Must Jamaica fail?

By John Rapley

Forty years ago, the Third World movement coalesced around an agenda of charting a separate course forward for developing societies. With the global trading system skewed in favour of rich countries, the push for a New International Economic Order (NIEO) aimed to change the rules of the global game in a more equitable manner. The oil shocks of the 1970s briefly gave hope to some former colonies, Jamaica among them, that cartels could be used to increase the revenue flows from primary exports.

But within a few years, the tight monetary policies of the First World had crushed the cartels. The resulting recession of the early 1980s tamed demand for primary commodities and drove their prices to the basement, tipping much of the South into severe recession. Many Third World countries then found themselves running cap in hand to the very international institutions they had decried as tools of neo-imperialism: the IMF and the World Bank. And in return for loans, NIEO recipient countries had to adopt structural adjustment.

Not all countries found themselves in such dire straits. A handful, notably in East Asia, had foregone a resource-exporting development model and focused on building their export-manufacturing capacity. The policies they adopted required considerable sacrifice on the part of their citizenries. But when the "Lost Decade" of the 1980s sank most of the Third World in poverty, they were still sailing forward.

They, and a few other countries, were playing catch-up with the West. But before the turn of the century, barely a third of developing countries were growing fast enough to converge with the rich world. The world as a whole was growing more unequal. By the turn of the millennium, the average person in a developed country took home 60 times more pay than the average person in a developing country.

But then, suddenly, that changed. Since the 1990s, growth rates across much of the Third World, including much of Africa, have been rising. In the same period, growth rates in the West began slowing, a trend that has picked up speed since the 2008 financial crisis. As a result, the growth gap between the rest and the West is widening in favour of the former, and average incomes are converging. As a result, today, nearly three-quarters of developing countries, accounting for most of humanity, are catching up to the developed world.

In an insightful recent paper put out by the Global Citizen Foundation, Arvind Subramanian and Martin Kessler show how what they call hyperglobalisation - the opening of the world's markets, some painful, that occurred in that earlier wave of structural adjustment - ultimately helped convergence to accelerate across most of the planet. With the income ratio between the rich and poor world having grown so wide, Western manufacturers were keen to outsource operations to low-wage zones. The result was a massive investment boom across the Third World. Trade as a proportion of global GDP has thus been rising sharply, with developing countries being disproportionate contributors to and beneficiaries of this process.

Revolutionary Development

It has been a revolutionary development. But sadly, Jamaica finds itself among the relative handful of outliers who are falling yet further behind. The convergence train has left the station, but we're still bickering over who lost the ticket.

There's more to convergence than open markets as the critics of Jamaica's structural adjustment experience point out. I'll turn my attention to the apparent recipes for successful development in a subsequent column. However, what I think we can say with quite some confidence is that the list of possible explanations and excuses is wearing thin. A lot of the countries who joined us in the 1970s Third World movement have since changed direction and joined the convergence movement. If they were once satisfied the world was stacked against them, they've found a way to work it to their advantage. Will we?

John Rapley, a political economist at the University of Cambridge, is currently on a visiting professorship at Queen's University in Canada. Email feedback to columns@gleanerjm,com and jr603@cam.ac.uk