f you think the post-pandemic future of the advanced economies looks bad, consider the far bleaker outlook faced by developing nations, especially the poorest among them. The 47 countries the United Nations refers to as LDCs (least developed countries) have barely made a dent in their chronic poverty. The 15 years (2000-2015) during which the Millennium Development Goals (MDGs) were to be reached saw barely half of them achieved. Their promised successors, the 17 Sustainable Development Goals (SDGs), are likely to fare no better.
Two sets of factors will play a role in this bleak future. The first are largely external and thus beyond the LDCs’ control. They include: Foreign Direct Investment (FDI) already slowing as part of a retreat from globalization. FDI will recede even further as economic trauma in the richer nations drives down the confidence to invest in riskier countries. Second, those emerging nations for which tourism is an important source of income and jobs (e.g., Morocco, South Africa, Botswana, Kenya, Tanzania, Cambodia, Thailand and others) are already seeing tourist arrivals dwindle to a trickle and post pandemic pent-up demand for travel may not mean that people will return to these places in the numbers we’re used to seeing.
As unemployment grows in the advanced economies, remittance transfers, the lifeblood of many poor households, are likely to decrease. The billions in aid that developing countries depend on, the LDCs especially, might decrease as the OECD donor countries tighten their own belts and philanthropic giving to NGOs takes a dip. Even though some donors such as France have pledged not to forget their friends in Africa and elsewhere, and calls for canceling debt are being heard from the IMF and others, it seems likely that foreign aid for development will be a lower priority for the donor nations than it has been.
Those developing countries that rely heavily on natural resources (oil, lithium, manganese, bauxite, phosphates, copper, iron etc.) will see short term demand go down as the richer nations pull back on production. This will hit the LDCs especially hard, since fully 23 of the world’s top 50 countries in terms of the percent of GDP based on natural resources are also on the list of the 47 LDCs, countries such as the Democratic Republic of the Congo (DRC) for example, with 32.7% of its GDP from natural resources (huge deposits of cobalt, tin, copper, tantalum, diamonds, lithium and gold), or Sierra Leone with 22.15% of its GDP linked to diamonds, iron, bauxite, chromite and other natural resources. Nine of the forty-seven LDCs derive about 20% or more of their GDP from natural resources. (To put this natural resource dependency in perspective the United States’ % of GDP from natural resources is just under ½ of 1%, (0.47) and the average for 186 countries is 6.53%.)
The second set of factors has to do with resilience and these factors are largely internal. We, in the advanced economies face unprecedented challenges in the post-pandemic future, but eventually we will bounce back. Not so in much of the developing world. In our case the very word “bounce” shows our faith in resilience, the underpinnings of which we have in abundance. (The physics of bouncing provides a good analogy. A rubber ball gets distorted when it hits a hard surface causing a temporary storage of kinetic energy, energy that “wants” to be released, hence the bounce.) The underpinnings of the richer countries’ resilience include productivity, innovation, talent, management, data collection and analysis skills, many of which are linked to science and technology; all are linked to education, and all are intertwined with, and embedded in, a relatively stable enabling environment that encourages those talents and skills. This is an environment that consists of physical and institutional infrastructure, from government to roads, to laws and courts, and financial systems. For all the flaws in our systems—and the current crisis has exposed them vividly (27 million people in the U.S. without health insurance, one half of households without emergency savings, over a half a million homeless living on the street…) we are still fundamentally resilient. Obviously, countries lacking in those attributes, and especially those beset by civil or religious strife, will be less resilient in the face of the present crisis and its sure-to-linger after-effects.
Yet we should not be at all surprised by this bleak picture. For as much as one might blame slow progress in the past on the inadequate response of OECD donors to developing nation poverty, or the fact of endemic corruption, the deeper issue is a long-standing misunderstanding of what it takes, and how long it takes, to become “developed.” In the seven decades since the world began thinking about helping the newly independent and largely poor nations develop, we have somehow assumed a linearity to the process (world history notwithstanding). Thus, once one becomes developed (in Rostovian five stages fashion), the gains are held in place and advancement continues ever upward. From the end of the World War II until about 2000 this seemed indeed to be the case. More wealth was created, more countries became more productive, and we began to see increasingly high growth rates in poor countries. China brought hundreds of millions out of poverty, South Korea (which was more or less where Ghana was in the early 1960s) became a fully advanced industrial economy. India, since major reforms were instituted between 1990 and 1992, made forward movement on many fronts. The assumption of an ever upward trajectory clearly also embodies the idea of “catching up” and again, growth rates between the late 90s and now seemed to support that premise. The richer nations began to show lower growth rates in the 1% to 3% range while many poor countries moved up to the 5% to 9% range.
