t even exist (Offer & S枚derberg, 2016). By awarding economists mostly from the Neo-classical schools, it not only tends to reduce diversity within the subject, but also arbitrarily produces Spokesperson(s) for the subject. The common public, media, universities, and policymakers are thus inordinately influenced by the opinions and suggestions given by the Nobel winners. Economics is a very policy-oriented subject, dealing with decisions such as Taxation, Subsidies, Government expenditures, Regulation etc. The creation of such spokespersons dominantly from Neoclassical school and their inherent bias in favor of the free market (pro-big business) policies and aversion against Welfare state policies can have adverse impact on the everyday lives and livelihood of ordinary people. Media and government often utilize the views of such Nobel winners to justify policies that negatively impact the working class and ordinary people. These policies include dismantling pro worker labor legislations, privatization of public sector companies, tax-cuts to corporates, reducing funds for social sectors, increasing indirect taxes, deregulation of financial institutions, etc. Such policies disproportionately benefit transnational corporates and capitalist class across the world. For instance, the Nobel laureate Milton Friedman was comfortable the illegal coup of democratically elected president Salvador Allende and actively supervised the neo-liberal economic policies of Dictator Pinochet in Chile (Fischer, 2009; Frank, 1976; Klein, 2007). The ideas of several Nobel Laureates such as the Efficient Market Hypothesis, Black- Scholes formula, as well as positions in favour of market deregulation, especially the financial market, and the presumed magical efficiency of unregulated markets led to the greatest economic disaster of our generation i.e. the Great Financial Crisis of 2007 (Bresser-Pereira, 2010; Crotty, 2017). And therefore, quite evidently, the pseudo-Nobel in economics stifles diversity of thought within economics, tends to manufacture spokesperson(s) of the discipline (with of course a pro-market outlook), and has increasingly turned into an institutional mechanism to promote and legitimize Neo-liberal policies throughout the World.

Moreover, recipients of the pseudo- Nobel Prize in economics have mostly been concentrated in few Universities of the Global North. The majority of Nobel awardees are from a handful of North American universities (Totska, 2023). Nearly 46 % of the 96 recipients of the Nobel in economics between 1969 to 2024 were affiliated with just four Universities of USA, namely, University of Chicago, Massachusetts Institute of Technology, Harvard University and Princeton University. It represents only 0.12% of all Universities in the USA, 0.02% in Europe, or 0.00012% of all Universities in the world. Research has shown that most PhD students in economics of the Ivy League universities, where Nobel is concentrated, are from economically and socially privileged backgrounds (Stansbury & Schultz, 2023). Furthermore, Nobel prize winners in Economics are connected through a tight network of professor-student relationships (Tol, 2022) and the possibility of nepotism can hardly be ruled out (Zuckerman, 1977). This finding is not surprising given the fact that the Nobel Prize selection committee allows previous Nobel Laureates to nominate a candidate for the subsequent years (NobelPrize.org, 2018) and getting nominated by a previous awardee dramatically increases the chances of receiving the Prize (Economist Data Team, 2021). By summarily excluding knowledge produced by the Global South, while concentrating on few universities of just one country from the North, where the discipline is mostly pursued by individuals from privileged socio-economic backgrounds, the Nobel Prize further accentuates exclusionary tendencies prevalent within this subject and entrenches monopolization of knowledge production by a few centres in the global North and makes decolonization of economics nearly impossible.

As far as this year鈥檚 Nobel in economics is concerned, it was awarded to three economists: Daron Acemoglu (MIT), Simon Johnson (MIT), and James Robinson (University of Chicago). According to the Nobel committee, they were selected for it because they were “able to demonstrate a relationship between institutions and prosperity. They have also developed theoretical tools that can explain why differences in institutions persist and how institutions can change.鈥� It is difficult to review the听entire corpus of work done by Acemoglu et al here, so a brief review of their most influential (cited) works is presented here at a听very high level of generality. Kvangraven et al., (2024) have also recently critiqued Acemoglu鈥檚 work for which he was awarded Nobel this year. Acemoglu鈥檚 work falls听largely under the New Institutional Economics school and has shown the importance of institutions (social-legal rules/norms governing/influencing economic behaviours) in a country’s economic growth or decline. The crux of their research is figuring out correct institutions for economic prosperity. But if one interrogates the kind of institutions being sought, it becomes apparent, that they are mostly those which enable or entrench the rule of private bourgeois property, that in turn, enhances market functioning and outcomes. In their paper, 鈥淭he Colonial Origins of Comparative Development: An Empirical Investigation – American Economic Association鈥�, they even argue that depending on the type of institutions (extractive or inclusive) set up by colonialists, ex-colonial countries will have different economic consequences in the post-colonial period. However, what their research fails to acknowledge is that it was precisely the web of intricate institutional mechanisms designed by colonialism that allowed for the unilateral expropriation and transfer of wealth from the Global South (ex-colonies with extractive institutions), allowing them to accumulate enormous wealth in the听Global North (settler colonies with supportive institutions) while forcing ex-colonies to be economically dependent and poor (Amin, 1988; Frank, 2013). From 1765 to 1938, the transfer of wealth from Indian colony to UK amounted to $45 trilion( Patnaik, 2017) and such drain of wealth from Global South to global North is estimated around $242 trillion from 1990 to 2015 (Hickel et al., 2022).

Acemoglu et al fail to acknowledge the complex historical and contemporary mechanism of neo-colonialism where the development of the North is pre-conditioned on the underdevelopment of the South (Amin, 1988), the structural constraints imposed on domestic policy space of states of the South (with extractive institutions) by Global financial capital (Patnaik, 2005, 2018) and inability to comprehend capital accumulation as autonomously determined global scale process (Grinberg, 2018). Additionally, Daron Acemoglu argues that all non-capitalist institutional solutions provided under socialism such as economic planning, coordination, nationalisation are 鈥渆xtractive鈥� institutions. Many ex-colony countries, such as India and China, were able to foster industrialization through extensive use of extractive institutions, such as public ownership of private commercial banks and financial institutions and, the use of comprehensive economic planning. Nonetheless, Daron supports mildly social democratic solutions such as minimum wage, breaking monopolies, reducing inequality, unionism, favouring greater democracy, addressing the adverse impact of AI on workers etc. but all within the realm of capitalism. Hence, Acemoglu (and others) getting the Nobel is another example of validating researchers whose research does not challenge the status quo of capitalism. 

Capitalism is posing a real existential risk to humanity, generating unprecedented inequality, subjecting common people to harsh neo-liberal austerity, and consequently emboldening right-wing neo-fascists in Europe, America and elsewhere. At this historical juncture, the celebration of Nobel Prize in economics, which legitimizes apologists of Capitalism and silences its critique puts even Nero to shame. Hence, it’s high time we end fetishising the Nobel Prize in economics and demand what Gunnar Myrdal did 50 years ago, that is, seek the abolition of Nobel Prize in economics (Brittan, 2009).

