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DEVELOPMENT POLICY Changing Perspectives and Emerging Paradigms

By Professor Denis Benn Michael Manley Professor of Public Affairs/ Public Policy UWI, Mona

Keynote Address Presented at the ECLAC-Sponsored Training Conference entitled 'Framework for Caribbean Investigation and Analysis' Trinidad and Tobago 24-25 May, 2004

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Contents:

i. ii. iii. iv. v. vi. vii. Notes

Introduction Development Policy in Historical Perspective: National and International Dimensions The Neo-Classical Counter-Offensive: Theoretical Premises and Practical Consequences The Impact of the Neo-Classical Approach on Development Policies of the UN System Emerging Development Paradigms Development Policy in the Context of Caribbean Regional Integration and Cooperation Conclusion

References

the intellectual genesis of developing policy can be found in the tradition of development economics. Indeed. which sought to highlight the structural . as it applies to developing countries. development policy has been the subject of a wide range of interpretations. which was further accentuated in the wake of the quickened pace of decolonisation during the 1960s as a number of former colonies attained independence and acceded to membership of the United Nations. among others. Paul Rosenstein-Rodan. I am conscious of the fact that the Commission has had a distinguished record of advancing path-breaking ideas. At the theoretical level. II Development Policy in Historical Perspective. the two terms are closely inter-linked and cannot therefore be entirely separated from each other in the discussion of development issues. not only in Latin America and the Caribbean but in other developing regions and indeed in the wider international community. Arthur Lewis. and on this basis highlight the changing perspectives and emerging paradigms on the subject. whereas the former involves the adoption and application of those principles in a practical development context. the latter may be said to embody the broad principles which inform approaches to development. including those in the Caribbean. associated with the writings of Raul Prebisch. the programme for international economic cooperation adopted for the first UN Development Decade (1961-1970) was premised on the need to accelerate progress towards self-sustaining growth and also to achieve 'a substantial increase in the rate of growth of developing countries'. Needless to say. What I would therefore like to do in this presentation is to identify the evolution in thinking on development policy. Hans Singer. Consequently. and Walter Rostow. Indeed. While the presentation focuses on development policy. National and International Dimensions The origins of development policy can be traced back to the initial preoccupation during the 1940s and 1950s with the development challenges facing the developing countries. ever since its establishment in 1948. in terms of definition. it should be noted that there is a close relationship between development policy and development theory. despite the conceptual distinction.3 I Introduction I feel extremely privileged to have been invited by ECLAC to deliver this address entitled Development Policy: Changing Perspectives and Emerging Paradigms. which have exercised an important influence on development policy.

that was subsequently elaborated in the form of the Heckscher-Ohlin theory8.4 underpinnings of underdevelopment and on this basis to formulate appropriate strategies aimed at stimulating growth and development.W. 'Labour in the West Indies' (1938)10 and subsequently elaborated in his seminal article entitled 'Economic Development With Unlimited Supplies of Labour'11 (1955). The intellectual rationale for this pattern of development was initially outlined by Lewis in his book. based on the work of W. including structuralism associated in the case of Latin America with the writings of Raul Prebisch1 and others. Arthur Lewis' 'Industrialisation in the Caribbean' (1950)9. particularly in the case of Latin American structuralism associated with Raul Prebisch. in which he argued that the relative lack of capital in the region together with the existence of a large supply of labour necessitated a strategy aimed at attracting external capital for investment in the industrial sector. up to the 1970s. dependency theory in which Andre Gunder Frank2 was perhaps the best known exponent. among others ― during the 1950s and 1960s and. served as the blueprint for the programme of 'industrialisation by invitation' based on the grant of tax incentives and import duty concessions to investors. capital accumulation advanced by Samir Amin5 and unequal exchange associated with the writings of Arghiri Emmanuel6. which was seen as a static concept that served to perpetuate the underdevelopment of the developing countries. Arthur Lewis4.and notwithstanding the criticisms of the 'terms of trade' thesis advanced by Prebisch and also by Hans Singer7. which was published in 1950. Consequently. In the case of the Caribbean. As a result of this policy . . the dual economy model developed by W. Rostow3. many developing countries embarked on a strategy of import substituting industrialisation which in fact sought to modify the traditional Ricardian notion of comparative advantage. given the small size of the economies of the region. It should be noted that William Demas. who in 1965 published his book entitled 'The Economics of Development in Small Countries with Special Reference to the Caribbean'.12 also became a major advocate of regional integration as a strategy for optimising the growth prospects of the countries of the region. Lewis advocated a strategy of regional economic integration in an effort to expand market size. A major theme underlying these formulations. stages-of-growth theory. was the claim that the developing countries were placed at an economic disadvantage derived from the adverse terms of trade between the primary commodities produced by them and the manufactured products produced by the developed countries. and which was to some extent influenced by the Puerto Rican model of industrialisation in vogue during the 1940s. In addition. special emphasis was placed on initiatives aimed at accelerating the pace of industrialisation in the developing countries in an effort to reduce their dependence on primary commodity exports. These efforts gave rise to the formulation of a number of theoretical frameworks. indeed.

