TCS Daily

Cloning the Western Societal Model

By Hans H.J. Labohm - October 17, 2002 12:00 AM

Although the notion social engineering has gone out of fashion, every individual, group and country constantly aims at improving its situation, which alters the way society is organised. It is also the ultimate aim of development cooperation. But does it help?

There is probably no field of government policy that displays a bigger gap between policy ambitions and policy results than development cooperation. Studies on development strategies and policies abound. But the number of studies on their outcome in the real world has been very limited and often shows dismal results.

It is true, however, that evaluation of development cooperation is extremely difficult. In business, results can easily be measured by calculating profits and losses. In the field of development cooperation evaluation is far more complex. The effect of development cooperation will have to be evaluated on the basis of many, sometimes contradictory criteria, which are partly susceptible to subjective interpretation. If one asks the professionals in the field about their personal feelings of the outcome of development projects on a micro level, many of them will answer that one third of the projects is successful, one third fails and the rest is somewhere in the twilight zone between success and failure. As regards the macro or country level it has to date been impossible to establish a clear-cut relationship between aid and, for instance, economic growth. However, World Bank studies show that countries with good governance and aid are growing faster than countries with bad governance and aid, while countries with bad governance without aid achieve the worst results in terms of economic growth.

Another complicating factor is that development cooperation comprises a wide variety of activities, from research for seed improvement to technical advise for legislative reform, from emergency aid to education, from health care to the transfer of technology, from the rehabilitation of slums to the financing of megadams, and from loans to small scale enterprises to large scale debt alleviation for governments. Furthermore, many organisations are active in the field of development cooperation: national donor agencies, multilateral agencies and NGOs. These are not always frank and transparent as regards their performance.

Shifting Priorities

Over the decades, development policy has been subject to shifts - some would say, fashions. Initially, in line with the philosophy of the Marshall Plan, priority was given to massive transfers of capital, technology and know-how, which were supposed to put the developing countries on the road to self-sustained growth, a notion coined by the American economic historian Walt Rostow. A strong and pro-active role of the state was believed to be indispensable to reach that stage. The government was thought to be the only actor that possessed sufficiently educated manpower resources to play such a role. In a later stage, new policy goals were added to the development agenda, such as income redistribution in order to achieve more income equality and the fulfilment of basic needs of the poor. This led to a reorientation of aid flows in favour of 'progressive' countries. Next, the development agenda was extended with 'spearheads', such as environment, women and culture. Today, good governance, participatory development, civil society and structural reform figure prominently on the development agenda.

Development aid only played a minor role in the spectacular growth of the Asian Tigers. And the lessons that could be drawn from their successes were, for a long time, being ignored by the official development agencies, especially in Europe. The Asian model, in which the private sector played a crucial role, was simply inconsistent with the statist, interventionist development paradigm prevailing in the seventies.

Aid Fatigue

Why has development aid been so ineffective? First of all, because its volume has been very modest given the scale and the scope of the problem. Over the past few years, official development assistance (ODA) by the members of the Organisation for Economic Cooperation and Development (OECD) has declined from a peak of $59.2 billion in 1994 to $52.1 billion in 1999. (This looks pale compared with what the same countries spend on farm subsidies alone: currently some $350 billion annually.) As a percentage of GDP (Gross Domestic Product) of the donor countries, this corresponds with a decline from about 0.34% in the eighties to 0.24% in 1999. This phenomenon is sometimes called aid fatigue or donor fatigue. This has led to a growing gap between the official UN aid target of 0.7% of GDP, which has been adopted and reconfirmed by the great majority of aid donors. But only the Scandinavian countries and The Netherlands have achieved that level. No wonder that a report of the Development Assistance Committee (DAC) of OECD stated: 'If present trends were to continue, the volume of development assistance would fade into insignificance long before the job was done.'

Seen from the perspective of the receiving countries, the performance looks somewhat better. For instance, in 1998 the ODA/GNP ratio for the countries South of Sahara amounted to 4.28%, with peaks for countries Cape Verde (24.3%), Eritrea (20.8%), Guinea-Bissau (50%) and Mozambique (28.2%).

By comparison, it should be noted that the Marshall aid, from which Europe has so much benefited after World War II, was also limited from a purely quantitative point of view. It did not exceed 2% of the GDP of the receiving countries. But Europe was not underdeveloped in the first place. Moreover, this aid has provided a very important psychological boost to heighten morale. In addition, American involvement has also resulted in institution building, such as the revamping of the Bank for International Settlement (BIS) in Basel and the establishment of the Organisation for European Economic Cooperation (OEEC), which later became the (OECD) in Paris, which all have made invaluable contributions to the promotion of economic cooperation and integration between the European countries.