Dr. Dawa Sherpa is Assistant Professor in the Department of Economics, Kurseong College, University of North Bengal, India.

References

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Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91(5), 1369鈥�1401.

Acemoglu, D., & Robinson, J. A. (2013). Why nations fail: The origins of power, prosperity, and poverty. Crown Currency.

Altman, M. (2004). The Nobel Prize in behavioral and experimental economics: A contextual and critical appraisal of the contributions of Daniel Kahneman and Cernon Smith. Review of Political Economy, 16(1), 3鈥�41.

Amin, S. (1988). Accumulation on a World Scale: Thirty Years Later. Rethinking Marxism.

Brittan, S. (2009, June 30). The not so noble Nobel Prize – Samuel Brittan: The Financial Times 19/12/03.

Crotty, J. (2017). The Realism of Assumptions Does Matter: Why Keynes-Minsky Theory Must Replace Efficient Market Theory as the Guide to Financial Regulation Policy. In Capitalism, Macroeconomics and Reality (pp. 13鈥�38). Edward Elgar Publishing.

Economist Data Team. (2021). The best way to win a Nobel is to get nominated by another laureate. The Economist, 1.

Fischer, K. (2009). The Influence of Neoliberals in Chile before, during, and after Pinochet. The Road from Mont P猫lerin: The Making of the Neoliberal Thought Collective, 305鈥�346.

Frank, A. G. (1976). Economic genocide in Chile: Open letter to Milton Friedman and Arnold Harberger. Economic and Political Weekly, 880鈥�888.

Frank, A. G. (2013). The development of underdevelopment. In Sociological Worlds (pp. 135鈥�141). Routledge.

Grinberg, N. (2018). Institutions and Capitalist Development: A Critique of the New Institutional Economics. Science & Society, 82(2), 203鈥�233.

Hickel, J., Dorninger, C., Wieland, H., & Suwandi, I. (2022). Imperialist appropriation in the world economy: Drain from the global South through unequal exchange, 1990鈥�2015. Global Environmental Change, 73, 102467.

Klein, N. (2007). The Shock Doctrine: The Rise of Disaster Capitalism. Metropolitan Books.

Kvangraven, Ingrid Harvold, and Surbhi Kesar Devika Dutt.2024. The Colonial Origins of Economics. Economic and Political Weekly. Vol. 59, Issue No. 42

MacLean, N. (2017). Democracy in Chains. The Deep History of the Radical Rigth鈥檚 Stealth Plan for America. (No Title).

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Mirowski, P. (2020). The neoliberal Ersatz nobel prize. Nine Lives of Neoliberalism, 219鈥�254.

Myrdal, G. (1977). The Nobel Prize in Economic Science. Challenge, 20(1), 50鈥�52.

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NobelPrize.org. (2018, July 4). Nomination and selection of economic sciences laureates. NobelPrize.Org.

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Patnaik U. (2017). Revisiting the 鈥楧rain,鈥� or transfers from India to Britain in the context of global diffusion of capitalism. In Chakrabarti S., & Patnaik U. (Eds.), Agrarian and other histories: Essays for Binay Bhushan Chaudhuri. Tulika Books.

Stansbury, A., & Schultz, R. (2023). The Economics Profession鈥檚 Socioeconomic Diversity Problem. Journal of Economic Perspectives, 37(4), 207鈥�230.

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The only Nobel Prize that has nothing to do with the will of its creator, Alfred Nobel, was announced on Monday, October 14th. As usual, the announcement sparked a range of reactions, and as economist . This time, the prize did its job and recognized the contribution of neo-institutionalism to economics. Its influence is undeniable, as can be seen from the fact that these authors are widely cited in macroeconomics courses. For instance, Daron Acemoglu had long been mentioned in academic circles as a favorite to win the Nobel, much like Leonardo DiCaprio was repeatedly named a favorite for the Best Actor Oscar. While we are already familiar with the kind of economics that dominates classrooms and the hegemonic media, as well as the economics that influences politics and shapes economic policies, it鈥檚 worth discussing the theoretical and empirical contributions being recognized and their main critical observations.

Daron Acemoglu, Simon Johnson, and James A. Robinson (AJR) have been awarded for studies of how institutions are formed and affect prosperity. Their work addresses what is perhaps one of the most important questions in economics: How do we explain the economic disparity between countries? Why are some nations persistently wealthy while others remain consistently poor? We should understand prosperity as the plain and simple economic growth. If we rule out biological, cultural, or geographical reasons, what remains is dimension of the historical-political order. Development, then, is largely dependent on one key factor: In the early stages of nations, before they became modern states, what forms of government, civil codes, and laws were established? According to AJR, the root of development lies in the different types of political institutions that were established across the world. Thus, inclusive institutions are in sharp contrast with extractive institutions.

Inclusive institutions are those that distribute power and limit its arbitrary exercise, enforcing property rights. In few words: the rule of law. On the other hand, extractive institutions are the opposite: full arbitrariness, little to no property rights, the rule of the strongest. Without the correct institutions, markets cannot function as they should. The rationale goes like this: These early institutions brought with them economic practices that shaped the behavior of both the state and entrepreneurs. Correct institutions encourage the right incentives. Thus, we have the innovative entrepreneur as a product of inclusive institutions, and the rent-seeking entrepreneur as a product of extractive institutions. In short, development is achieved through the institutions of idyllic capitalism: full property rights and democracy.

But this pristine vision of development is vulnerable from many fronts. To start, AJR must empirically prove that their hypothesis is correct 鈥� that it is institutions that generate economic growth, not the other way around. To achieve this, they use historical data on settler mortality rates. In principle, where mortality rates were higher, it was harder for Europeans to settle and bring inclusive institutions. In contrast, where mortality was high, extractive institutions were the only option. Glaeser and his colleagues argue that . For these authors, an equally valid explanation is that settlers brought their 鈥渁dvanced鈥� human capital, which made the long-term difference. In any case, econometrically speaking, it is almost impossible to ensure that it is indeed the institutions, and not something else, that determines who develops and who doesn鈥檛. It could be that the 鈥渞ight鈥� institutions flourished because it was in the settlers’ interest to reproduce the emerging capitalism. Even the mere presence of European settlements facilitated trade flows. Settlers were essentially recreating their societies in the colonies to resemble the metropolis.

Moreover, AJR鈥檚 argument lacks originality or, worse, lacks thoroughness in acknowledging intellectual predecessors. The same argument had already been put forward by Marxist economist Paul Baran in the 1950s. As noted by on X, Baran mentions in his book The Political Economy of Growth that it matters little who the Europeans settlers were 鈥� whether families fleeing religious persecution or expatriated criminals, they all 鈥渃arried capitalism in their bones and encountered little resistance鈥�. Where conditions were adverse, either due to climate or facing advanced forms of statehood, colonialism was simply looting.