social development. under the influence of both Structuralism and socialist-oriented models of development. science and technology. which was established following the first UNCTAD held in Geneva in 1964. human capital. during the 1960s and 1970s.The Neglected Equation' which has been circulated to the meeting. including international trade. with special reference to the trade in primary commodities. was the need for the state to play an active role in the development process by orchestrating wide ranging interventions in the economic sphere aimed at accelerating the pace of development. this had become an important article of faith not only of the developing countries but the concept of a developmental state was also embraced by international development institutions such as the World Bank as well as the regional development banks. The emphasis on the role of government in the development process was also reflected in the formulation of five year and ten year development plans which were premised on government intervention aimed at stimulating investment. and the structuring of the economic and social sectors of the UN system. Psychic Income and Development . but also exercised a significant influence on the orientation of development policy at the global level. was inspired to a large extent by the theoretical perspectives derived from the tradition of development economics mentioned earlier. apart from these broad trends. the demand by the developing countries for changes to be effected in the international economic system. as well as Ramesh Deosaran's attempt to redefine . A notable feature of development policy. endorse the industrialisation thesis propounded by the Latin American structuralists but actively sought to promote increased market access for the exports of the developing countries through the adoption of the Generalised System of Trade Preference (GSP). human resources development. a number of concepts such as sustainable development. which grew out of the study entitled 'Our Common Future' (1987) based on the work of a panel chaired by Geo Harlem Brundtland. This orientation on the part of the UNCTAD Secretariat was not unrelated to the fact that Raul Prebisch. This was evident in the fact that not only did the UNCTAD secretariat. money and finance. Indeed. In addition. Not surprisingly. one of the main architects of the 'declining terms of trade' thesis. which is associated with the work of Robert Putnam and others. as it emerged during the 1960s and 1970s. I have shown how. promoted by UNDP. sustainable human development. particularly in the industrial sector. the proposals embodied in the UN resolution on the NIEO envisaged fundamental reforms in respect of a wide range of development issues. social capital. industrialisation. designed to achieve higher levels of growth. became the first Secretary General of UNCTAD. the control over national resources. as was reflected in the adoption by the UN General Assembly in 1974 of the resolutions on the New International Economic Order (NIEO).5 The theoretical insights associated with the tradition of development economics not only shaped the approach to development in Latin America and the Caribbean and in developing countries in other geographical regions. In another paper entitled 'Aesthetics.