But also qualitatively, aid remains deficient. A major part of aid is tied. That means that it is more dependent upon the available supply of the donor countries' export industries than geared to the needs of the receiving countries. Another important flaw is the etatist and technocratic character of aid. 'Etatist' means an approach in which the government in the receiving country plays an active role in the economy and the administering of aid, while 'technocratic' means an approach focussed at, for instance, macro-economic policy, capital goods and technology. But experience has taught that the success of development is critically dependent on a great many 'environmental' factors, including politics, governance and institutions. In countries where these environmental factors are not favourable, aid tends to disappear into a black hole.

More recently, therefore, attention has shifted to the improvement of the environmental conditions in these fields, whereby priority is given to sound economic policies, effective social policies, good governance, participatory development, civil society, the protection of private property rights and the establishment of an effective judiciary, which are all indispensable elements for economic development. Despite the fact that the foreign policy establishment of the donor countries has all along called for adoption of democracy and the protection of human rights in the Third World, the development cooperation establishment in the same countries had qualms about prodding the developing countries too much in that respect. Today the two establishments profess the same gospel.

Income Differences

The next graph shows the differences in Gross National Income (GNI) per capita between selected countries in the world.

This graph shows GNI per capita, expressed in Purchasing Power Parities (PPPs). PPP is defined as the number of units of a country's currency required to buy the same amount of goods and services in the domestic market as 1$ would buy in the United States.

The differences are striking. But in historical perspective, they are of a rather recent date. Before 1820 economic growth has been low everywhere in the world, while income differences per capita were modest. However, in the beginning of the 19th century economic growth rose to an annual 2%, though almost exclusively in Western Europe and America. The rest of the world remained relatively poor. This development was triggered by the industrial revolution that started in England and gradually spread over the West at large.

But what are the deeper causes of this development and why did they occur for the first time in Western Europe? The answer to this question is utterly relevant for obtaining a better understanding of the determinants of the creation of wealth, which in its turn is crucial to the
discovery of the right mix of policies and institutions to promote further economic development, both in rich and in poor nations. Economic science offers much support to answer these questions. But, yet, the traditional economic approach remains wanting, because it usually ignores a couple of underlying determinants that are indispensable for economic development.

There is, however, one branch of economic science that has amply studied these factors. And that is economic history. In many ways economic history, therefore, offers deeper insights in the nature and causes of the wealth of nations than the traditional, rather technical economic approach. But, with the possible exception of the work of Walt Rostow, the relevant literature plays a very limited, if any, role in development thinking and policies. Although in the recent past some evolution has taken place in development thinking, development practice is still excessively dominated by a technocratic approach.

Lessens From Western Economic History

Development cooperation should, therefore, rely more on the lessons that can be drawn from our own economic history. To this end, reference can be made to the ideas developed by the great German historian Werner Sombart, who wrote in the first half of the previous century about the rise of modern capitalism. More recent literature is for instance 'The Wealth and Poverty of Nations. Why Some Are So Rich and Some So Poor' , by David S. Landes, a former Harvard professor, as well as the last book by Mancur Olson: 'Power and Prosperity - Outgrowing Communist and Capitalist Dictatorships.'

From these studies it emerges that economic development is the result of a mixture of numerous factors. At the risk of oversimplification, these can be grouped into five clusters: natural factors, cultural factors, political factors, institutional factors and economic factors. These are all interrelated in a complex way and the boundaries between them are often very diffuse.

Natural Factors

As regards natural factors it is striking that nature has not been equally generous to all parts of the world. Climate, including temperature and rainfall, is very much dependent upon the location of countries on the globe. And one can't argue with geography. Most developing countries lie in the tropics and semi-tropics. The developed countries lie in the temperate zone, particularly in the northern hemisphere. In the tropics rainfall is often irregular and unpredictable. Downpours alternate with droughts. This has a negative impact on agriculture. Western Europe was blessed with a temperate climate caused by the warm Gulf stream, with regular rainfall, which was conducive to the development of agriculture. Temperature is also important for human activity. In general the discomfort of heat exceeds that of cold. Moreover, higher temperatures encourage the proliferation of life forms hostile to man, such as insects and parasites. The result is faster transmissions of diseases, which pose a threat to humans and cattle. Besides temperature, the availability of water poses a problem.

