No issue sets more serious challenges to our affluent society and our economic system than does the plight of the Third World. Since the Second World war the Third World has achieved considerable economic growth and some countries have "modernised" spectacularly. On average infant mortality, literacy and length of life have improved considerably.

However the Third World development is in a very unsatisfactory state. The benefits have mostly gone to the small richer classes in the Third World. The important question to ask of a development strategy is how well does it work for those in most need, not what does it add to GNP or to the wealth of the rich. About half the world's people have an income of under $2 per day. The inequality evident within the world economy is extreme. The richest 20% of people are getting 86% of world income, while the poorest 20% of people are getting only 1.3%.

The inequality is getting worse. In 1960 rich world average income was 20 times poor world income. In 1980 rich world average income was 46 times poor world income. In 1990 rich world average income was 55 times poor world income. The ratio is now around 7O to 1.

Annual aid to the Third World in 1998 was $30 billion. Debt repayments from the Third World to rich world banks was $270 billion!

The magnitude of the debt problem sets a major challenge to anyone who still believes the conventional development strategy can lead the Third World to prosperity.

The huge and disturbing Third World problem is mainly due to the faults in conventional development theory and practice. The core mistake is the identification of development with economic growth (or the assumption that growth is the means to development, or the main condition necessary for it, etc.) Conventional development theorists proceed as if all that matters is increasing the amount of economic activity, i.e., of production for sale or Gross Domestic Product. They assume that the more goods and services produced and sold then the more wealth that is being generated, the more taxes governments can collect and spend on problems such as health, education and the environment and the more jobs and incomes people can have. So in time the increased economic growth is supposed to lift all to high living standards.

Thus conventional economists emphasise the need to:

If you take maximising the growth of GDP as your top priority then you will encourage and assist those with capital to invest in whatever will make most profit. They will do this best if they put the available local land, labour and capital into producing relatively expensive things to sell to people on higher incomes. People with capital to invest never maximise their income by producing what is most needed, such as food for poor peasants. It is always far more profitable to invest in putting Third World land into producing luxury crops such as coffee to export to rich countries.

Although increased production for sale in a society can bring some benefits to some people, when economic growth is taken as the major development goal serious damage is done to the living standards and the experienced quality of life of the poor majority of the people, to social cohesion and to the environment.

Yes making growth the goal will maximise the volume of goods and services produced, i.e., the "wealth" generated, but firstly this is typically not only of little or no benefit to most people in the Third World. More importantly, it deprives the poor of the resources they once had. It is very easy to see this if we look at how resources are distributed by an economy driven by market forces, profit and growth. The basic problem in Third World development is not any absolute shortage of resources such as land and capital, but their extremely uneven and unjust distribution. So we must ask why the distributions are so bad? The essential answer is very simple.

A great deal of development has taken place in the Third World; the trouble is that it has not been development of the most needed industries. It has been mostly the development of industries to provide crops and consumer goods for the small rich local elites or for export to the rich countries i.e., it has been inappropriate development.

Just consider the fact that millions of Third World people work hard producing crops and goods for other people, from which they derive very little benefit, i.e., very low wages. All that labour and all that land could have been fully deovoted to meeting their own needs. Look at any typical Third World capital city and you see a vast amount of development of offices, hotels, airports, boutiques, cars and roads...which is of little or no benefit to most people.

This is most evident in the case of export crops. In some countries half of the best land grows crops to export to the rich countries, including fodder for animals. Again this is a direct consequence of allowing the highest bid to determine the uses to which the Third World's productive capacity is put.

When Third World productive capacity is put into producing exports the people of the Third World receive only minute proportions of the wealth generated. For instance in Central America a 3000 ha cattle ranch might provide (very low) incomes for only two workers, yet that much land might feed 15,000 people if gardened intensively.

Thus conventional development can be seen as a process which draws Third World productive capacity into producing mostly for the benefit of the local rich classes, the transnational corporations and the consumers in rich countries.