under the new dispensation. seeing that these issues are dealt with at some length in that paper. the economic stabilisation and structural adjustment programmes espoused by these institutions during the 1980s were directly influenced by the premises of the new economic orthodoxy. in reducing public sector deficits and in controlling inflation. the emphasis on the primacy of market forces and private sector initiatives.6 aspects of the social capital thesis. notably in terms of an increase in poverty. In fact. they have had a negative impact on the economies of these countries. growing income inequality and a deterioration in . The new 'monetarism' which became the guiding principle of a resurgent neo-liberalism also produced a shift in the policy stance of the international financial institutions. which. Ann Krueger and Deepak Lal. Bela Balassa. The triumph of neo-liberalism was further bolstered in 1989 with the collapse of the Soviet Union and the consequent weakening of the world socialist system. there was a significant retrenchment of the functions of the state based on a minimalist conception of its role in the development process. particularly in terms of his advocacy of the concept of 'social psychological capital'. under US influence. I will not address them in this presentation. both of which subscribed to an uncompromising neo-liberalism underpinned by the writings of conservative economists such as Milton Friedman. the evidence obtained from a review of the experience of many developing countries in Africa. However. resulted in a major ideological shift away from the assumptions of traditional development policy. notably the IMF and the World Bank. As a result. these developments resulted in the unchallenged hegemony of the US as the sole surviving superpower. have also shaped development policy perspectives. At the geopolitical level. In fact. actively embraced the new economic philosophy. Notwithstanding the unabashed proclamation of the merits of structural adjustment. not only advocated a reduction in the role of the state but also succeeded in reorienting the focus away from development to the principle of allocative efficiency. III The Neo-Classical Counter-Offensive The emergence during the early 1980s of conservative governments in Britain under Prime Minister Margaret Thatcher and in the United States under President Ronald Reagan. The new reality led to the assertion of a triumphal capitalism and bold and confident predictions regarding the end of ideology. Asia and the Pacific and Latin America and the Caribbean indicates that although these programmes succeeded in some cases. as was posited by writers such as Francis Fukuyama in his 1992 book entitled 'The End of History and the Last Man' 13 which in effect asserted that liberal democracy together with free market economics represented the end point in the ideological evolution of human society. which constituted the ideological bedrock of the 'new conservative economics'. among others.

The mood of capitalist triumphalism. albeit with some temporary concessions to the preferential arrangements traditionally granted to the developing countries. the developing countries have objected to the lack of transparency in the negotiations within the WTO reflected in the undemocratic practices involved in the 'green room' process which have effectively excluded the majority of developing countries from the negotiating process. despite the demand by the developing countries for a prior review of the implementation of the agreements already concluded in respect of investment.7 the social conditions in many countries as a result of a cutback in social sector expenditure which was often stipulated under the programmes in an effort to reduce public sector deficits.1990) Decades. Compared with the strategies of the first (1961 . the Strategy for the Fourth Decade . the conclusion under the Uruguay Round. Of special significance is the fact that the developed countries have sought to put on the WTO agenda a number of new issues such as competition policy. together with the insistence by the developed countries on maintaining large subsidies on their agricultural products. of a series of multilateral trade agreements dealing with investment measures (TRIMS). The Impact of the Neo-Classical Approach on the Development Policies of the UN System The fundamental shift which has occurred in development policy in the wake of a resurgent neo-liberalism has had a negative impact on the approach to development by the UN system in the period since the mid 1980s. and also the establishment of the World Trade Organisation (WTO) in an effort to promote a liberalised global trading regime based largely on the principle of reciprocity. as was the case during the 1960s and 1970s. In addition. IV. trade facilitation. to a focus on more limited goals and targets. Second (1971 .1970). and transparency in governmental procurement. intellectual property rights and services. intellectual property rights (TRIPS) and trade in services (GATS). was manifested not only at the national level but during the 1980s and 1990s a conscious attempt was made by the developed countries to promote an assertive strategy of globalisation and economic liberalisation. were at the heart of the collapse of the WTO Ministerial meeting held in Cancun in 2003. which have had a negative impact on the economics of many developing countries.1980) and Third (1981 . based on neo-classical economic assumptions. These concerns on the part of the developing countries. there has been a significant shift from the traditional emphasis on development policy as a holistic phenomenon. Specifically. which clearly emphasised the importance of economic growth in the overall development equation. while calling for further liberalisation by the developing countries in several sectors. This is clearly reflected in the changing content of the International Development Strategies adopted by the UN General Assembly during the past four decades. and the attempt to introduce new issues for negotiation. as was evident in the expansion of the influence of transnational corporations.