An unfavourable climate can hardly be influenced. It is a permanent handicap for the wealth creating capacity of societies.

Also the quality of the human resources is important. But these are not unalterable. It can be improved by education and training.

Cultural Factors

As regards the cultural factors the amalgam of European tribes, law and customs, together with the Judeo-Christian religious and the Greek political traditions have promoted the emergence of free space for individual action. Local law and customs limited the power of the sovereigns. In various European societies they had to be formally elected by the citizens, which implies that their power is of human origin and hence limited.

The Judeo, Christian and Greek traditions are all averse to autocracy and are attached to private property. In autocratic civilizations, such as ancient China and Egypt, sovereigns were regarded to be of divine descent. They could freely dispose of life and property of their subjects. Citizens had no incentive to strive for the improvement of their fate, since they could not benefit from the fruits of their labour.

Not until the Calvinists and Lutherans did translate the Bible into the local European languages in the middle of the 16th century, these notions began to play a more prominent role in the European mind. Moreover, a division was made between worldly and spiritual power, secularisation, whereby religious control over people's minds was reduced and free-thinking was promoted.

At the end of the first millennium, the Islamic civilization, including its science and technology, was still far superior to that in Europe. But, under the pressure of theological conformism, free thinking and innovation was stifled. On the other hand, in some parts of Europe, a spiritual climate emerged which was propitious for innovation, discoveries and inventions, such as the mechanical clock and the art of printing.

The German sociologist, Max Weber, has emphasised that some features of Protestantism, including the importance which is being attached to the work ethic and a sober lifestyle, was conducive to savings, which had a positive impact on economic progress. The Protestants saw success in this terrestrial world as an indication that they were God's elect. But that does not mean that these virtues were absent in other religions. The spectacular growth of the Asian Tigers shows that economic progress is equally possible in a different religious environment. The important thing is that religious values and norms are not opposed to the idea that man can improve his fate by his own efforts.

Another important element concerns the place of the individual within society. Contrary to India, for example, where this place was determined by the caste to which people belonged, Europe offered opportunities for upward social mobility.

Besides religion in a strict sense, there are also values and norms which have a positive impact on economic progress, including integrity, work ethic, self-discipline, strict observance of commitments, punctuality, decent behaviour, trust, a certain balance between competition and cooperation and the rejection of corruption. First of all, corruption should of course be disapproved because of moral considerations. But it is also very harmful from a purely economic point of view, because it leads to higher transaction costs and increased uncertainty, thus higher risk premiums, which are all very damaging for investments and economic development at large.

This graph presents an overview of the level of corruption for selected countries. It is based on a survey by Transparency International on the perceptions of business people, academics and country analysts. The scores range from 10 (highly clean) to 0 (highly corrupt).

With exceptions, corruption and GNI p.c. show a similar pattern. The richer a country, the less corruption and vice versa.

Political Factors

It is evident that the absence of violent conflicts, both internally and externally, is a very important precondition for economic progress. Less evident is the nature of the power constellation: monolithic or fragmented; autocratic or democratic. As regards the internal situation, there was no strong central power in Europe, because of the political rivalry between local rulers, in many periods and regions. This contrasts with the situation in ancient Asia and Egypt. Consequently, there was room for the emergence of cities as semi-autonomous centres of administration, populated by free citizens ('city air makes free'). They became powerhouses of economic progress. Cities elsewhere in the world were generally subjected to central authority. This development was accompanied by increasing participation in political decision-making by the citizens that ultimately resulted in democracy.

For a long time Western thinkers have emphasised the importance of democracy for economic development. For them democracy and economic progress were Siamese twines. This idea was rejected in the communist world. There it was believed that the monopoly of political power by one party was necessary for fast economic development. In one of the last bulwarks of communism, Cuba, this is still the official position.

Also the strength of political institutions is important, especially their capability to perform important functions, such as legislation, the enforcement of the law and order, as well as the levying of taxes.

Economic Factors

Among the economic factors, economic systems play a major role. Until the end of the eighties, there were roughly two rivalling economic systems: the western free market economy and the communist command economy. In addition, there were (and still are) mixtures of both systems in Asia. The collapse of communism was accompanied by the breakdown of the command economy. It proved that the long-standing critics of the command economy, such as Ludwig von Mises en Friedrich von Hayek , who already had revealed its fatal flaws more than half a century ago, had been right all along. The command economy proved to be far inferior to the market economy in creating wealth. The downfall of this model has fostered a worldwide adoption of both the market economy and democracy.