Millions of people are without sufficient food and materials for reasonable lifestyles and more importantly without the small amounts of productive capacity (e.g., land) that would enable them to produce for themselves most of what they need. The required land, water, capital etc. exist in adequate and often abundant quantity in most if not all poor countries. It is the normal functioning of the global market economy which delivers the available resources to a few and deprives the majority. The drive to maximise output, sales and returns on investment and economic growth inevitably leads to focusing development and resources on those who are already rich.

There are serious conceptual mistakes in identifying development with economic growth.

Firstly a society is much more than an economy. A society includes moral values, social relations, traditions, cohesion, community, arts, cultural and religious practicess. If the economy is allowed to become the dominant factor in a society this will cause serious problems. The quest for greater individual wealth via competitive market operations will easily damage and drive out considerations of morality, justice and what is good for society. This is one of the main mistakes being made in rich countries today.

Secondly even within the economy development is not equivalent to growth. When a tadpole develops it does become bigger but it also changes its form; it becomes a frog and it then stops getting bigger, because it has then finished developing. Economists have no concept of when an economy has become "developed enough", or what the end goal of development might be. They can only think about it becoming bigger, i.e., increasing the volume of sales. But it makes no sense to discuss development without having some idea of the what the goal of development is. We should start with questions like, "What do we want developed?", "What will our society be like when it has been developed?", "What are our development goals?"

Conventional development allows those few with most of the capital to develop whatever will most enrich themselves, while a tiny fraction of the wealth or benefit produced goes to Third World people. Conventional economnists think this is acceptable, and that this "trickle down" process will raise all to high living standards someday.

Sometimes there is indeed significant tricke down. The current surge in the Chinese economy has lifted many out of poverty. This is not so surprising since China's verylow wages have helped it to win most of the world's manufacturing export markets. But that's a very atypical situation and few if any of the other poor countries can hope to eliminate poverty by the same means

It is obvious that very very little ever trickles down. People making shirts in Bangladesh get paid 15c per hour, 1/50 of the wealth they help to generate, ie., of the retail price of the shirt. ( See Chossudovsky, 1997.)

In the world as a whole the amount of benefit that trickles down is evident in the fact that one-fifth of the world's people now get 86% of world income, while the poorest one-fifth get only 1.3%, and the ratio is getting worse.

In fact in most cases precisely the opposite of Trickle Down is typically what happens. That is, when conventional development commences people often lose what they had. For example the building of big dams and the expansion of export cropping has resulted in millions of small landowners losing the land and forests they used to have.

Even if there was significant trickle down this would be far less satisfactory than if the availa le development resources were fully and directly applied by poor people to producing to meet their own needs. Any trickle down process means most of the productive capacity and most of the wealth generated are flowing to the rich. Apprpriate development (below) makes sure that does not happen.

Conventional development can be seen as a process whereby the Third World's resources are taken over by the rich countries and their corporations. Long agoThird World countries had control over their own forests and lands and used them to produce what they needed. But the result of conventional development is that these resources have come to be owned by, or are producing for, the benefit of the small local rich classes, the transnational corporations and the people who shop in rich world supermarkets. Conventional development involves bringing people into the global market, where they must sell something in order to buy what they need, and where market forces then ensure that the majority of very poor people get very few of the resources available, have to sell their resources and labour cheaply, and see their land and forests bought by rich people and put into the production of items for others to use.

Thus Goldsmith discusses "development as colonialism". (Goldsmith, 1997.) Rist says, "...development has resulted in material and cultural expropriation." (Rist, 1997, p.. 243.) Schwarz and Schwarz say "Development now seems little more than a window dressing for economic colonialism." (1998, p. 3.) Chossudowsky's The Globalisation of Poverty (1997) details the mechanisms, especially in relation to finance. (See also Trainer, 1989, 1995a.)

According to the conventional view foreign investment is crucial to facilitate development, because development is thought of in terms of investing capital to increase production for sale. However the critical view is that although foreign investment certainly promotes development, but the development is almost entirely inappropriate.