the WTO with trade policy and the UN with social development. fall essentially within a social development universe rather than within the broader parameters of development to which the UN system had previously subscribed. and social development. humanitarian affairs and international peace and security. Quite significantly. the diffusion of old technology. seeks to advance the concept of human development as an overarching philosophy. longevity. environmental sustainability and the establishment of a global partnership for development. The HDR. notwithstanding the fact that during the 1990s the UN sponsored a series of global conferences on issues such as human rights. HIV/AIDS and other diseases. a gender empowerment measurement (GEM) and a Technology Achievement Index (TAI). One initiative within the UN system which requires special comment relates to the publication of the UNDP annual Human Development Report (HDR). particularly hunger and destitution. including a human poverty index (HPI). universal primary education. Indeed. . which is intended to measure technological progress based on four criteria. a gender-related development index (GDI). notwithstanding the desirability for global development issues to be brought under the purview of the UN General Assembly as the most universal and democratic international forum. the diffusion of new technology and human resources development. maternal health. measured in terms of purchasing power parity (PPP). the Millennium Development Goals which embrace issues such as poverty eradication. this development seems to reflect a de facto division of labour among international institutions in which the IMF deals with macroeconomic policy. namely. 'the developing countries need not await the transformation in per capita income to do away with the existence of poverty. namely. Moreover. a number of other indices have been added to the original HDI. In fact. it has failed to recapture its previous holistic conception of development. gender. Over the years. it states that while growth is desirable. it is clear that the core economic development issues have been assigned to the IMF and World Bank. which has been published annually since 1990. At the heart of the HDR is the Human Development Index (HDI) which is a composite index comprising three elements. population. educational attainment and an income element. compared to the traditional growth-oriented models of development based on growth indices and per capita GNP measurements. gender. since some developing countries with low per capita income had succeeded in obtaining relatively good results in the social field'. the World Bank with structural and development policy.8 (1991-2000) places much greater emphasis on poverty eradication and social development. Within this schema. It in effect posits a substitute perspective on development. the indigenous creation of technology. infant mortality.

For this reason. governance and technology. While these issues are of undoubted importance. and also economic infrastructure are also essential to the achievement of an optimal level of development. vis-à-vis ECOSOC and the UN General Assembly has provoked considerable debate. covered. economic growth. It is also significant that despite its sponsorship of the annual HDR which has. who served as a consultant to UNDP in the preparation of the first Human Development Report. have been very influential in shaping the philosophical orientation of the HDR. human security. has increasingly sought to limit the focus of its activities to a number of select themes or practice areas. and environmental sustainability. over the years. human rights. Indeed. One school of thought argues that it is within the province of the Boards to lay down broad . governance. Fortunately these objections were overcome since the publication has succeeded in promoting an enlightened debate on the benefits of 'fair trade' versus 'free trade' and also endorsed a number of the positions that the developing countries had sought to defend over the years in the context of the multilateral trade negotiations within the WTO. gender. globalisation.14 The ideas advanced by Sen. at the operational level UNDP. a wide range of development topics such as financing. capital investment in the directly productive sectors of the economy. in reality.all of which were encompassed within the development policy matrix traditionally supported by UNDP and other organisations and agencies of the UN system. their ability to achieve a holistic development focus since issues relating to macroeconomic policy. such as agriculture. such as poverty eradication. at the behest of the donors. poverty eradication. the reports have placed considerable emphasis on social sector investment as the basis for promoting human development. the sensitivity in the relations between international development institutions in respect of perceived areas of responsibility is illustrated by the recent controversy surrounding the publication by UNDP of the book entitled Making Global Trade Work for People in which the WTO objected to aspects of the publication on the ground that it was not adequately consulted in an area for which it had responsibility. This has lessened. etc. However. in recent years the nature of the role of the Executive Boards of funds and programmes such as UNDP and UNFPA. production and the application of science and technology . industry. consumption. For this reason. despite the claim that it offers a substitute perspective on development. people's participation.9 Essentially. some developed countries attempted to suppress the publication. the Bretton Woods institutions and the WTO to which reference was made earlier.. to some extent. that UNDP's emphasis on social development is based on an explicit recognition of the division of labour between the UN system. the increasingly narrow focus of UNDP's development orientation is likely to prevent the organisation from dealing with a number of the central structural obstacles to development such as trade. It may be argued of course. the HDI is underpinned by a new conception of development reflected in Amartya Sen's redefinition of development as a process of 'enlarging people's choices' and ensuring greater freedom.