Why did the command economy fail? Economic performance was more important for the communist system than for other political systems. Because in the absence of democracy and free elections, the capability to offer its population a rising standard of living was one of the major sources of legitimacy of the political monopoly of the communists. In the sixties Khrushchev still boasted that the Soviet economy would have overtaken that of the United States in the year 2000. But the command economy could not fulfil that promise. In reality that was a big gap between the pretensions of the Soviet Union as an economic superpower and the miserable results of its economy.

The modern economy proves to be too complex to be steered from the top. Central planners simply do not possess the necessary specific knowledge, for instance concerning production processes, technologies and markets, to make efficient decisions, resulting in a massive waste of scarce resources. The modern economy requires decentralized decision-making by many independent actors, including entrepreneurs, who should be guided by the preferences of the consumers. In other words, the modern market economy is based on consumers' sovereignty and not on producers' sovereignty.

Moreover, the command economy laboured under the absence of material incentives. Capital goods were owned by the state, not by private individuals. If an entrepreneur in the market economy is successful, he earns extra money, which he may invest in his enterprise, which will give him even higher returns in the future. This mechanism, which is an important engine of economic progress, is absent in the command economy. More generally, people could not benefit from the fruits of their own labour. This led to apathy, negligence and many other forms of unproductive behaviour. Lack of incentives also had an adverse impact on innovation. Lack of innovation in the civil sector was even reinforced by the cult of excessive secrecy, because of which there were no mechanisms to translate superior defence technologies into civil uses.

One of the most important conclusions that can be drawn from the collapse of communism and its command economy is that the creation of wealth requires a broad-based, more or less spontaneous process that is characterised by decentralised decision-making, competition and free trade, in which the individual entrepreneur plays a pivotal role. In other words, the invisible hand instead of the visible boot.

But does economic freedom have to necessarily be accompanied by political freedom, notably democracy? There are many arguments that tend to support an affirmative answer to this question.

Democracy and Market Economy

In the foregoing it has been shown that political fragmentation and broader political participation have been important preconditions for the emergence of a thriving market economy. But the reverse also seems true. Once the market economy has been adopted, it will lead to the involvement of a growing number of people in crucial economic decision-making, for instance in the field of investments, production, technology and markets. It is hardly conceivable that those who occupy important positions in the economic field - and who constitute the main driving forces behind the prosperity of the population - will acquiesce in permanent political tutelage.

Institutional Factors

Besides it should be borne in mind that democracy is also indispensable for a durable anchoring of economic freedom, including individual property rights, protection against theft or confiscation (also excessive taxation) by the state, free trade and enforcement of contracts. In this respect autocracy offers fewer guarantees than democracy. Although there are many historical examples of enlightened autocracies that have fostered economic freedom, the succession of the autocrat, because of the absence of clear rules, leads to uncertainty. One can never be sure whether the successor will reimpose restraints on economic freedom. Therefore, political freedom, democracy and the rule of law offer better guarantees for economic freedom.

Yet, not everybody is convinced of the advantages of democracy. For instance, the former Prime Minister of Singapore, Lee Kuan Yew, believes that democracy leads to undisciplined and disorderly behaviour, which has an adverse impact on economic development. Nonetheless, a major part of the world has now adopted democracy. Even in China the monopoly of political power by the communist party is not sacrosanct anymore at the local level. Further proliferation of democracy seems therefore plausible.

Raw Materials

The availability of raw materials is also very important for the wealth of nations. In addition to agricultural commodities, mineral commodities such as coal and iron played a crucial role in the industrial revolution. Today oil and gas are of utmost importance. Yet, the role of commodities for the prosperity of countries is often overstated. Countries like Japan and Singapore possess only few raw materials. Nonetheless, they are among the richest countries in the world. Conversely, many countries in Africa possess massive reserves of mineral resources. Yet, they belong to the poorest nations in the world.

There is another snag. It proves to be very difficult to spend the revenues earned by commodity exports in such a way that it leads to broad-based economic development, from which the population at large may benefit. This is for instance shown by the experience in Russia and the OPEC countries. Even in highly developed countries this may pose problems. Take for example the 'Dutch disease'. This is a distortion of the economy because of a sudden discovery of exportable natural resources (gas and oil), which leads to all sorts of adverse side effects, including inflation, overconsumption, appreciation of the local currency and a crowding out of traditional exports.