Another criticism is the great variability in the types of institutions imposed in the colonies. These institutions were highly dependent on specific contexts and the economic interests of the metropolis. As Vernengo and Perez-Caldentey highlight, when necessary or convenient, the British had no problem establishing exclusive practices, while at the same time, the Spanish could implement inclusive institutions as well. These Latin American economists also question AJR, and the literature they produced,

Political scientist Yuen Yuen Ang, author of How China Escaped the Poverty Trap, also questions whether the so-called inclusive institutions are truly inclusive for all social groups. In North American colonies, property rights certainly protected white settlers, but not Native Americans, slaves, or women. As Yuen Ang suggests, This sophisticated form is called access money: the purchase of economic privileges by those with power. This type of corruption was characteristic of the so-called Gilded Age in the United States, a time that saw the rise of the great industrial barons of the late nineteenth century, who blurred the lines between politics and economics to amass great fortunes. The Gilded Age would also be characteristic of contemporary China. This interpretation of development history is far from AJR鈥檚 鈥渃orrect鈥� institutions.

Another problem is that, beyond using mortality data in their empirical studies, AJR completely ignore the violent nature of imperialism and colonialism. The plundering and extermination of entire peoples are not part of the analysis. The professor of Development Studies, , from the 鈥渋ntellectual鈥� distance of studying the economy without being 鈥渟tained鈥� by etical considerations of the subject matter. Furthermore, the absence of an imperialist context and massive violence reflects that AJR focus on a simplistic and deceptive interpretation of development: GDP per capita.

We should note that neo-institutionalism appears as an approach that covers up the loose ends of neoclassical theory. It is therefore a complement to the dominant economic narrative. It does not seek to critically scrutinize conventional theory but rather to save it. For these neo-institutionalists, solid liberal institutions are the foundation of private property and provide the 鈥渃orrect鈥� incentives for innovation, technological development, and competition. On an ontological level, economic actors are what they are, and incentives determine which behaviors will prevail. There is no discussion of how these actors come to be constituted; their nature is already fixed. According to heterodox economist Ha-Joon Chang, this aspect differentiates the new institutionalists from the classical institutionalists, such as Veblen, who laid the foundation for a much richer economic analysis, one reluctant to conceive of the economy as an entity separate from history and society as a whole.

As mentioned at the beginning, the Nobel Prize in Economics is awarded to those who have been highly influential within the discipline. As has happened before, even if this academic community reaches a consensus that does not signify any progress beyond what has already been advanced by other social sciences, that consensus is still perceived as a demonstration of economics鈥� technical and scientific superiority. It鈥檚 no surprise, then, that the laureates’ work contains methodological and factual flaws. Measurement and manipulation issues suggest that the results lack of solid foundations.

The dominant economic literature on comparative development, which seeks to answer the big question of current global economic disparities, has serious difficulties explaining how countries like South Korea, Taiwan, Singapore, and China can 鈥減rosper鈥� despite lacking the type of institutions that supposedly drive development. The acclaimed book summarizing the studies and contributions of neo-institutionalism is written by two of the laureates, Daron Acemoglu and James A. Robinson, and is titled Why Nations Fail. Neo-institutionalism deserves a book narrating its shortcomings as an example of how theories that claim to be rigorous end up being deeply unsatisfactory. Such a book could well be titled Why Theories Fail.

Yaku Fernandez-Landa, originally from Peru, is a 听Political Economist currently听 based in Geneva. He has completed studies in Economics and Political Economy in Switzerland and the US.

In the realm of听, the 鈥榳hite saviour鈥� trope has long been a subject of听. This phenomenon, often rooted in colonialist attitudes, positions Western individuals or entities as benevolent rescuers of non-Western communities, usually without acknowledging or addressing systemic multidimensional inequalities, colonial/racial privilege, and local agency of indigenous communities. The white saviour complex has not only perpetuated听听but has also听听the efforts and voices of those it claims to help.

As artificial intelligence (AI) has emerged as a global force to potentially , we see a new manifestation of the white saviour industrial complex within emerging global AI governance.

Global governance and the (colonial) race towards AI supremacy

The race towards AI supremacy has increasingly mirrored colonial-era power dynamics, with  and  striving to establish dominance in global AI technology and its governance. In this contemporary digital race, wealthier nations, primarily from the Global North, leverage their significant resources and technological advancements to dictate the terms of AI development and deployment. This pursuit often marginalises and sidelines the contributions and needs of the Global Majority, perpetuating  of exploitation and inequality.

The development of AI systems is inextricably linked to the continuities of historical injustices, constituting a  There are global economic and political power imbalances in AI production, with value being extracted from the  in the Majority world to benefit Western technology companies. This perpetuates an 鈥榠nternational division of digital labour鈥� that concentrates the most stable, well-paid AI jobs in the West, while exporting the most precarious, low-paid work to the Majority world.

The competitive drive for AI supremacy is not just about technological innovation but also about control 

Additionally, AI development is often shaped by Western values and knowledge, marginalising non-Western alternatives and limiting possibilities for decolonising AI 鈥� a reflection of a broader pattern of 鈥榟egemonic knowledge production鈥� within the 鈥樷��.

As the old adage goes 鈥渢here is nothing new under the sun鈥�, from the , research on , to, the epistemic challenges in global AI governance are reflective of historical structural inequities. Much of the research and policy development in many academic fields has historically been conducted by scholars and institutions based in the Global North. This dominance has shaped the research agenda, methodologies, and policy recommendations in ways that  with the needs and perspectives of the Global Majority.

Scholars from the Global North often have more resources, better funding, and greater access to academic networks, which allows them to  many fields. Likewise, the ethical, legal, social, and policy (ELSP) research on AI development and deployment is often led by Western academics who prioritise issues, solutions, and policies that resonate with Western perspectives. Consequently, Western academics also  other contexts, needs, and overall create a  that does not reflect the socioeconomic realities and lived experiences of the Global Majority, or risk perpetuating existing forms of .

Navigating the white saviour complex in global AI governance

Much like traditional international development initiatives, AI governance often involves Western-developed solutions being implemented in non-Western contexts, with imposed solutions through a 鈥榗opy and paste鈥� approach to Western 鈥榞olden standards鈥�, with several significant consequences. For example, Western nations often export their governance models as 鈥榞olden standards鈥�, assuming that these frameworks will be universally applicable. However, this approach neglects the unique social, political, and economic landscapes of non-Western countries. For instance,  may not be suitable for countries with different governance structures or developmental priorities.

These solutions often designed for Western innovation ecosystems do not consider non-Western local nuances, needs, or cultural contexts. As a result, they are often ineffective or   rather than fostering self-sufficiency, which can lead to a loss of agency and autonomy, perpetuating cycles of dependency and underdevelopment, with devastating .