are quite explicit in their advocacy of 'a relative shift of resources from conventional country-specific aid to international public goods'. both within the intergovernmental forums and in the operational programmes of various organisations. as such.particularly in the face of the growing disadvantages experienced by the developing countries in the context of the inexorable march of globalisation . suggests that there has been a systematic shift in focus from the traditional broad-based approach to development to a more limited. which Marco Ferroni15 has characterised as reflecting the opening up of a new policy space to deal with a number of global or trans-border issues. such as environmental sustainability and the HIV/AIDS parademic. While it is important to promote international public goods. The initiative is motivated in part by the assumption that recent years donors have in been less inclined to increase aid allocations for traditional development purposes and that. including poverty eradication. The review of the evolution of development policy in the UN system. which is less than half of the 0. as has been the tendency in recent years. . however . by virtue of their contributions.10 development policy to guide the operations of the various programmes and funds for which they are responsible. In fact. the donors may be encouraged to assign resources for this purpose. should be guided by the development policy directives laid down by ECOSOC and the UN General Assembly and therefore the Executive Boards should provide broad oversight to ensure that the funds and programmes effectively pursue the goals laid down and.7 percent target for Official Development Assistance previously sanctioned by the international community.is an increase in overall development assistance instead of a reallocation of the present limited amount of such assistance. should not seek to stipulate. Others have argued nevertheless that UN programmes and funds such as UNDP and UNFPA. as is reflected in the Millennium Development Goals (MDGs). It should also be noted that in recent years increasing emphasis has also been placed on the concept of international public goods. What is really needed. particularly in the context of the intensification of the phenomenon of globalisation. which are beyond the capacity of individual countries. the donors have continued to exercise a dominant influence in the Executive Boards in determining the development orientation of the various funds and programmes. which as stated earlier. on their own. proponents of the international public goods perspective. there is a danger that the already limited resources assigned to development would be reallocated to deal with issues falling within this sphere of activities. by focusing on global issues which are of interest to both developed and developing countries. is likely to limit the ability of the system to deal with the major structural challenges facing the developing countries. it is likely that the nature of the role of the Boards vis-à-vis ECOSOC and the UN General Assembly will continue to generate debate within the UN system. theme-specific focus and that. such as Ravi Kanbur16. the goals to be addressed by the funds and programmes. While. there is an overriding emphasis on social development issues.

it may be more appropriate to adopt the concept of competitive advantage instead of comparative advantage in seeking to determine the relative advantages of participants in the international trading system. given the fact that. the theory of comparative advantage. since although neo-classical trade theory is premised on the liberalisation of all factors of production. as economists such as Michael Porter17 have pointed out. It has also been criticised for assuming the existence of perfect competition. At the international level. both the IMF and the World Bank are fully committed to the neo-classical economic orthodoxy which means that they subscribe to a fairly limited conception of development. which suggests that the system of free trade is far from being philosophically unassailable. the free movement of labour is often excluded from the equation. a major weakness is seen as its attempt to apply a highly idealised conception of the economic system to describe a complex reality. For this reason. For example. has been criticised for being too static in its conception since comparative advantage is susceptible to change over time. has been the subject of a number of criticisms regarding fundamental weaknesses in it theoretical underpinnings. The attempt to define the function of the state as providing an enabling environment for private sector investment is also quite misleading since the role of the state must be defined in wider terms. contrary to the conventional wisdom. given its responsibility to provide strategic inputs in the development process and to ensure social equity. 'countries that have done well in the post-war period are those that have been able to formulate a domestic investment strategy to kick-start growth and those that have had the appropriate institutions to handle adverse economic shocks. and which was supplemented by monetarist approaches during the 1980s. as Dani Rodrik has pointed out. not those that relied on reduced barriers to trade and capital flows' 18 . perfect competition and economic equilibrium seldom apply. critics point to the lack of consistency in the application of the concept of comparative advantage in the context of globalisation and economic liberalisation. More important still. Moreover. Similarly. whereas in most economies. particularly those of the developing countries.11 This development is all the more significant. based on their reliance on market forces and private sector initiatives. which is largely the product of the 'marginalist' revolution of the late 19th century. under the so called 'Washington Consensus'. competitive advantage can be created based on the application of technology. It is important to note that neo-classical economics.

