|Saturday, 10 May 2003|
A three sector growth model for development and peace
by Dr. Ponna Wignaraja, Chairman - South Asian Perspectives Network Association, Vice Chairman - Independent South Asian Commission on Poverty Alleviation (1992)
Since the beginning of the new millennium and the United Nation (UN)'s announcement of its goal to reduce poverty by 50% by the year 2015, some re-examination of past development thinking and action has taken place.
However, much of this can be seen as "marginal tinkering" and reformist - and an inadequate response to the current crisis of development and poverty. There is an urgent need to provide new directions. No longer can reliance be placed either on the strategies of the 1950s and 1960s and debt-led growth. Nor can the present crisis of development and poverty be resolved through Keynesian consensus and unsustainable welfare economics, or by simplistically resorting to monetarist and neoclassical economies, tempered by a "humane face" and "human development".
In 1992, a stark warning was issued - almost a decade before the UN Millennium Declaration - by the unanimous report of the Independence South Asian Commission on Poverty Alleviation (ISACPA), established by the South Asian Association for Regional Cooperation (SAARC) Heads of State. The report stated that "poverty in the South Asian Region, based on conventional 'poverty line' estimates, is of the order of 440 million and is likely to increase. The magnitude and complexity of this problem in South Asia is staggering. When coupled with the multifaceted crises currently facing South Asian countries, the problem is becoming unmanageable, not only putting democracy at risk but also posing a threat to the fabric of South Asian societies."
Current studies confirm that poverty is increasing. Even the latest World Bank Annual Report 2003 has recognized that social unrest threatens poverty reduction goals. These warning signals - and others - are yet to be taken seriously.
Three sector growth
What is the answer to this problem? Conventional development thinking prescribes a two-sector growth model - private and public, and welfare for the poor. ISACPA recommended a three-sector growth model, with the third sector being that of the poor, who can as subjects in the process generate a further accumulation process where growth, human development, and equity are not trade-offs.
The economies of this third sector, though simply stated, has a far from simplistic economic and political rationale. The eradication of poverty requires a major political rather than a technocratic approach where social mobilization and empowerment of the poor and their efficiency play a critical role. This simple truth is not based on a priori theorizing but on lessons from the ground.
The 1992 ISACPA Report recommended a balanced and holistic pro-poor development approach, which in a transitional time frame, moves on two fronts - a cautious open-economy industrialization front with pro-poor reforms, and a poverty eradication front with rigorous social mobilization and participation of the poor as "subjects" and not "objects" in the process.
These two parallel strategic thrusts, which have long-and short-term time frames, can be harmonized as the processes evolve. These recommendations also elaborated how strategic "pro-poor planning" can generate pro-poor growth in each of the two fronts with a lower capital output ratio. Growth in the formal public and private sectors will be complemented in a third informal sector by growth generated by organizations of the poor. The public and private sectors can together generate 6% growth, with organizations of the poor generating 2%-3% growth, to reach an overall sustainable growth rate of about 9% through the three sectors, to achieve the UN Goal.
The innovative way to undertake this transitional strategy is available to all partners who seek to holistically achieve the Millennium Development Goals. It is based on five critical interrelated fundamentals.
Social transformation and sustainability: Reducing poverty of such magnitude requires a major social transformation and real structural changes that are more than mere macro financial and budgetary discipline, and fragmented welfare and safety nets for the poor at the micro level. The transformation's objective is to move from postcolonial dependency to greater self-reliance and an alternative modernity, based on lessons from the ground.
Perspective and values: The transformation has to be value led. Some critical values at the microlevel relate to looking at life in its totality and all its richness; fostering participation of the people in decisions that affect their lives; sharing with and caring for the community with cooperative activities beyond individual self-interest; promoting trust, simplicity, thrift; encouraging a work ethic with a fine-tuned balance between work and leisure; fostering harmony with nature and a rational use of both natural and financial resources; establishing communal ownership of some natural resources; and ensuring complementarities between men and women, as well as gender equity.
These values embedded in South Asian culture have reemerged in the new social movements and "success cases" of poverty eradication at the microlevel with the poor as subjects. A new people-to-people, people-to-nature, and people-to-their-knowledge-system relationship will inform the micro-macro framework conditions.
Countervailing power: a political approach to the transition: To achieve the perspective and values transformation, there must be a link between development and democracy with real - and not pseudo - participation and devolution of power and empowerment of the poor. Any meaningful approach to structural adjustment that will not benefit the rich at the expense of the poor must be based on establishing countervailing power, which is the ability of the poor to assert their rights to resources and also establish their self-esteem. The conventional project approach with technocratic "tool kits" - which accompanies the two-sector growth model, structural adjustment and unsustainable welfare-is inadequate.
Growth, human development, and equity: A sustainable poverty reduction strategy needs to search for alternative driving forces for a self-sustaining accumulation process. This is not a matter of merely giving credit to the poor or delivering fragmented services.
It is a matter of embarking on a new pattern of growth with the poor saving, even at low levels of income, and learning to transform their efficiency and work into assets. In such a strategy, the people's creativity, locally available resources, and local knowledge systems become critical instruments. Imported capital and technology, the factors in short supply, can be supplementary.
Refocusing praxis and participation: To link all these fundamentals, a different methodology of analysis and action is required. Social sciences have evolved through Cartesian approaches and a predetermined universalism. Social praxis is an action, reflection, and learning process where the awareness of the poor is raised, and they can also be engaged and bring about changes in their lives as they participate as subjects - not objects. This requires interdisciplinary and collective creativity. The preceding methodology of poverty reduction requires linking social praxis with participation and social mobilization.
For the poor to engage in praxis, it is necessary to demystify both the nature of knowledge and the premises and method of knowledge transfer before proceeding to the concept of cognitive knowledge and to the many stocks of knowledge and technology that can be drawn on by the poor when they participate in development as subjects.
The World Bank 2003 Report recognized that developing countries need to promote participation and substantive democracy, inclusiveness, and transparency as they build the institutions needed to manage their resources.
It is also stated that poor people must have a greater say in the process that will shape their lives in the decades ahead. Decisions need to be taken in an inclusive and consultative manner that recognizes the views of poor people while also empowering them with greater control of their own resources. This is what the fundamentals are about and leads to an unambiguous conclusion that the poor are not the problem and can contribute to the solution.
[This article is extracted from the latest issue of the Asian Development Bank Review (Journal)]
Produced by Lake House