Furthermore, the imposition of Western AI governance frameworks can reinforce a cycle of dependency, where non-Western countries rely on external expertise and solutions rather than developing their own capacities. This dynamic can stifle local innovation and self-sufficiency, leading to long-term detrimental effects on local governance and technological development.

While there are increased calls for a decolonial informed approach (DIA) to , from  and , in many global AI forums and discussions,  Western technical experts and policymakers dominate the conversation, often marginalising those who are most affected by AI technologies. This exclusion mirrors  of disenfranchisement and reinforces geopolitical power imbalances.

The ethical considerations surrounding AI governance, such as data privacy, bias mitigation, and transparency, may be inadequately addressed when Western frameworks are applied without . For example, data privacy laws that work in Western contexts may not consider the cultural attitudes towards privacy in non-Western societies, leading to ethical dilemmas and . While these frameworks are important and often abide to Western versions of 鈥榙emocracy鈥� and 鈥榬ule of law鈥�,  reveal that this emerging ethical imperialism may not fully encompass the lived experience, diverse values, and ethical considerations of different cultures in our global society. Imposing a singular ethical perspective can be seen as a form of ethical imperialism, where Western norms are prioritised over non-Western local traditions and beliefs.

, including AI systems, are not value neutral, they are developed by individuals and organisations that bring their own values, beliefs, and biases into the . For instance, if the majority of AI researchers come from a particular cultural or socioeconomic background, their perspectives will likely dominate the development process, leading to  that reflect their worldviews. This can result in algorithms that prioritise certain types of data or decision-making processes that align with those values, while neglecting others. These embedded values can influence how technologies are designed, implemented, and utilised, potentially perpetuating existing power dynamics and intersectional inequalities.

Another concern is that many  organisations that are increasingly funding access to digital public goods (DPG) , digital public infrastructure (DPI), and AI related policies still maintain an inherent colonial culture where as  writes 鈥淪uddenly, we find ourselves in a world where the act of calling out racism is more offensive than racism itself.鈥�

From ,  and the inequality associated with , we must critically address undertones of injustice to ensure that AI advancements contribute to equitable digital development rather than reinforcing historical injustices and systemic power imbalances of .

The South African context: an insidious manifestation of the white saviour trope

In South Africa, the white saviour trope has subtle nuances, but with very harmful effects. The country鈥檚 history of apartheid has left , with a privileged minority often holding significant power and influence, particularly . Today, this dynamic is evident in how privileged minorities are supported to position themselves as the 鈥榲oices of African people鈥� and 鈥榓dvocating African values鈥� at the global stage on discussions related to frontier technologies and the overall digital economy.

An unsurprising phenomena since, according to the , 鈥淭he dualism that stems from the legacy of demographic and spatial exclusion in South Africa is reflected in the digital economy landscape, and a large share of South Africans remain disconnected from the opportunities it has created.鈥�

Certain privileged individuals and groups assume the role of leaders representing broader Indigenous local communities often legitimised by  with Indigenous subordinates. These 鈥楢frican voices鈥� may not genuinely reflect the diverse perspectives and needs of the Indigenous majority. Instead, their viewpoints often align more closely with their own interests of , the , or of the Western institutions they are affiliated with.

These self-appointed spokespersons backed by generous funding often act as intermediaries between local communities and international entities. However, their legitimacy and commitment to true diversity, equity, and inclusion (DEI) are often questionable as they benefit from the status quo of being palatable to international donors. As , they have limited motivation to challenge systemic issues and the overall status quo in practice when situations that call for allyship, ethics, and decolonisation (which these individuals publicly advocate for) end in cognitive dissonance and default to protecting .

By ignoring , maintaining colonial practices in IDA, and encouraging privileged minorities to dominate the narrative on the socio-technical disruptions associated with new technologies for the Global Majority, we risk perpetuating  which hinders genuine progress towards real equity, epistemic justice, and risk perpetuating scenarios where the voices of the marginalized and real victims remain unheard.

Moving towards truly responsible global AI governance

To counter the white saviour industrial complex in global AI governance, a shift towards more inclusive and equitable practices is necessary, that places positionality and reflexivity at the centre of global AI governance and overall ELSP research on the digital economy. This shift could be based upon the following approaches.

Inclusive representation is paramount, voices from the Global Majority and marginalised communities should be included in global AI governance discussions. This means creating platforms and opportunities including resource allocation for diverse perspectives to be heard and considered.

Context-specific solutions should be considered. AI solutions should be tailored to local contexts, ethical, legal, social, cultural, and economic factors should be considered through engaging with local experts and communities, to understand their unique needs and challenges. Local experts should also be supported with the capacity to create home-grown solutions as well as contribute to technical discussions at the global stage.

Moreover, funding to boost collaborative frameworks must be prioritised. Developing collaborative governance frameworks that involve multiple stakeholders, including governments, civil society, and the private sector, can help create more balanced and effective policies. These frameworks require concerted funding and should prioritise bottom-up co-creation and mutually beneficial partnerships, rather than top-down imposition.

Ethical pluralism is key. Recognising and respecting the plurality of ethical perspectives is essential. Global AI governance should be flexible enough to incorporate different ethical frameworks and values, allowing for a more nuanced and comprehensive approach to AI ethics.

Finally, there is a need to decolonise research and policy. In both AI governance and development economics, it is important to decolonise research and policy-making processes. This involves including reflexivity on researcher positionality, valuing indigenous knowledge systems, promoting local research initiatives, and ensuring that policy recommendations are grounded in local realities, including through thought leadership of indigenous technical experts representing their communities.

The white saviour industrial complex in global AI governance reflects broader historical and systemic issues. As AI continues to shape our world, it is imperative that we address these issues head-on. We can move towards a more just and equitable global AI governance landscape by reflecting on the atrociousness of the past to ensure our collective efforts to foster inclusivity in the digital age respect local contexts, embrace ethical pluralism, reflexivity, and a decolonial informed approach鈥攁n exercise which will not only enhance the effectiveness of truly global AI solutions for good but also empower communities worldwide to shape their own technological futures.

 is a pioneering policy entrepreneur. As founder and executive director of the  (DepHUB), she is the first indigenous African woman to establish an independent think tank in South Africa. Shamira was a 2023-2024 Policy Leader Fellow at the EUI Florence School of Transnational Governance. She is an active member of many global expert working groups. Shamira has published a wide range of knowledge products that focus on diverse areas such as measuring the data-driven digital economy, sustainable digital transformation, and the multidimensional aspects of crafting human-centred responsible transnational AI governance, that benefits the Global Majority.

This post was first published on .

By Robrecht Declercq & Duncan Money

7 January 1968 was a day of celebration across the Congolese Copperbelt, marked with marches and festivities in the mining towns, bonuses for mineworkers and medals for those who had labored many years in the industry. All this marked the one-year anniversary of the foundation of G茅camines, the state-owned company that was established when the Congolese government nationalized the operations of Union Mini猫re du Haut Katanga (UMHK).