Similarly. IV. the need for the formulation of a new development paradigm has become an urgent necessity. will require the formulation of a new techno-economic paradigm in order to respond adequately to the challenges presented by these developments. despite growing recognition of the importance of science and technology in the development process. the Labour Party. but rather in the capacity of countries 'to engage the world economy on their own terms. in adopting the so-called 'third way'. as the neo-liberal thesis suggests. biotechnology and new materials. the grant of substantial agricultural subsidies by the US and the European Union in a situation in which the developing countries are routinely precluded from granting subsidies under the terms of the conditionalities applied under IMF/World Bank sponsored structural adjustment programmes. these subjects have not been adequately addressed in the formulation of conventional development policy. Thomas Palley20 has advocated the application of structural Keynesianism to the formulation of development policy in order to ensure that the interests of the working class are adequately protected. Joseph Stiglitz has in fact called for an increased role for the state in the development process since government action is often critical to ensuring desirable policy outcomes. not on terms set by the global markets or multilateral institutions.'19 Finally. In the case of the United Kingdom.12 In other words. The fact is that. It is also becoming quite clear that the advent of new technologies such as microelectronics. the solution does not lie with liberalisation in itself. which cannot be guaranteed by the operation of the market on its own. The maintenance of an adequate balance between the two elements of this strategy continues to present a . number of major challenges in the formulation and application of an enlightened development policy. has sought to combine free market principles with a socialist ethic of distribution in an effort to ensure an optimum social outcome by limiting the negative impact of an unrestrained neo-liberal economic philosophy. Emerging Development Paradigms Based on the perceived inadequacies of the existing neo-liberal economic orthodoxy which has failed to deliver the expected benefits and in a situation in which poverty not only persists at the national level but in which income disparities between rich and poor countries continue to increase. implies a highly selective application of neo-liberal principles in international trade and economic relations.

who posits that: …. as in the case of the UNDP-sponsored Human Development Reports. Beckford. I may add. advocated a strategy of nationalisation and the promotion of greater selfreliance. was a staunch advocate of a development policy focused on industrialisation in the context of efforts to promote increased regional economic co-operation. V.'22 and.23 However. The challenge outlined above is perhaps best captured by Paolo Sylos Labini. particularly in terms of the need for regional integration as a means of optimising the development possibilities of the region and as a strategy for ensuring the exercise of 'effective'. sovereignty. who was one of the pioneers of development economics. the Lewis-Demas thesis came under increasing attack during the 1960s and 1970s from the New World Group24 of economists. I would like to address the issue in the context of specific Caribbean realities. as he was wont to argue.'21 Moreover. the Caribbean has not been exempt from the several shifts in development policy over the years. especially if we intend to analyse not only countries that today are advanced but also underdeveloped countries. as Steven Durlauf has reminded us '…. such as Best. an attempt has been made by some social science theorists to elaborate the concept of 'psychic income' and to reformulate the approach to development policy in order to ensure the inclusion of this important element in the overall development equation.13 Similarly. As was stated earlier. The development strategy supported by the Group was also premised on the need for the . This position was also clearly supported by William Demas. In recognition of this need.we have to enlarge the scope of our enquiries concerning development processes. Girvan and others. although an attempt has been made in recent years to reformulate development policy in terms of human development goals. instead of merely 'formal'. who starting from the premise that the transnational corporations in the region operated on the basis of the same exploitative logic as the traditional plantation system. this effort has failed to take into account. Development Policy in the Context of Caribbean Regional Integration and Cooperation Having provided a general overview of the evolution in thinking on development policy globally. It was noted that Arthur Lewis. with development policy. the psychic dimension of human existence which is clearly linked to the existence of an aesthetically pleasing social environment.methodological eclicticism seems more than warranted when dealing with issues as complicated as growth.

the free market philosophy became the dominant influence on development policy during the 1980s.which in fact became an important article of faith of the development policy to which countries in the region subscribed during the 1960s and 1970s. Consequently. the less than optimal results from the policies pursued within this framework. Notwithstanding the challenges which it presents. petroleum/natural gas. The reality is that the Caribbean Community possesses a number of critical resources such as bauxite/alumina. gold. to which reference was made earlier. and indeed in some parts of the academic community in the developed world. the establishment of the CSME constitutes a major element of the current development strategy pursued by the countries of the region. as in other parts of the developing world. In the wake of neo-liberal revolution. Indeed. have committed themselves to introduce by the end of 2004. since it will be responsible for the settlement of trade disputes which might arise among member states. in its original jurisdiction. with special reference to the conclusion of a separate Economic Partnership Agreement (EPA) between the Caribbean and the EU. A number of commentators including Havelock Brewster25 and Norman Girvan. as was the situation in many other developing countries. the FTAA and in the ACP/EU Cotonou arrangements. there is renewed interest in rethinking the premises of neo-liberal economic policies in an effort to arrive at a development paradigm more suited to the needs of the region. agriculture and forestry. efforts are also being made to establish the Caribbean Court of Justice (CCJ) which. An important element in the rethinking of development policy in the region relates to the current effort of the member countries of the Caribbean Community to intensify regional economic integration in the context of the proposed Caribbean Single Market and Economy (CSME) both as a means of advancing their development and in an effort to strengthen their bargaining position in the context of the negotiations within the WTO. will be an important element in the functioning of the CSME.26 have pointed to the slow pace at which progress is being made towards the completion of the legislative and administrative arrangements that will be necessary for the launch of the CSME. which Barbados. has led to increased questioning of the unqualified application of the neo-classical model to the realities of the small economies of the Caribbean. the 1980s witnessed a fundamental shift in orientation towards a reliance on the market and increased private sector investment under the influence of the structural adjustment programmes on which a number of countries in the region embarked in an effort to deal with their balance of payments problems. Of course.14 government to play a critical role in the development process . significant tourism infrastructure and not insignificant human . diamonds. However. Jamaica and Trinidad and Tobago.

