Essay: Rise of emerging powers and challenges of notions of development

Does the rise of emerging powers challenge existing notions of development?

Introduction:

The term development is usually conceived in a broad sense of analysis. To pave way for progress, development in this context connotes the creation of wealth for all citizens within a diverse and broad societal space which allows for access to quality of livelihood and the potential for growth (Rist 2008, p.8). Over the years the contention as to who defines a holistic model or parameter for development has been controversial, nonetheless the big picture of development depicts the entrenchment of incentive for sustainable economic growth measured through variables such as employment creation, economic output, as well as the existence of institutional and environmental platform that allows for investments and innovations, capable of ensuring long term efficiency in production and distribution network for goods and services.

The Organisation for Economic Co-operation and Development (OECD) since its establishment in 1961 has been in the fore front of describing what the road map to development should be. Based on its obligation of continued monitoring of economic and development policies within member countries as well as outside OECD area, it has proffered consistent projections of short and long term economic developments. This study reveals that the world wide process of homogenizing the spread of market principles and globalization, accounts for the assertion that restricted exchange of goods and services is capable of impeding development while retaining the notion that an autonomous market will encourage development towards a modern society.

Hence the existing notion of development is predicated upon western neo liberal propositions that economic progress or otherwise has a consequence on development, the view has been promoted through the instrumentality of the World Bank as a global development institution, that neo-liberal economic model remains the only viable panacea for sustainable economic development since post cold war era. Therefore international trade and capital flow, operating within open market framework is believed to be a pre-requisite for sustainable growth, juxtaposed with an open political space which assures the promotion of higher living standards, poverty alleviation and conflict prevention.

Dramatically, the rise of ‘emerging powers’ seem to be reshaping the policy prescription for what development entails in the conventional sense. The global economy is witnessing a shift from the conventional concept of development with the emergence of the group often referred to as BRIC which presupposes (Brazil, Russia, India, and China). Contrary to western perception, the developing BRIC countries are changing the pattern of international trade and production.

I therefore argue in this essay that the rise of emerging powers heralds a wave of change in global political economy and the way development is been perceived across the globe, by engaging the Washington consensus debate vis-a-vis the Beijing consensus bringing to fore the changes in China`s economic reform through state led policies and direction. Not unmindful of the challenges that Chinese model might face in an era of globalisation, an array of policy option were suggested for embracing the emerging development strategies of the south-south economies into viable linkages capable of sustainable growth and development through involvement in global governance

Unveiling the rise of Emerging Powers:

The emergence of this group (BRIC) is seen to be having an impact on global economy given their nature of resource consumption hinged on a potentially viable market and diverse economy. Indications on the growth of these countries continues to challenge the existing notion of development as we see great powers come to terms with the obvious reality and engaging the BRIC countries into the management of the global economic system.

It seems to me that this shift for the past two and a half decades poses a challenge to the existing notion of development. For instance, China has fast become a manufacturing and service providing engine room maintaining an overwhelming annual growth rate of 9% -10% over the years.

The integration of the emerging powers economies represents a powerful economic engagement for development in contemporary global epoch. A unique feature of the ‘emerging power’ countries is that they are ranked developing nations with vast land mass and very large populations (ranging from 140 million to 1.3 billion). The BRIC countries are also the political and economic forces in their respective regions with a projection to attain the rank of top ten progressive economies by 2040, putting behind the economies of the wealthier (G7) countries. The internal struggle between the BRIC countries reflects a will to evolve a unique development strategy within their national principles rather than succumb to imperial description of development. For example China`s economic antecedent clearly does not embrace imperial model of development. The Chinese government operate on revamped socialist idea which defines development in globalist terms.

Unpacking Development in China:

China represents the home to one-sixth of humanity with a population of 160 Million in which analyst project to be the next economic superpower given its developmental path. However China`s emerging role to erect and sustain a formidable structure in the global market place amidst global political complexities is indeed fascinating, although China enjoys enormous economies of scale to determine the prices of manufactured goods it leveraged on the failure of neo liberal policy recommendations to navigate its way through other larger emerging economies and retain stability.

In contemporary global era, China has been very keen on internally managing their economy, the consequence of which it eschewed involvement in financial speculations that created loss and brought numerous developing nations under the purview and resultant structural adjustment programme of the IMF. Through state regulated institutions in China, it remoulded its economy to fit into global complexities while retaining their national origin. The entrance of China into the global struggle of development interestingly foils the transnational aim of profit accumulation in communist term thus, unveiling a unique posture of China`s development in the wake of globalisation (Sarah 2004,p.10).