Early in 1967, the Democratic Republic of Congo (DRC) had decided to nationalize the largest and most powerful colonial company that still operated on its soil, after a dispute about where the headquarters of the company should reside. But deeper concerns stemmed from the fact that a former colonial business still controlled the most important natural treasures of the newly independent Congo. The Congolese had high hopes that the new company would propel economic growth through significant expansion of production. Ultimately, these hopes met with bitter disappointment.

It was not only Congolese people who entertained such hopes, however. What happened in Congo was part of what we term a post-colonial world of copper (1960-1980) in our edited collection . The book is a history of the global production of copper, its labour relations, technologies and the international political economy across the 19^th and 20^th century. The transition, and ultimately, failure of this unique albeit brief episode of postcolonial control is one of the focuses of the book. We assert that the national fragmentation of copper production in the postcolonial world, was in fact deeply intertwined with transnational influences and exchanges. It expressed an agenda that was shared in the Global South: to straighten out the huge economic imbalances with the Global North.

The nationalization of UMHK was contagious. Zambia nationalized the mines in 1969, Chile did so in 1971 while the military junta of Peru nationalized the mines of Cerro de Pasco in 1973. Within a span of a few years, control over the industry in the world鈥檚 four-largest copper exporters had passed from American and European multinationals to newly-assertive states. The postcolonial world of copper  embodied economic sovereignty, state-led national development schemes and international co-operation. It was pursued by military juntas, dictators and socialist-inspired leaders alike. In all these countries, the red metal symbolized the national treasury, the material of progress. As Zambia鈥檚 President Kenneth Kaunda remarked, Zambians were 鈥渂orn with a copper spoon in our mouths.鈥�

The nationalizations were celebrated in the copper states as a re-birth of the nation, an expression of true 鈥榠ndependence鈥�. After political sovereignty, countries established economic sovereignty. In Chile, stamps, postcards, paintings celebrated the nationalization of the copper seams as a major achievement. Songs were made. One remarkable postcard equaled the control over copper with the coming-of-age of Chile as a modern and developed state, no longer in a state of dependency: 鈥淐hile se pone pantalones largos (鈥�) ahora el cobre es chileno鈥�.  These vivid expressions were no less different than the carefully orchestrated celebrations held in Congo.

This was no less than a revolutionary overhaul of an older world of copper, one we term in our book the 鈥楢merican world of copper鈥� that endured from the late 19^th to the mid-20^th centuries. The international copper industry was not only dominated by American firms (with some notable exceptions) in these years but also by American-born ideas of company structures, technologies and labor practices.

American dominance over the copper industry emerged alongside an enormous increase in demand for copper during the Second Industrial Revolution. Electrification required copper to generate and distribute power, and output rose enormously. World copper production was about 55,000 tons in 1850 and almost 900,000 tons in 1910.

Over the late 19^th century, the American world of copper spawned huge multinational companies that developed a firm grip over new copper mines in Latin America and Central Africa. How these companies operated in different places was remarkably similar: an oppressive paternalistic control that sought control over virtually all the aspects of workers lives and an unhealthy influence of (domestic) politics. Copper companies controlled the entire chain: from mine to consumer was the slogan of the notorious Anaconda copper company that operated in Montana and Chile.

But in the 1960 and 1970s copper states took their place. Importantly, copper states were aware of the fact that domestic control did not suffice. On the initiative of Zambia, copper states established an international cartel in 1967: CIPEC (Conseil intergouvernemental des pays exportateurs de cuivre). The acronym was an obvious reference to the oil cartel OPEC that had upended the global oil industry.

Much like its more famous counterpart, the CIPEC aimed to control the price of copper by coordinating production between the major exporters. This was part of broader efforts by producer nations to contest the structure of the world economy and take advantage that industrialized economies had on raw materials from elsewhere. European economies in particular were heavily dependent on copper imported from CIPEC members.

CIPEC鈥檚 membership soon expanded too. In 1975, Papua New Guinea and Indonesia together with Yugoslavia and even Australia joined CIPEC. The control over commodities like copper seemed to offer a tangible way to actually reform the global economy. Indeed, industries could ill-afford to be cut from metals and energy sources like oil.

CIPEC also showed remarkable continuities. Mining multinationals during the American world of copper had endeavored to control global copper production to support prices and revenues. Yet they had found this an extremely difficult task, an inauspicious legacy for CIPEC.

By the late 1970s, the bid for state-controlled and internationally coordinated growth based on copper tragically failed. Unlike OPEC, CIPEC controlled an insufficient portion of global production and couldn鈥檛 discipline member states to stick to planned production cuts. Moreover, once the world economy went into decline after the Oil Crisis of 1973, international copper prices slid into the abyss, causing massive problems in the copper-producing states.

G茅camines still exists today, but in a very different form. Its demise encapsulated the end of post-colonial world of copper. After two decades of low copper prices, its operations were privatized under a World Bank program in the early 2000s. Congo鈥檚 mines today are owned and operated by large multinational corporations (plus some state-owned Chinese companies).

Born with a Copper Spoon describes this moment of postcolonial world of copper, both its intense feelings of nationalism and the international cooperation it entailed. Ultimately what happened in the copper mines in Africa and Latin America was salient in the important bid of the Global South to straighten out the huge imbalances of the world economy, which culminated in a program of action called the New International Economic Order (NIEO).

The underlying ambitions and ideas of the postcolonial world of copper have far from disappeared. The sovereignty of natural resources has become much more widely accepted. Furthermore, the situation of today demonstrates important parallels with historical periods in the copper industry: an energy transition that will require enormous quantities of copper, wide anticipation of prolonged high copper prices and states around the world taking a greater role in the industry. A new world of copper is in the making?

Robrecht Declercq is a historian, writer, and lecturer at the UCL-Saint Louis de Bruxelles.

听is a freelance historian and consultant and his work focuses on the mining industry.

The agreement recently negotiated between the Government of Ethiopia and the International Monetary Fund (IMF) not only imposes austerity on the government, but also risks destroying the country鈥檚 model of economic development.

Ethiopia, Africa鈥檚 second-most populous country, has featured tremendous progress in its economic development in the past twenty years. A developmental state driving public investment while imposing tight regulations on the financial sector, a managed exchange rate, and capital controls, achieved a significant decline in hunger and malnutrition, and improvements in literacy and other relevant human development indicators.