based on various models which are in fact identified in the Treaty. based on their relatively low level of competitiveness vis-a vis other member states of the Community. in recognition of its limited geographical size. As such. as was stated earlier. in recent years there has been a significant increase in cross-border investment in a number of service sectors. The debate also overlooks the fact that not only will the CSME strengthen the negotiating capacity of the member states of the Caribbean Community by facilitating the adoption of a joint platform on issues. in particular. need to embrace the concept of the collective exercise of sovereignty. . The concept is most closely linked to the experience of Singapore which. has sought to expand its development prospects by 'integrating' parts of Malaysia and some of the neighbouring Indonesian islands into a common development framework or growth triangle which generates economic benefits for all the participants in the arrangement. of which few other economic entities of similar size can boast. it is highly unlikely that they will be able to survive in an even more competitive environment outside the CSME. but. which is an indispensable strategy for optimising the development possibilities of the region and also for maximising the exercise of sovereignty at a time when small states. It is also noteworthy that at the thirtieth anniversary Conference of Heads of Government held in Montego Bay in July 2003. Jamaica and Trinidad and Tobago. these efforts have been motivated to a large extent by a desire to promote 'market extension' and have not been based on factor complementarity. But this position is quite indefensible since it is obvious that if countries are not competitive enough for the CSME. Indeed. including in particular banking and insurance. notably among companies based in Barbados. It is worth noting in passing that recently the argument has been advanced in certain quarters that some countries would be adversely affected by participation in the CSME. the Heads of Government agreed to appoint a group of experts to identify the possibilities for production integration in the region and also the related policy and institutional arrangements to give effect to the strategy. it will provide increased opportunities for production integration. it provides a solid basis for the promotion of a strategy of production integration in the region. Of course. Article 52 of the Revised Treaty of Chaguaramas makes specific reference to the promotion of production integration. as Trevor Farrell27 and others have pointed out. the logic of regional economic integration could be further extended by linking it to the possible creation of a growth pole or growth triangle in the region. In terms of the current status of developments in the region. However.15 resources. which is at the heart of the strategy of production integration.

a wide range of options is available to the Community for the flexible exercise of sovereignty at different levels. However. While it is true that. the Community is seen as a 'community of sovereign states' which tends to highlight the sovereignty vested in the individual states. In this connection. based on the promotion of closer economic links with Brazil. in which the former is seen as providing a 'gateway' for Caricom countries into a major trading bloc. as is indeed the case in respect of some aspects of the negotiations carried out within the framework of the Caribbean Regional Negotiating Mechanism (CRNM). it is clear that an effectively functioning Community will require innovative governance arrangements which would involve. sovereignty resides in individual countries. This would be perfectly compatible with a strategy of production integration within Caricom based on the exploitation of the region's natural resources. and. without resorting to political union. since it is recognised that the effectiveness of regional economic arrangements will depend to a large extent on the nature of the political decision making process within the Community. including geo-strategic initiatives which bear on economics.16 Significant benefits could be derived by promoting a similar arrangement within the Caribbean/South American region. even the cession of . based on the provisions of the existing treaty. Equally significant in this context is the fact that Guyana and Suriname are currently engaged in preliminary oil exploration which. because of the reservations in some countries regarding the establishment of a federation or other form of political union. as was stated earlier. It should also be noted that while development policy in the Caribbean has traditionally focused on economic and social development issues. development policy in the Caribbean will therefore need to expand its horizons and seek to encompass new and innovative possibilities. Guyana has recently concluded a trade agreement with Brazil. in other cases. Guyana could serve as the 'gateway' by virtue of its existing trade agreement with that country. the collective exercise of sovereignty. based on US Geological Survey data. Given these realities. given the small size of many of the islands. in reality. In fact it is understood that a proposal by Brazil for the conclusion of a formal relationship between CARICOM and MERCOSUR is currently being studied by the Caricom Secretariat. bearing in mind that Brazil is a member of MERCOSUR. governance arrangements at the regional level have also come under increased scrutiny as part of the effort to give effect to the CSME. is likely to yield significant quantities of petroleum. it would be feasible to establish a Caricom growth triangle involving the three member states of the Community. it should be noted that with the blessing of CARICOM. Given the potential of these countries to exploit the petroleum resources of the Guianas Shield and the significant petroleum and natural gas production of Trinidad and Tobago. if it is to serve as a dynamic instrument in the service of the development in the region. At the present time. in which. including poverty eradication and sustainable development. in some cases.