During these years we forgot the enormity of the development project, and in turn lost the humility needed to face its obstacles. The late anthropologist Clifford Geertz described what the new nations needed to undertake, a long list of tasks that was, as he put it, “just for starters:”
“It had to organize, or reorganize, a weak and disrupted, "underdeveloped" economic system: attract aid, stimulate growth, and set policies on everything from trade and land reform to factory employment and fiscal policy. It had to construct, or reconstruct, a set of popular (at least ostensibly), culturally comprehensible political institutions—a presidency or prime ministership, a parliament, parties, ministries, elections. It had to work out a language policy, mark out the domains and jurisdictions of local administration, elicit a general sense of citizenship—a public identity and a peoplehood—out of a swirl of ethnic, religious, regional, and racial particularisms. It had to define, however delicately, the relations between religion, the state, and secular life; train, equip, and manage professional security forces; consolidate and codify a thoroughly pluralized, custom-bound legal order; develop a broadly accessible system of primary education. It had to attack illiteracy, urban sprawl, and poverty; manage population growth and movement; modernize healthcare; administer prisons; collect customs; build roads; shepherd a press. And that was just for starters.… It was a heady time. No wonder it was followed by ambiguous successes, precipitate turnarounds, sobering disappointments, and often enough, murderous disruptions.”
Anyone who travels widely in the poor countries today and compares things to what one saw 20 or 30 years ago, will notice a one-step-forward-two-steps back (or at best a one forward one back) pattern. Get a bit ahead on one front, get way behind on another.
Anyone who travels widely in the poor countries today and compares things to what one saw 20 or 30 years ago, will notice a one-step-forward-two-steps back (or at best a one forward one back) pattern. Get a bit ahead on one front, get way behind on another.
Remarkably, a few have managed to complete most of Geertz’ list and in the course of it have built resilience. But most have not. In the poorest nations, the lack of resilience is critical, and this time the disappointments are likely to be even more sobering. Many on the list of LDCs, countries like the Central African Republic, Sierra Leone, Liberia, Niger, Haiti, and Yemen, lack even the most basic underpinnings of resilience. Sierra Leone has all of 13 respirators in the entire country. In Yemen, (where I worked in development aid 30 years ago) a grossly inadequate medical system has been dismantled, one of many victims of the war.
Moreover, in almost all the poorest countries employment is concentrated in the “informal sector,” thus un-regulated, un-taxed, un-counted (one often hidden obstacle faced by almost all the LDCs is their lack of capacity to collect data, much less analyze it). While the noise and bustle of informal sector markets might give the impression of a vibrant precursor of growth, the informal sector is almost by definition a default economy—a last resort of people desperate to make a few pennies to survive. Its existence is already a sign of failure. And of course, these hundreds of millions of “jobs” are not backed by any kind of safety net. Social divisions, widening in many of the advanced economies, will widen even more in the poorest. And just as the coronavirus feeds on the weakest among us, there is the danger of more non-state actor interventions causing more “murderous disruptions” in the least resilient of the LDCs.