Nonetheless, Ethiopia is facing serious macroeconomic challenges including high inflation of close to 30 percent, a current account deficit, foreign exchange shortage, and slowing growth, jointly with domestic conflicts and climate change impacts. This situation has forced the country into negotiations with creditors on its external debt, even though Ethiopia鈥檚 external debt stock compared to GDP is less compared to other low-income countries. International financial institutions see government budget deficits as the main culprit in causing inflation and an overvalued real exchange rate that causes trade deficits and balance-of-payments problems while crowding out private investment in the country. End of July 2024, the Government of Ethiopia and the International Monetary Fund (IMF) concluded an agreement on policy action to be taken for a stepwise release of a loan of USD 3.4 billion from the IMF, starting with the immediate release of USD 1 billion, as well as additional grants and loans from the World bank. The agreement is built on the following : 1) floating the exchange rate; 2) modernizing the monetary policy framework going from reserve targeting to interest rate targeting; 3) ending monetary financing of the government budget via the National Bank of Ethiopia (NBE) and exiting financial repression; 4) improving mobilization of domestic government revenues; 5) debt restructuring with external creditors; 6) strengthening the financial position of state-owned enterprises.

What is wrong with the analysis?

This analysis of Ethiopia鈥檚 situation is misguided. Starting with inflation, at the Ethiopia鈥檚 government budget shows that over the past years, there have only been deficits if capital expenditures and current expenditures are considered jointly. Yet, keeping capital expenditures separately (it is appropriate to finance new investment with new loans to match additional output with additional money) reveals that current expenditures are more than covered by revenues meaning that the current budget is not even facing a deficit. Rather than by the narrow monetarist focus on government budgets, inflation can be better explained by past currency devaluations as well as various supply-side bottlenecks. For instance, multiple domestic conflicts in Ethiopia have impaired agricultural output, which, all along with population growth and urbanization, led to increasing food prices.

To be clear, there are problems arising from Ethiopia鈥檚 current economic framework in a situation of foreign exchange shortage: for example, instead of investing export revenues in production capacity, exporters often decided to use the part of foreign currency, which they were not obliged to surrender to the NBE, to exchange it at a favorable rate in the illegal parallel market or to illegally import consumer goods, which are sold at high prices domestically due to import restrictions. As another example, coffee farmers are forced to export coffee via marketing facilitators to earn the country foreign exchange. Yet, farmers would prefer to sell it in the domestic market where they could realize higher prices and better cover ever-growing living costs.

Yet, such phenomena, including the large disparity between the official and the parallel market exchange rate, are symptoms rather than causes of the existing problems. The bottom line is that increasing incomes stemming from Ethiopia鈥檚 strong economic growth have given way to growing import demand, which has hit the country鈥檚 balance-of-payments constraint. It is import substitution (for instance domestic renewable energy for fossil fuel imports) and export promotion that must do the job to improve the current account, ease foreign exchange shortage. Moreover, the country needs domestic investment, particularly in agriculture, to bring down food prices and overall inflation. This would correct the current wrong systemic incentives and move economic activity away from the parallel foreign exchange market.

What is wrong with the agreement?

In the IMF鈥檚 ideal world, the policy action agreed on in the deal will solve the problem: a floating exchange rate means that there is no parallel market anymore; austerity will stabilize prices. Both actions combined will restore international competitiveness because the market exchange rate will be such that imports and exports balance. Private investment will not be crowded out anymore by the government鈥檚 borrowing. Instead, it will prosper both domestically and via foreign direct investment (FDI), thus earning the country鈥檚 foreign exchange in the future and bringing it on a lasting growth path.

A lot is wrong with this optimistic projection. The most essential question is: how will the availability of foreign currency change as a result of the agreement鈥檚 implementation? The trade balance, on the one hand, may improve thanks to exchange rate depreciation but it is not clear how significant this effect is because exports (imports) are much more affected by changes in foreign (domestic) incomes than by changes in relative prices. Moreover, we are still to see how much relative prices even change once inflation goes up, thus undoing the nominal depreciation. On the other hand, the agreement has led to the , which is now increasing import demand. Income flows will lead to an additional loss of foreign exchange because foreign investors are now allowed to repatriate their profits more easily. It is doubtful that this can be counterbalanced by inflows from growing foreign investment itself. Other flows such as remittances and official development assistance, beyond international financial institutions鈥� bailout, will supposedly not change significantly. 鈥淪trengthening the financial position of state-owned enterprises鈥� essentially comes to privatization such as it has been announced for , meaning that the government is planning to sell out precious and strategic assets. This will yield short-term returns, including conditional finance from the World Bank, but a continued drain of foreign exchange from profit repatriation.

At the time of writing this text, the exchange rate has depreciated by about 100 percent. The NBE facilitates the floating regime by holding foreign exchange auctions with commercial banks to determine the rate. For the time being, this is quite a restricted foreign exchange market with the NBE as the key regulator by deciding on foreign exchange supply. Moreover, the current regulations still include some foreign exchange retention requirements and relatively tight capital account restrictions. Exchange rate floating thus only takes place within restrictions, which is why the parallel market is expected to stay in place since on the capital account side of the balance of payments, money is still trying to leave the country.

Taking stock of the economy鈥檚 expected structural change, it seems like in the short term there are additional foreign exchange losses whereas the additional inflows may or may not take place in the middle to long term. Immediate crisis is avoided by injections of foreign exchange from international financial institutions and, maybe, privatization returns. Overall, a larger share of foreign exchange trading may go through official channels than via the parallel market as compared to the previous situation, but a loss of foreign exchange is still a loss. It remains to be seen how far the Government of Ethiopia is willing to satisfy the IMF鈥檚 expectations once inflation has started increasing and foreign exchange shortage intensifies again once the additional liquidity that followed the IMF agreement is used up. That would be the opposite of the expected outcome.

If, in such a situation, the journey continues towards more liberalization to give the country more of the same medicine, the next step would be the removal of capital controls. Money currently being restricted from leaving the country could turn into a surge of capital flight, putting further pressure on the exchange rate and becoming self-enforcing. The NBE would have to use foreign exchange reserves to entertain capital flight. Inflation would shoot up from an already very high rate. In the worst case, balanced trade is not achieved via depreciation directly but indirectly due to collapsing import demand caused by a deep economic crisis. As the that the NBE 鈥渕ay have to take further policy action by raising interest rates to ensure inflation quickly returns to a downward path鈥�. To be less diplomatic, the NBE would have to increase its policy rate by an enormous amount in its fight against currency depreciation because the alternative policy instruments such as capital controls would have been removed. Given such a scenario, it is hard to imagine how private investment shall come in and bring the economy on a sustainable growth pattern, let alone the investment in key sectors to ensure food security, external balance, and internal structural change. There is still a window of opportunity for the Government of Ethiopia not to pursue this path to its end but to embrace more effective reforms.

The reforms needed

This critical view shall not deny that there is need for reform. The new that the NBE announced while the negotiations were still going on is a step in the right direction. So far, the monetary policy has been conducted in a rather monetarist way by targeting reserve growth, which constrained lending to productive and green investment. In contrast to the IMF鈥檚 misguided approach to monetary theory, this framework will and finance public investment to co-exist with private investment without any crowding-out. Public investment must play a key role to achieve the joint goals of domestic growth, price stability, poverty reduction, and a stable balance of payments. Austerity, high interest rates, and selling out public assets are the opposite of what is needed. Instead, regulation of the external account is necessary to maintain the Government鈥檚 policy space.