Lessons for Development Cooperation

In the foregoing analysis it was argued that western economic history offers many valuable lessons for the development of the Third World, including the importance of the market mechanism, the scope for the individual to take initiatives, democracy, institutions, values and norms. Although the existence of an explicit linkage between the insights developed by economic historians and the current development orthodoxy is hard to prove, it is striking that there is at present such a broad consensus within the development community about the significance that should be attached to all those elements.

This is a rather recent phenomenon. In the seventies and eighties, for instance, there were still fierce debates between various schools of thought: those who favoured a market-based approach and who believed that the fruits of economic growth would automatically 'trickle down' to broad layers of the population on the one hand, and those who believed that this process would be too slow and favoured pro-active government policies aimed at direct poverty alleviation on the other hand. In the new consensus all these elements have been incorporated in a pretty balanced way.

Some believe that the old development orthodoxy has been more damaging than helpful to the Third World. In the eighties Deepak Lal has been one of its outstanding critics.

Deepak Lal In Arms Against the Dirigiste Dogma

The Brandt report - published by a committee headed by former German Chancellor Willy Brandt - induced Deepak Lal to write a booklet: 'The Poverty of Development Economics'. In this booklet he firmly rejected the approach taken by Brandt and, more generally, the prevailing development orthodoxy at that time. The Brandt report focussed on the future relationships between the developed countries and the Third World, or, to put it differently, between North (or more precisely the West) and South. In this report much emphasis was laid on the distribution of wealth. It advocated massive international income transfers and collectivist regulation of the world economy. It was imbued by a mistrust in the market mechanism and displayed a glaring lack of understanding of the process of wealth creation. Particularly the role of incentives and entrepreneurial initiatives were completely ignored.

Deepak Lal defines development economics as the set of 'unorthodox' economic theories that would apply to the developing countries. It was based on the view that standard neo-classical economics would not be relevant for the Third World. The species homo economicus was supposed to be absent among the poor ill-educated masses of the population in the Third World. These people were not considered to react rationally to changes in relative prices. Moreover, social and economic structures were rigid and inadequate, for instance in the field of agriculture and finance. These constituted, therefore, impediments to development. Because of their poverty, the countries concerned would also lack sufficient savings. Consequently, the proponents of this view believed that the market economy was not suitable for the developing countries.

In their external trade relations Third World countries would be facing chronic deficits on their trade balances and a permanent shortage of foreign currency. This was the result of their modest export potential and the limited absorption capacity of western markets for the supply from developing countries. Or, to put it in more technical terms, the income elasticity of western demand for goods from the Third World, especially commodities, would be low. The conclusion was that not only the market mechanism, but also free trade was unsuitable for the developing countries. Instead, all kinds of government intervention, both nationally and internationally, were advocated, which Deepak Lal coined as the 'dirigiste dogma'.

The supporters of this school of thought believed that the allocation of existing but changing resources, which is an important focus of orthodox microeconomics, was of minor importance for the formulation of government policies. In their vision, governments should first and foremost deal with the design and implementation of a 'strategy' for rapid and balanced growth, whereby priority should be given to the control of macroeconomic aggregates, such as savings, the trade balance and the balance between broadly defined sectors, including industry and agriculture. Moreover, they believed in the necessity of large-scale and permanent government intervention, aimed at the distribution of economic goods and the management of various kinds of labour and capital by comprehensive price and wage controls, as well as measures to influence the composition of the package of goods to be produced and imported. In this way they, they sought to secure that scarce resources were used to fulfil the basic needs of the poor instead of the luxurious needs of the rich.

But on the basis of an impressive amount of theoretical and empirical studies Deepak Lal attacks the 'dirigiste dogma'. Lal points out that people in the Third World are perfectly able to take rational economic decisions. Given the food scarcity in many poor countries it is particularly important that farmers react to higher prices by extending their production. This response is indeed confirmed by many studies.