attention will also need to be paid to the wider CDCC membership and indeed to the Association of Caribbean States (ACS). with special reference to the possibility of establishing a Commission to advance relevant initiatives and also to force the pace of implementation in respect of CSME . it was mandated to explore the possibility of introducing a system based on the principle of 'automaticity' of resource transfers to the Secretariat. Consequently. as was mentioned previously. In addition. and Trinidad and Tobago to examine the existing governance arrangements. the Caricom Secretariat and the ACS Secretariat in order to achieve this objective. rather than duplicate. The Prime Ministerial Expert Group was also requested to make recommendations for the more effective functioning of the Assembly of Caribbean Community Parliamentarians (ACCP). The decisions to be taken on issues relating to regional governance will form part of the wider strategy on trade and economic integration within CARICOM which. In an effort to carry forward this initiative. Port-of-Spain will need to focus on the possibilities for collaboration and the intensification of synergies among all member states of the CDCC. In recognition of the importance of effective regional governance arrangements. It will be important therefore to organise periodic meetings between ECLAC. which also cuts across the constituency for which the ECLAC Sub Regional Headquarters in Port-of-Spain has responsibility. This will inevitably involve a rationalisation of effort in order to complement.17 supranationality in specific areas . . initiatives within the region. Antigua and Barbuda. 2004. Barbados. At the intersessional meeting of Heads of Government held in St Kitts in March. comprising the Prime Ministers of St Vincent and the Grenadines (Chairman). at the next meeting of the Caricom Heads of Government to be held in Grenada in July 2004. It should be mentioned that although the analysis has focused largely on the Caribbean Community. Port-of-Spain. Jamaica. the Prime Ministerial Expert Group appointed three technical sub-groups to review the various issues. has become a central focus of development policy in the Caribbean.as indeed would be the case with the establishment of the Caribbean Court of Justice (CCJ) which will eventually function as a supranational entity and the decisions of which will be binding on member states of the Community. the development policy articulated by ECLAC. which had been submitted to the Prime Ministerial Expert Group would be considered. in an effort to put the funding of the Caricom Secretariat on a firmer footing. the CARICOM Heads of Government have appointed a Prime Ministerial Expert Group. in conjunction with a separate report prepared by a group of external consultants on the functioning of the Caricom Secretariat. it was decided that the reports of the technical sub-groups.related issues.

particularly in terms of regional integration and in the management of external trade negotiations. and bearing in mind its distinguished record of contribution over the years. is well placed to provide the necessary intellectual support for the formulation of a creative strategy designed to promote the optimal development of the region based on growth with equity. This is a historic enterprise in which ECLAC must place a central role. face a number of major challenges which will require the formulation of new and innovative development paradigms in order to enable them to cope with these challenges.18 VII Conclusion The foregoing analysis has sought to highlight the changing perspectives on development policy both globally and in the specific context of the Caribbean. with which the region has been forced to deal on a collective basis. in keeping with its mandate to serve as an intellectual centre for analysis and policy formulation within the UN system at the regional level. ECLAC. _________________________ . While significant progress has been made. Port-of-Spain. The analysis suggests that the developing countries as a whole and the Caribbean in particular. and also the achievement of human development goals.

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