Moreover, while the real exchange rate may not be the most critical variable defining trade performance, it is clear that a fixed rate has led to real overvaluation after years of high inflation. Yet, this does not require a floating rate and the removal of capital controls. A (stepwise) devaluation can achieve the same goal. Likewise, increasing mobilization of government revenues is a welcome move if it takes poor households鈥� financial constraints into account. But again, this is a domestic issue that does not need financial liberalization.

It also must be admitted that Ethiopia needs FDI to facilitate technology transfer and increase the economy鈥檚 productivity. But this should not come with treating all capital flows the same way, irrespective of whether they contribute to long-term growth or are merely looking for short-term profits.

The coming months, and possibly years, including the continued debt restructuring negotiations with creditors, will show if the Government of Ethiopia is willing to maintain and improve the key parts of its successful development model. The alternative will be most likely be capital flight, austerity, and a tight constraint on long-term development.

Basil Oberholzer is Senior Associate Research Scientist at the Centre for Development and Environment, University of Bern, Switzerland. You can reach him at: basil.oberholzer@faculty.unibe.ch.

Photo: Addis Ababa. Rights reserved to DevEcon and the author

Born in 1931, C. T. Kurien contributed to rethinking economics through his various writings, particularly books and his vision for a practical B.A degree in Economics at Madras Christian College (MCC), an autonomous college situated in Chennai, a port city in Southern India. Besides MCC, another institution he contributed to was Madras Institute of Development Studies (MIDS), a research-only institute, also in Chennai. Kurien passed away in July 2024 aged 93.

This blog post provides a brief introduction to Kurien鈥檚 life and economics.

Brief Life

While at school in Kerala, Kurien was struck by the glimpses of Indian socio-economic realities found in Minoo Masani鈥檚 Our India, which was a text for his English course. It was recommended that he study logic and history before undertaking a degree in economics; and so, Kurien pursued his Intermediate (today鈥檚 class 11 & 12) from St. Joseph鈥檚 College, Bengaluru between 1948 and 1950.

Kurien did his B.A (Hons.) Economics at MCC (1950-53). In an autographical discussion in Rethinking Economics: Reflections Based on a Study of the Indian Economy (1996), Kurien shares details regarding his academic life. As a BA student, Kurien had to study 6 papers and write one essay; in the first year, he had 鈥楶rinciples of Economics鈥� and 鈥楨conomic History鈥�; and in his final year, he had 鈥楶ublic Finance鈥� and 鈥楻ural Economics鈥�. The 鈥楶rinciples of Economics鈥� course dealt with the theory of consumer behaviour drawn from marginalist economists such as Lionel Robbins. It was in the 鈥楶ublic Finance鈥� course where the students were exposed to contemporary discussions related to the Indian Economy.

Since Madras University recognised BA (hons) as equivalent to an MA in Economics, Kurien was eligible for lectureship. And so, after his BA, he joined the teaching faculty at MCC in 1953. Kurien was to be associated with MCC for 25 years鈥攈e left MCC in 1978.[1] Between 1953 and 1958, Kurien (1996) identifies two debates, which took place in the pages of Economic Weekly that influenced him. First was VKRV Rao鈥檚 critique of Keynesian economics based on the standpoint of Indian specificities. The second was the debate on the choice of technique in relation to questions regarding planning. In the former, KN Raj, Joan Robinson, Amartya Sen, and others participated.

Taking a leave of absence from MCC, Kurien moved to Stanford University in 1958 to begin work on his PhD, which was completed in 1962. His teachers included H. Houthakker, K. Arrow, Irma Adelman, Hollis Chenery, Lorie Tarshis and Bernard Haley. Kurien鈥檚 Ph.D supervisor was Chenery, and when Chenery left to join the Kennedy administration, Moses Abramovitz became Kurien鈥檚 supervisor. Kurien鈥檚 Ph.D thesis was titled Factor Market Structure and Technological Characteristics  of an Underdeveloped Country: An Indian Case Study. The central argument was that there was a rational basis 鈥渇or factor market imperfections in underdeveloped countries, particularly those said to be characterised by surplus labour鈥� (p. 27).

In 1978, Kurien left MCC and joined MIDS as its director. MIDS was founded by Malcolm Adisheshiah in 1970 and in 1977 was reconstituted as an Indian Council for Social Science Research (ICSSR) institute. Kurien served as Chairman of MIDS from 1997 to 2003. At MIDS, he supervised ten PhD dissertations (for the list, see Appendix A). In 1996, Kurien received UGC鈥檚 Lifetime Achievement Award. In 2002, he served as the President of Indian Economic Association.

Rural Transformation

Kurien鈥檚 book Dynamics of Rural Transformation:  A Study of Tamil Nadu, 1950-1975 (1981) was a pioneering one in regional economics, and it was adapted as a model study for other states by ICSSR. Published in 1981, the book examined the nature of rural transformation in Tamil Nadu between 1950 and 1975.

Kurien outlines the following ways to interpret changes in Tamil Nadu鈥檚 rural economy.

1. Commodity flow approach: this mostly involves the 鈥渃onversion of all quantities into value categories鈥︹�� (p. 119). Within this, the commonly used methods are the neoclassical aggregate production function and the disaggregated input-output.
2. Class approach: since classes are 鈥渃onceptual categories鈥�, their usage allows for commenting on long-term changes. Moreover, when applied to studying short-term changes, the translation of 鈥渃onceptual categories into operational empirical categories鈥� have been found to be 鈥渄ifficult鈥� (p. 120). Kurien, here, refers to the debate between Ashok Rudra and Utsa Patnaik in 1971 in Economic & Political Weekly (p. 147, n. 4).
3. Factor analysis: this 鈥渆nables an examination of the interrelationships among a set of variates to proceed towards the construction of a composite index out of the variety of variables鈥� (p. 120). Kurien probably picked this up from Adelman, one of his Stanford teachers; she co-authored with Cynthia Morris Society, Politics and Economic Development: A Quantitative Approach in 1967.
4. Cluster analysis: it 鈥減ermits one to group a set of variables or entities whose properties can be represented by a variety of variables, into more homogeneous subgroups鈥︹�� (p. 120); this was used in his earlier work with Josef James which was published as Economic Change in Tamil Nadu 1960-1970 (1979).

Kurien eschews all these four approaches and prefers going with 鈥渁 deliberately chosen focus鈥� (p. 120) to make sense of rural transformation. In the book, he makes use of decile groups, Gini coefficients and concentration ratios. Kurien makes the issues in comparing various survey data very explicit and provides a rich description of the data sources. There are insightful discussions on cropping patterns in the districts versus the state (pp. 37-41), increased mechanization of agriculture (p. 35), increased consumption of fertilizers (p. 36), decline in rural real wages (p. 100).