As for those nations on the next rung up the ladder, the ones that have gingerly begun to “catch up,” they are likely to find that even a 12- to 24-month setback will have dire consequences, and that is because the nature of catching up in today’s world is considerably different than it once was. Speed is now the key because the path is so steep (see the Geertz quote above). Whereas the U.S. could take 200 years to reach its advanced state, today if you don’t advance quickly (China is a perfect example of hyper speed development) you begin not just to stand still but to fall back. Anyone who travels widely in the poor countries today and compares things to what one saw 20 or 30 years ago, will notice a one-step-forward-two-steps back (or at best a one forward one back) pattern. Get a bit ahead on one front, get way behind on another. For example, an unintended consequence of a decline in infant mortality rates is a growing youth bulge, which in turn strains other sectors, fueling among other things urban in-migration, with just one consequence being a less promising future for agriculture. Just as many poor are financially wiped out by even a minor medical emergency, the same is true for entire sectors of developing world economies. The holding power of gains is weak. A small setback can cause a giant disruption. The recent plague of locusts in Kenya seems to have come about because preventive measures like spraying were curtailed by the country’s lockdown, with thousands of hectares of crop land affected. In countries with millions suffering from malnutrition, drops in subsistence agriculture from events like locust invasions can be lethal. It is especially sad that in those sectors of society meant to provide the human seed corn of the future, health and education, the likelihood of falling backwards is great.
In Morocco, for example, a country that has moved, one might say, to “second world” status, with many solid institutions, an increasingly diversified economy, a modern infrastructure including Africa’s first high speed rail line, enormous progress has been made in literacy and universal primary education. Yet today as a result of over-crowding, labor disputes, and a general lowering of quality, 22% of all schools in the country are private, whereas 50 years ago the percentage was miniscule. The private school movement is fueled by a lack of faith in a weakened public education system. As in many countries, people are less and less willing to wait patiently for weak institutions and systems to get their act together. Of all the ways people now vote with their feet the most palpable is economic migration. The young, the courageous, the healthy, the risk-takers, seek and often find ways to leave their poor countries to work and live elsewhere, depriving their origin countries of energy and talent. And even though there are signs of a diaspora “giving back” to their home countries, most who leave do not return.
In the best of times, the world’s poorest countries face daunting challenges, moving forward, when they do, haltingly. In the post-pandemic future, there is even less prospect of sustained forward movement. As for the people themselves, the third world’s poor have generations of experience surviving in the face overwhelming circumstances, husbanding their social capital, living at subsistence level and expecting very little of their leaders and the larger world. Whether the grim post pandemic effects are short or long lived, they will continue, albeit painfully, to muddle along.
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A Bleak Post-Pandemic Future for the Underdeveloped World
UN Photo by Kibae Park.
May 15, 2020
I
f you think the post-pandemic future of the advanced economies looks bad, consider the far bleaker outlook faced by developing nations, especially the poorest among them. The 47 countries the United Nations refers to as LDCs (least developed countries) have barely made a dent in their chronic poverty. The 15 years (2000-2015) during which the Millennium Development Goals (MDGs) were to be reached saw barely half of them achieved. Their promised successors, the 17 Sustainable Development Goals (SDGs), are likely to fare no better.
Two sets of factors will play a role in this bleak future. The first are largely external and thus beyond the LDCs’ control. They include: Foreign Direct Investment (FDI) already slowing as part of a retreat from globalization. FDI will recede even further as economic trauma in the richer nations drives down the confidence to invest in riskier countries. Second, those emerging nations for which tourism is an important source of income and jobs (e.g., Morocco, South Africa, Botswana, Kenya, Tanzania, Cambodia, Thailand and others) are already seeing tourist arrivals dwindle to a trickle and post pandemic pent-up demand for travel may not mean that people will return to these places in the numbers we’re used to seeing.
As unemployment grows in the advanced economies, remittance transfers, the lifeblood of many poor households, are likely to decrease. The billions in aid that developing countries depend on, the LDCs especially, might decrease as the OECD donor countries tighten their own belts and philanthropic giving to NGOs takes a dip. Even though some donors such as France have pledged not to forget their friends in Africa and elsewhere, and calls for canceling debt are being heard from the IMF and others, it seems likely that foreign aid for development will be a lower priority for the donor nations than it has been.
Those developing countries that rely heavily on natural resources (oil, lithium, manganese, bauxite, phosphates, copper, iron etc.) will see short term demand go down as the richer nations pull back on production. This will hit the LDCs especially hard, since fully 23 of the world’s top 50 countries in terms of the percent of GDP based on natural resources are also on the list of the 47 LDCs, countries such as the Democratic Republic of the Congo (DRC) for example, with 32.7% of its GDP from natural resources (huge deposits of cobalt, tin, copper, tantalum, diamonds, lithium and gold), or Sierra Leone with 22.15% of its GDP linked to diamonds, iron, bauxite, chromite and other natural resources. Nine of the forty-seven LDCs derive about 20% or more of their GDP from natural resources. (To put this natural resource dependency in perspective the United States’ % of GDP from natural resources is just under ½ of 1%, (0.47) and the average for 186 countries is 6.53%.)