Te theory of 'absolute' scarcity of foreign currency, as a consequence of permanent balance of payments problems was rejected by some countries, while others accepted it. The first group, including a couple of countries in East Asia, showed that the theory's underlying pessimism was unfounded. Other countries, such as India, believed in it and conducted a policy aimed at import substitution behind high tariff walls. Because of the protection offered by them, industries that were in principle capable of exporting, were lured by easier profits in the home market. Consequently, export revenues were lower than they would have been under a more liberal trade regime. In this way, the theory acted as a self-fulfilling prophecy. The glaring successes of countries which followed outward-looking export oriented development policies, instead of inward-looking import substitution policies, has discredited the theory, and, in doing so, also development economics at large, according to Lal.

It goes without saying that the market mechanism in the Third World exhibits many flaws. But that does not necessarily mean that dirigiste policies produce better results, neither from the point of view of economic rationality, nor as regards poverty alleviation. Lal even asserts that the serious distortions of prices in the Third World have nothing to do with the deficiencies of the price mechanism, but with non-rational government intervention, of which regulation of foreign trade, the licence system in the industrial field and various forms of price control are the most important elements. Success of dirigisme requires omniscient bureaucrats who are uniquely guided by the interests of the citizens. This species is rare.

Dirigisme, to which so many development economists have given their intellectual support, was aimed at improving the functioning of an imperfect market economy. Instead, it has resulted in policy-induced distortions that were more damaging than the market imperfections they were supposed to remedy in the first place.

The most important lesson that can be drawn from the development results over the last few decades in the Third World is that economic growth will increase the demand for unskilled labour. This should be brought about by well-functioning markets whereby the price mechanism should be allowed to play its proper role. This is probably the most efficient mechanism in the fight against poverty. That was Deepak Lal's message in the eighties.

What was an iconoclastic view at the time, is now an article of faith of modern development thinking. But the fight between different schools of thought has taken years, if not decades, and has inflicted unimaginable damage upon the Third World, in terms of lost opportunities for the creation of wealth and, consequently, the continuation of poverty. As has been observed before, the differences of views have faded away and have been substituted by a broad-based consensus, in which the lessons of decades of development experience have been incorporated.

Current Development Consensus

The current development consensus can be found, for instance, in the comprehensive development framework of the World Bank. It is an holistic framework, which offers objectives for macroeconomic policy and trade; the role of government, regulations and the fight against corruption, the creation of a social safety net, health care, education, infrastructure, environment, rural development, the promotion of private enterprise, and the creation of equal opportunities for women. Additionally, attention should be paid to the overarching problem of institutional reform. In this context institutions can be perceived as rules. These can be of a formal nature, such as the constitution, legislation, regulation and contracts. But they can also be of an informal nature, such as norms based on values. These rules create opportunities for the citizen but they also pose limits. Institutional reform is aimed at influencing behaviour of individuals and organisations in the direction of desired goals.

Will the new development orthodoxy succeed where the previous one has so dismally failed? That is pretty doubtful. The goals as such seem laudable. But the new approach is dubbed 'holistic' and 'comprehensive'. And experience teaches us that all such approaches prove to be very difficult to implement. Moreover, it seems to imply an attempt - unprecedented in human history - to clone the western societal model and to transplant it to the rest of the world. Such an attempt may meet many obstacles and fierce resistance.

Should this not be considered as a new form of - this time 'cultural' - imperialism? To my mind the answer is negative. First of all, because development experts from all over the world, including the developing countries, subscribe to the new strategy, and many have even been actively engaged in its design. Secondly, the new consensus is the logical result of the lessons that can be drawn from our own western history, especially as regards the 'organic' relationship between cultural, political and institutional factors on the one hand and economic performance on the other.

Many countries have adopted western practices (for instance, western methods of production, management and marketing, as well as the implementation of the market economy at large) In doing so, they have achieved - sometimes considerable - success in their strife for economic prosperity. But the present approach is far more ambitious. It is not only about adopting practices, but also adopting institutions as well as their underlying norms and values, which may be partly incompatible with local values and norms. The experience of the successful economies of East Asia shows that it is possible to adopt western practices in a time frame of a few decades. But as far as the adoption of institutions, different time scales have to be reckoned with. As regards institutions, such as those in the public and corporate field, one should perhaps think in terms of many decades. As regards values and norms one should maybe think in terms of 50 - 100 years. It is not likely that this process will ultimately result in identical societal models. Undoubtedly cultural and other differences will remain. And unfavourable climatic conditions will continue to pose serious problems for the countries in question to ever reach the level of prosperity of the developed countries of today. But that does not mean that they could not achieve substantial progress.

All in all, development thinking seems to be on the right track. At the same time, however, it will probably take a long time before it will bear fruit.

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