Development as Modernisation and Economic Growth

The post-Second World War world order

The events leading up to the Second World War and the war itself had a profound impact on political and economic structures. The main impact was the emergence of bipolar world order, with the rise of communist power, the USSR, on the one side and the United States as leader of the liberal capitalist system on the other. The US had emerged from the war as the strongest economy, enjoying rapid growth and capital accumulation and saw itself as the leader of the emerging monetary and economic system in the capitalist world.

A major early objective of the US was to assist Europe's recovery and lay the foundations of a new economic and political order while containing the spread of communism in Western Europe. It was felt that institutions were needed that were able to create a functioning, liberal market economies and order the economic, social, and political development in a post-war world. Amongst other things, the Bretton Woods conference of 1944 saw the establishment of the International Monetary Fund, and the International Bank (IMF) for Reconstruction and Development (IBRD or World Bank). Initially, these institutions were tasked with providing the loans, credits, and investment necessary for Europe's post-war reconstruction and preventing a backlash into depression. As former colonies of European powers achieved independence from the 1950s onwards, these two institutions started to get more involved in broader international development.

Meanwhile, the United Nations (UN) came into existence in October 1945 with the goal of creating a wider and more permanent system of global security. In addition to maintaining peace and security, other important objectives included developing friendly relations among countries based on respect for the principles of equal rights and self-determination of peoples; achieving worldwide co-operation to solve international economic, social, cultural, and humanitarian problems; respecting and promoting human rights; and serving as a centre where countries could co-ordinate their actions and activities toward these various ends. To help it carry out its mandate, the UN established a number of specialised agencies, including the World Health Organization (WHO), the International Labour Organisation (ILO), United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Children's Fund (UNICEF), United Nations Development Programme (UNDP), and the International Atomic Energy Authority (IAEA). Most of these were established around the end of the Second World War, for example, the ILO and UNESCO in 1944, WHO in 1946, and IAEA in 1957.

For much of the past half century, the World Bank and IMF on the one hand and the UN system (led by UNDP) on the other, have stood as the two main poles of the international development system. At times, the relationship between them has been principally one of tension, with the Washington institutions emphasising market-led economic growth and the UN system championing human and social development. Arguably, however, the Millennium Development Goals represent an attempt at a consensus between them.

Development as Growth and Modernisation

Post-war development theories were dominated by the idea of development as economic growth and material well-being. With it came a strong focus on the state: The belief that growth and prosperity would come if the market was left on its own had been shattered by the Great Depression and mass-unemployment of the 1930s. Furthermore, the apparent success of state planning in the early years in the USSR led to a rethinking about the role of the state in the economy.

The European Recovery Programme, an aid programme for Europe, allowed reconstruction of war-damaged industries. In most Western countries, growth picked up rapidly and was driven by the state and the industrial sector. The path of growth was assumed to be a linear one: State intervention and aid would encourage savings and investment for technological innovation. The resulting increase in productivity would absorb the workforce from low-productivity sectors (agriculture) to the industrial sector and thus accelerate industrialisation and fuel growth. Progress in this model was - and to a large extent, continues to be - measured in terms of growth in the size of national economies and per capita income.

The end of colonialism and the foundation of independent nation states reinforced the notion of development as growth and modernisation. The rapid recovery of post-war Europe had led to widespread optimism and the firm belief that the newly independent states could copy the example of Europe's reconstruction. Emulating 'modern' Western societies, so it was believed, would lead developing countries out of poverty and allow them to catch up with the developed world. It was widely assumed that development could only happen if traditional values were replaced with modern ones.

By 'traditional' values modernist theorists meant:

• people are oriented to the past and not to the future

• economic, political, and legal relationships are dominated by kinship

• an emotional, superstitious, and fatalistic approach to the world

Contrast these values with what are assumed to be modern values.

• progress matters more than traditions

• an individual's position in society depends on personal achievement rather than kinship ties

• modern people are forward looking and have a strong entrepreneurial spirit

Hence, modernisation implied a change in the value system. The West was seen as the blueprint for development and modernisation was regarded as 'the process of change towards those types of social, economic, and political systems that have developed in Western Europe and North America' (Eisenstadt 1966 p. 1). Modernisation theory underpinned the idea of development as growth, with modernisation defined as a linear path towards a developed industrial society. Economic development through industrial transformation would lead to economic growth, allowing poorer countries to catch up with industrial countries. The resulting growth theories assumed that wealth generated through economic growth would trickle down and eventually benefit all segments of society.