Since China launched its economic reform in 1979, its economic comparative advantage in a relatively striking nature towards intensive labour and manufacturing over took most economies within Asia (Lardy 1992) indeed the reform engineered critical input which encouraged high rate of investment upon which huge capital flow and foreign direct investment (FDI) led China to an expanding export destination, the pace of export growth underpins the dynamics of global demand for China towards industrialisation. Reaffirming the steady growth in Chinese export market, the chief executive of Viacom is quoted as once saying that ‘there is no such thing as a global strategy without China’ (Wolf 2003, p.3).

The production mechanism in China accounts for huge exportation of good from Japan by 33.8% with a fall of 5.4% of good exported from Japan to the US (Edwards 2004, p.13). Clearly leaving Japan behind as an exporting power chain. The impact today is that every leading multinational corporation see`s emerging China as the primary destination for direct foreign investment.

So what about development in China?

China as a developing nation is crucial in analysing and understanding alternative development propositions. This is because prior to China`s emerging trend in global economic growth, it was believed by conveyors of the Washington Consensus that neo liberal free market capitalism bears the only viable route towards economic growth for developing nations (Williamson 1989). However the empirical revelations of applying the neo liberal prescription or what is sometimes called the “ commandments” of the Washington consensus led to economic stagnation and currency crises culminating in the collapse of social and economic system in developing countries during the 1990s and beyond.

Evidenced by Argentina which adopted the policy prescriptions of the IMF in the 1990`s, it met a catastrophic economic collapse by 2001 (Oniz 2004, p.375) creating a sense of less confidence in the existent market fundamentalist dictum. This scenario also challenges the view of Thatcher when she asserts that ‘there is no alternative’ to neo liberalism in developing nation. Interestingly new strategies bearing no semblance with the Washington development model have proven to be effective in developing countries in recent times and this alternative model of development spins around China economic reform.

All over East Asia, their economic success was largely the function of a relatively authoritarian and corporatist state involvement (Wade 1990, p.287) in contra distinction to free market liberal model. Within this frame work of analysis, over 235 million Chinese citizens have be taken out of poverty and the world Banks affirms this statement by opining that China`s development has contributed to global poverty reduction by 67% in the last 25 years.

The conditions for development based upon Washington consensus model were rigid and homogeneous to virtually all developing countries that embraced it, where as the Beijing consensus takes cognisance of a case by case challenge unique to each national economy, offering a more flexible approach towards addressing development problems in the developing world. The Beijing consensus and China`s development can be interchangeably used, as the consensus promotes the ideals of Chinese fast growing economy which also suggests how to organise the place of a developing country in the world” (Ramo 2004, p.11). The suggestions of the Beijing engagement are in no manner coercive and less tangible, but they do form a sensible road map for development particularly in the third world economies. These in-exhaustive parameters provide an insight into the alternative options for developing nations towards development;

Beyond National GDP: ThePer Capita of various states based on conventional development wisdom is crucial in classifying developed and developing economies, the idea of rejecting GDP as the ‘be all and end all’ development formula (Leonard 2006) is a deliberate U- turn from the neo capitalist doctrine which takes GDP seriously in development analysis. As a replacement the Beijing consensus puts emphasis on the quality of life and equality in the society, this informed China focusing its attention along this path (Ramo, 2004,p.12). The human development index of the United Nations Development Programs has been a reliable source for measuring acceptable quality of life across nations, it measures development by exclusively comparing development to economic growth which helps to clarify the notion that poverty does not essentially mean low income earning rather it is the deprivation of the basic necessities of livelihood (Ogden 2002,p.367). In light of this, China vigorously pursued multiple goals based on its development strategy, or what commentator described as ‘striking the balance’ approach which distinguished the Beijing development approach

Looking Inward: The Beijing consensus exemplifies the need for developing nations to internally seek palliatives, to their development concern instead of inculcating a culture of dependence on hegemonic western powers (Ramo 2004, p.12). China practically demonstrates this point by traditionally prioritizing its national options in addressing developmental concerns without reliance on foreign assistance of any sort. This does not necessarily insinuate that any nation can survive in isolation, it just stresses the point that commitment towards development was internally sourced in China`s economic reform process.

The idea of being inward reliant is particularly relevant in Africa, since Africa has a long antecedence of western manipulation and exploitation, within the framework Beijing development agenda, African countries enjoy favourable economic ties from China without strings of fiscal and governance nature, thereby providing a fundamental alternative value that western relations does not offer.