The second set of factors has to do with resilience and these factors are largely internal. We, in the advanced economies face unprecedented challenges in the post-pandemic future, but eventually we will bounce back. Not so in much of the developing world. In our case the very word “bounce” shows our faith in resilience, the underpinnings of which we have in abundance. (The physics of bouncing provides a good analogy. A rubber ball gets distorted when it hits a hard surface causing a temporary storage of kinetic energy, energy that “wants” to be released, hence the bounce.) The underpinnings of the richer countries’ resilience include productivity, innovation, talent, management, data collection and analysis skills, many of which are linked to science and technology; all are linked to education, and all are intertwined with, and embedded in, a relatively stable enabling environment that encourages those talents and skills. This is an environment that consists of physical and institutional infrastructure, from government to roads, to laws and courts, and financial systems. For all the flaws in our systems—and the current crisis has exposed them vividly (27 million people in the U.S. without health insurance, one half of households without emergency savings, over a half a million homeless living on the street…) we are still fundamentally resilient. Obviously, countries lacking in those attributes, and especially those beset by civil or religious strife, will be less resilient in the face of the present crisis and its sure-to-linger after-effects.
Yet we should not be at all surprised by this bleak picture. For as much as one might blame slow progress in the past on the inadequate response of OECD donors to developing nation poverty, or the fact of endemic corruption, the deeper issue is a long-standing misunderstanding of what it takes, and how long it takes, to become “developed.” In the seven decades since the world began thinking about helping the newly independent and largely poor nations develop, we have somehow assumed a linearity to the process (world history notwithstanding). Thus, once one becomes developed (in Rostovian five stages fashion), the gains are held in place and advancement continues ever upward. From the end of the World War II until about 2000 this seemed indeed to be the case. More wealth was created, more countries became more productive, and we began to see increasingly high growth rates in poor countries. China brought hundreds of millions out of poverty, South Korea (which was more or less where Ghana was in the early 1960s) became a fully advanced industrial economy. India, since major reforms were instituted between 1990 and 1992, made forward movement on many fronts. The assumption of an ever upward trajectory clearly also embodies the idea of “catching up” and again, growth rates between the late 90s and now seemed to support that premise. The richer nations began to show lower growth rates in the 1% to 3% range while many poor countries moved up to the 5% to 9% range.
During these years we forgot the enormity of the development project, and in turn lost the humility needed to face its obstacles. The late anthropologist Clifford Geertz described what the new nations needed to undertake, a long list of tasks that was, as he put it, “just for starters:”
“It had to organize, or reorganize, a weak and disrupted, "underdeveloped" economic system: attract aid, stimulate growth, and set policies on everything from trade and land reform to factory employment and fiscal policy. It had to construct, or reconstruct, a set of popular (at least ostensibly), culturally comprehensible political institutions—a presidency or prime ministership, a parliament, parties, ministries, elections. It had to work out a language policy, mark out the domains and jurisdictions of local administration, elicit a general sense of citizenship—a public identity and a peoplehood—out of a swirl of ethnic, religious, regional, and racial particularisms. It had to define, however delicately, the relations between religion, the state, and secular life; train, equip, and manage professional security forces; consolidate and codify a thoroughly pluralized, custom-bound legal order; develop a broadly accessible system of primary education. It had to attack illiteracy, urban sprawl, and poverty; manage population growth and movement; modernize healthcare; administer prisons; collect customs; build roads; shepherd a press. And that was just for starters.… It was a heady time. No wonder it was followed by ambiguous successes, precipitate turnarounds, sobering disappointments, and often enough, murderous disruptions.”
Anyone who travels widely in the poor countries today and compares things to what one saw 20 or 30 years ago, will notice a one-step-forward-two-steps back (or at best a one forward one back) pattern. Get a bit ahead on one front, get way behind on another.
