In a broadside against the United Nations Development Program, Jagdish Bhagwati, professor of economics at Columbia University and an adviser to the government of India and numerous international bodies, argues that the UN’s premier agency has declined in staff quality as it clings to outdated policies that actually harm poor countries.
At the heart of his argument, in an interview for the International Peace Institute’s Global Observatory, an online magazine, Bhagwati, who is also a senior fellow in international economics at the Council on Foreign Relations in New York, reignites the controversy over diverging views on development in the global North and South.
He is concerned that antimarket, antireform forces have captured a wider audience than that of the post-colonial economic thinkers, who argued against policies for economic and institutional growth promoted by the industrial countries. The old antimarketers and their contemporary followers have called for a new global economic order in which redistribution of wealth, rather than the creation of wealth, should be the top priority. They oppose stringent reforms of government policies and programs that are often demanded by the International Monetary Fund or other institutions, such as reducing or ending subsidies that prop up certain economic sectors like agriculture or hold down living costs for the poor.
Critics like Bhagwati counter that tough reforms and productive investment choices, not temporary palliatives or handouts, are what stimulate long-term sustainable development.
The issue of how growth and development are best achieved is also a theme in the critique of the often ineffective UN Economic and Social Council, by Paul Kennedy in his 2006 book, “The Parliament of Man: The Past, Present and Future of the United Nations.” Tracking the issue historically, Kennedy wrote: “Put crudely, the “have nots” (the South), encouraged by the socialist bloc and First World radicals, were challenging the “haves” (the North and its institutions) about the existing balance of economic power. Distribution, not growth, was back on the agenda.”
Bhagwati said in the interview for the Global Observatory, which ranged over many development policy issues, that the UN Development Program had fallen into the trap of thinking that putting a priority on economic growth was wrong, in large part because it resulted in imposed prescriptions that hurt nonmarket sectors like health, education or other social programs.
“What they didn’t realize was that growth was an instrumental variable, as we put it in economics,” he said. “It was not the objective of policy.” Economic growth, in other words, could benefit all aspects of national life, given good governance and wise policy choices. “You’ve got to have rapid growth before we can impact on poverty,” he said.
“And so I think the UNDP [was] under the influence of people like Mahbub ul Haq [the late creator of the UN’s Human Development Report] and Amartya Sen [an Indian development economist and Nobel prize winner] “who were actually bringing the Indian ideas from the 50’s and 60’s” to the UN agency, Bhagwati said, referring to a period when India had a controlled protectionist economy but also a strong democracy.
“So I think they wound up locking UNDP into a set of attitudes which then made out like growth was no good.” He thinks the same people had some influence with World Bank presidents, “particularly later on when Jim Wolfensohn came in.”
Bhagwati had some positive words for the World Bank, which he views as more effective and staffed with more expertise than UNDP, since Helen Clark, the agency’s chief, he noted, has no experience in development.
He also had advice for the bank’s new president, Jim Yong Kim, a health expert from Dartmouth College. Bhagwati said Kim should set himself up with “a number of really first-rate advisers who are not just conventional development economists, who are willing to look at what is actually happening on the world in terms of the kinds of things you were against in 2000 … and see and learn for yourself how good some of these reforms really are, how inclusive they’ve been and how they interact very nicely with politics of democracy.”
Leaders of both the World Bank and the UN Development Program “have to be open to new ideas,” Bhagwati added. “So I think we need leadership. We need continuous feedback from the evolving experience. And unfortunately both in the bank and the UNDP, the ideas about development are really unwittingly calculated to harm the developing countries. I hope some of these messages get through.”