Proactive and Innovative Government:A proactive and innovative government apparatus is essential in coming to terms with the challenges of a dynamic socio-economic atmosphere. Since 1979, the Chinese government has maintained constant strategic development policies towards addressing problem of development for it population. For instance, the government of China periodically conduct public opinion survey to ascertain what the views and demands of its citizens are as well as to also measure government acceptance (Ogben 2002, p.100-101).

Thus the Beijing consensus reflects the Chinese government`s dedication to innovative policy making, this basically worked for China in implementing its ‘One Child Policy’ which was geared to manage population growth at the time. The policy was instrumental to the government meeting certain economic stability. The Beijing consensus therefore provides an angle to understanding the context of emerging power development which upholds the fundamental role of the state in driving the reform process of China particularly on the domestic front, but more instructively on a global scale.

However certain structural deficiencies must be tackled to sustain the economic and social prosperity that China`s development has shown. As a recommendation for sustainability, the following will prove useful for emerging powers to be stable in multilateral engagements:-

The Environmental Sustainability: The pace of China`s development increased the pollution that international community is faced with today, it is estimated that China accounts for about 20% of cross border pollution as a result of its heavy use of coal and carbon related emission, although the government have made efforts to reduce this environmental damage. About 1% of national income was invested in pollution prevention and control; this is definitely insufficient to tackle the environmental challenge that has pervaded China due to rapid industrialisation. Therefore China`s sustainable growth seem more feasible if its energy mix is derived away from coal and toward cleaner fuels and also manages its natural resources more efficiently. If China must be a global economic leader it needs to engage in global efforts towards addressing climate change.

Building Sustainable Infrastructure: As an emerging power, China`s existing infrastructural defect would hamper its steady economic projections. Since China has become a key player in the global financial arena, it ought to build a vibrant domestic institution capable of coping with the exigencies of contemporary capital mobility. It is estimated that due to infrastructural defects in China, the Gross Domestic output in transport sector dropped from 1.7% to 1.0% between the 1980`s and 1990`s. Hence the need for a more effective framework for consistent supervision and monitoring of various sectors of its economy

Maintaining a Coherent Legal and Socio-Political Institution: Most BRIC countries are engulfed with the challenge of preserving social stability while promoting economic growth. For instance, the economic boom in China does not automatically translate into the distribution on the gains internally. The export advantage is used to satisfy the demand of external market thereby creating the likelihood of internal inequality within the country. Also the current legal framework in China does not fit into its economic growth on an international scale, the state needs continuous reform to deal with widespread corruption amongst public office holder, provide guarantee health insurance for its citizen and well as institutionalise its policies on unemployment and pension

Conclusion:

The evident loopholes of neo liberal economic growth, leading to the failure of achieving set goal particularly in developing countries informed the debate as to what options of development is capable of entrusting sustainability, therefore rethinking development provides evidences that reclaim development strategies from orthodox neo- liberal ideas.

Arguing that state intervention is crucially imperative to kick start development and resting upon East Asia experience, a challenge is posed on the unrestrained flows of international liquid capital which lead to speculative bubbles and financial crises across borders.

It is more evident given these reality that the neo liberal formula has not necessarily solved the development equation if tested with empirical realities i.e. (increased inequality and reduction in the standard of living). Therefore the ‘no alternative’ dictum is put to rest with the emergence of BRIC countries representing a paradigm shift.

However the era of globalisation portends great implications for the emerging powers (BRIC) to achieve stability and long term performance. Although there seem to be a future for the emerging powers since an impartial study reveals that most developed economies of contemporary time used the East Asian model as a launching pad to develop (Chang 2003, p.24). Also looking at the emerging powers through new lenses, the industrialised countries (G7) need to evolve a favourable inclusion of the developing nation into global governance, efforts towards this has been seen in the formation of the G20, which connects policy makers across the developing nations to wax their unique economic advantages into policies pursuant to increasing their bargaining power among external actors.

After all the inclusion of China in 2001 as a member of the World Trade Organization (WTO) has been envisioned as a good thing amongst third world commentators, since the long run advantage will not only be beneficial to China but to other developing nations in trade terms, more progressive roles can be achieved in the international domain if voices within the emerging powers are geared towards ensuring human right protection, strengthened democracy and a well as the adoption of environment sensitive technology to cope with issues on climate change.