Anyone who travels widely in the poor countries today and compares things to what one saw 20 or 30 years ago, will notice a one-step-forward-two-steps back (or at best a one forward one back) pattern. Get a bit ahead on one front, get way behind on another.
Remarkably, a few have managed to complete most of Geertz’ list and in the course of it have built resilience. But most have not. In the poorest nations, the lack of resilience is critical, and this time the disappointments are likely to be even more sobering. Many on the list of LDCs, countries like the Central African Republic, Sierra Leone, Liberia, Niger, Haiti, and Yemen, lack even the most basic underpinnings of resilience. Sierra Leone has all of 13 respirators in the entire country. In Yemen, (where I worked in development aid 30 years ago) a grossly inadequate medical system has been dismantled, one of many victims of the war.
Moreover, in almost all the poorest countries employment is concentrated in the “informal sector,” thus un-regulated, un-taxed, un-counted (one often hidden obstacle faced by almost all the LDCs is their lack of capacity to collect data, much less analyze it). While the noise and bustle of informal sector markets might give the impression of a vibrant precursor of growth, the informal sector is almost by definition a default economy—a last resort of people desperate to make a few pennies to survive. Its existence is already a sign of failure. And of course, these hundreds of millions of “jobs” are not backed by any kind of safety net. Social divisions, widening in many of the advanced economies, will widen even more in the poorest. And just as the coronavirus feeds on the weakest among us, there is the danger of more non-state actor interventions causing more “murderous disruptions” in the least resilient of the LDCs.
As for those nations on the next rung up the ladder, the ones that have gingerly begun to “catch up,” they are likely to find that even a 12- to 24-month setback will have dire consequences, and that is because the nature of catching up in today’s world is considerably different than it once was. Speed is now the key because the path is so steep (see the Geertz quote above). Whereas the U.S. could take 200 years to reach its advanced state, today if you don’t advance quickly (China is a perfect example of hyper speed development) you begin not just to stand still but to fall back. Anyone who travels widely in the poor countries today and compares things to what one saw 20 or 30 years ago, will notice a one-step-forward-two-steps back (or at best a one forward one back) pattern. Get a bit ahead on one front, get way behind on another. For example, an unintended consequence of a decline in infant mortality rates is a growing youth bulge, which in turn strains other sectors, fueling among other things urban in-migration, with just one consequence being a less promising future for agriculture. Just as many poor are financially wiped out by even a minor medical emergency, the same is true for entire sectors of developing world economies. The holding power of gains is weak. A small setback can cause a giant disruption. The recent plague of locusts in Kenya seems to have come about because preventive measures like spraying were curtailed by the country’s lockdown, with thousands of hectares of crop land affected. In countries with millions suffering from malnutrition, drops in subsistence agriculture from events like locust invasions can be lethal. It is especially sad that in those sectors of society meant to provide the human seed corn of the future, health and education, the likelihood of falling backwards is great.
In Morocco, for example, a country that has moved, one might say, to “second world” status, with many solid institutions, an increasingly diversified economy, a modern infrastructure including Africa’s first high speed rail line, enormous progress has been made in literacy and universal primary education. Yet today as a result of over-crowding, labor disputes, and a general lowering of quality, 22% of all schools in the country are private, whereas 50 years ago the percentage was miniscule. The private school movement is fueled by a lack of faith in a weakened public education system. As in many countries, people are less and less willing to wait patiently for weak institutions and systems to get their act together. Of all the ways people now vote with their feet the most palpable is economic migration. The young, the courageous, the healthy, the risk-takers, seek and often find ways to leave their poor countries to work and live elsewhere, depriving their origin countries of energy and talent. And even though there are signs of a diaspora “giving back” to their home countries, most who leave do not return.
In the best of times, the world’s poorest countries face daunting challenges, moving forward, when they do, haltingly. In the post-pandemic future, there is even less prospect of sustained forward movement. As for the people themselves, the third world’s poor have generations of experience surviving in the face overwhelming circumstances, husbanding their social capital, living at subsistence level and expecting very little of their leaders and the larger world. Whether the grim post pandemic effects are short or long lived, they will continue, albeit painfully, to muddle along.