Markets in Economic Theory

Kurien鈥檚 R.C. Dutt lectures on political economy, given in 1990, was published as a book in 1993. It was titled On Markets in Economic Theory and Policy.

While he has not made theoretical contributions to the notion of markets, as a student of development economics, Kurien has 鈥渢ried to understand the phenomenon of the market in the context of the evolution and transformation of economies鈥� (p. 7). He rightly observes that 鈥溾�hile theory has the facility to make abstractions from reality, policy cannot abstract away from reality鈥� (p. 12). After stating that 鈥淸t]here are different theoretical traditions in economics鈥�, Kurien draws our attention to the 鈥渢wo very broad traditions鈥� outlined by Amartya Sen: 鈥渢he 鈥榚thical鈥� and 鈥榚ngineering鈥� traditions (p. 8). Kurien鈥檚 standpoint is best captured by this sentence: 鈥渢he market must be considered both as a social institution and as embodying certain logical properties鈥� (p. 10).

In his lectures, Kurien focuses his attention on four thinkers: Adam Smith, Karl Marx, John Hicks, and Karl Polanyi. In this blog post, we shall restrict our attention to Kurien鈥檚 view of Adam Smith鈥攅specially because of the dominant view which incorrectly views Smith as a precursor of marginalist economics and a champion of free market.

Kurien rightly points out the state of affairs that Smith is not pleased with: guilds and restrictions on trade. Smith wished that people had the freedom to enter the market and compete. And, most importantly, 鈥溾�mith鈥檚 position is that the exercise of self-love must be seen within the context of a kind of social relationship built on justice which includes protecting the weak and chastising the guilty鈥� (p. 15). Kurien makes his own position very explicit when he writes that he favours the 鈥渆thical tradition鈥he institutional approach鈥� (p. 11).

Traditions in Economics

Kurien鈥檚 engagement with various approaches in economics is visible in his Dynamics of Rural Transformation (1981), On Markets in Economic Theory and Policy (1993), and 鈥楬istory, Logic and Narrative in Pedagogy鈥� (2019)鈥攁 chapter in Pluralistic Economics and Its History, a book I co-edited with Ajit Sinha.

Drawing on Sen, Kurien (1993) places Socrates, Aristotle and Kautilya in the 鈥渆thical tradition鈥� and Walras in the 鈥渆ngineering tradition鈥� (p. 9). But in fact, Sen places Kautilya in the engineering tradition alongside Petty and Walras. Sen, in his slim book On Ethics and Economics (1987), writes: 鈥淭he 鈥榚ngineering鈥� approach also connects with those studies of economics which developed from the technique-oriented analysis of statecraft. Indeed, in what was almost certainly the first book ever written with anything like the title 鈥楨conomics鈥�, namely Kautilya鈥檚 Arthasastra, the logistic approach to statecraft, including economic policy, is prominent鈥� (p. 5).

Such a distinction is a poor one because Smith鈥檚 political economy is a mix of logical and ethical considerations. More significantly, such a distinction is problematic because it obfuscates the truth鈥攖hat there exists contending paradigms within the so-called engineering tradition. For example, Ricardo is a classical political economist while Walras is a marginalist economics鈥攁nd both were concerned about ethical matters.

On the first point, Kurien also agrees. As he writes: 鈥渢here is no incompatibility between the ethical and engineering approaches鈥� and 鈥溾�he tendency to think of the two traditions as mutually exclusive, and even as antagonistic 鈥� is an error and a pity鈥� (p. 9). Kurien also calls them the 鈥渋nstitutional approach鈥� and the 鈥渓ogical approach鈥� (p. 10).

In Kurien (2019), he begins by noting that economics teaching is dominated by neoclassical (I prefer marginalist) economics owing to the dominance of textbooks by Mankiw (and in the past, Samuelson and Marshall). While Kurien (1981) distinguished between the neoclassical production function and class analysis, his subsequent writings draw from Sen鈥檚 classification. In Kurien (2019), he calls the two approaches in economics as the 鈥渟ubstantive approach鈥� and the 鈥渇ormal approach鈥�. He places Smith in the former and Ricardo, Jevons, Walras, Arrow, and Debreu in the latter.

Concluding Thoughts

Kurien had a life-long interest in the pedagogy of economics. In Kurien (2019), he recommended the inclusion of real-life issues, history of economic thought and economic history, and the collection and analysis of data in the economics curriculum. And so, when I sent him my book Macroeconomics: An Introduction (2021), which is built on my standpoint of contending (鈥渆ngineering鈥�) approaches in economics, I was a little anxious. I was reassured and delighted when he wrote that he found my work as 鈥渁n original contribution to economics as a branch of the social sciences鈥� (personal correspondence, 17 July 2021).

Kurien鈥檚 work helps us understand the specificities of the Indian economy better. Initially, he used descriptive statistics, and later in life he employed narratives鈥攁ll with the clear purpose of ensuring a good life for all.[2] Let me end this essay with an excerpt from Kurien (1993): 鈥淢y view is that鈥ny serious study of social issues and of society, or of the economy as part of the study of society, is related to two basic queries: 鈥榃hat is my responsibility to myself?鈥� and 鈥榃hat is my responsibility to my neighbour?鈥�, precisely because society (and economy) consists of myself and my neighbours and of our interaction鈥� (p. 11).  

ALEX M. THOMAS is Associate Professor of Economics, Azim Premji University, Bengaluru, India. He is the author of Macroeconomics: An Introduction (Cambridge UP, 2021). He is a founding member of the Indian Society for the History of Economic Thought (ISHET) and serves as a council member for the European Society for the History of Economic Thought (ESHET).

Photo: C. T. Kurien, Source: 

This blog post is based on the online presentation I gave at The Reading Club, Department of Economics, MCC on 3^rd August 2024; I am grateful to Arun Koshy for inviting me to commemorate Kurien鈥檚 life and work. The content and opinions expressed are mine and are not endorsed by and nor do they necessarily reflect the views of Azim Premji University.

APPENDIX A

Table: List of PhD students supervised by C. T. Kurien at MIDS

Source:

[1] Under Kurien鈥檚 leadership, the faculty body at MCC restructured their undergraduate curriculum; a report of that exercise, including the syllabus, was published as 鈥樷�� (1976) in Economic & Political Weekly (vol. 11, no. 51, pp. 1962-1966). I am grateful to C. Selvaraj for alerting me to this article.

[2] He reviewed a variety of economics books for the magazine Frontline; it would be fruitful for someone to write a paper studying his numerous book reviews. For a list of reviews, see (for drawing my attention to this aspect of Kurien鈥檚 work, I acknowledge Raghunath Nageswaran).