Foreign investors never invest in the production of the most needed things, such as cheap food, clean water or simple housing. Foreign investment goes mostly into producing things for the urban rich or for export to rich countries and draws local land and productive capacity into these ventures.

In addition there is good evidence that the more foreign investment a country has the slower its development is! (For extensive documentation see Bornschier et a., 1978.)

Most importantly, it is a mistake to think that development can't take place without the investment of large sums of capital. The "appropriate" development approach (below) insists that relatively little capital is needed to develop those things that would enable modest but satisfactory living standards for all in a typical Third World country.

Conventional development thought has recently placed considerable emphasis on the export-led strategy as the path whereby several Third World nations notably Taiwan, South Korea, Singapore and Hong Kong, have developed at a rapid rate. However, it is not plausible that these set an example which the rest of the Third world could follow.

These NICs have prospered by winning the competition to export manufactured goods to the quite limited markets of the rich countries. There is only room for a very small number of countries to succeed in that arena. The four countries listed above total a mere 2% of the Third World's population. Advocates of the export oriented approach to development fail to deal with the fact that it could only succeed if there were vast untapped markets in the developed countries permitting continual expansion of Third world manufactured exports. But in reality there is large and chronic trade problem; export markets are glutted, protection is rampant, commodity prices are low, world trade has slumped since 1980, and rich countries are already importing far more than they could pay for if they were not going so far into debt.

The NICs succeeded through policies which flatly contradict conventional free market development theory, notably heavy reliance on state regulation and subsidies.

The 1997 "Asian meltdown" showed how unsatisfactory the development of the Newly Industrialising Countries has been. They have become so dependent on exports and on global financial systems that most of them suddenly collapsed when speculators decided to withdraw their capital, devastating the lives of their poorer people. (Appropriate developent requires little capital so this vulnerability is avoided.)

Since 1980 the situation of most of the people in the Third World has deteriorated significantly due to the "globalisation" of the world economy and the rise of the International Monetary Fund, World Bank and the World Trade Order to be extremely powerful agencies determining development.

Globalisation refers to the emergence of a unified and integrated world economy in which the big transnational corporations and banks have increasing freedom and access to trade as they wish, because the barriers such as protection for Third World industries are being removed and governments are deregulating their economies. The conventional economist sees globalisation as highly desirable, especially as it involves increased freedom of trade, but it is having devastating effects on the Third World. Increased freedom of trade means greater scope for transnational corporations and banks to enter countries to get access to their resources and labour and to take over their firms and markets.

Globalisation is now widely criticised as being responsible for the destruction of the economies, jobs and living standards of millions of people in rich as well as poor countries. It enables the corporations to focus investment and activity in the few most profitable regions of the world, and to ignore the rest. Governments cannot direct development into needed areas, because that would be to" interfere with the freedom of trade and enterprise". That is the supreme and sacred principle the rich insist must be followed now.

One consequence of this agenda is that poor people in general and some entire countries, especially in Africa and the Pacific, will be increasingly irrelevant to the interests of the corporations and will therefore sink into stagnation and squalor. They cannot possibly compete in export markets and they have no cheap resources to attract foreign investors. Inequality, great wealth accompanied by great poverty, is rapidly increasing around the world now. So again it is a mistake to evaluate conventional development in view of the success of China; thekey question is how well does it work for the poorest and weakest.

Development makes no sense unless governments have the capacity to control and regulate the economy, trade, foreign investment etc., for example, to be able to get foreign investors to locate in a region that needs jobs. Yet globalisation is about leaving development to market forces, i.e., before long development will only be development of whatever it suits the corporations to develop. Rich countries and their agencies such as the World Bank, actively prevent the governments of poor countries from taking control of their own development;for example Structural Adjustment Packages insist that free market principles should be adopted.

The most powerful forces inflicting these "developments" on the Third World over the last 20 years have come via the Structural Adjustment Packages of the World Bank and International Monetary Fund.

When a Third World country's debt repayments become impossible for it to manage it must go to the International Monetary Fund and the World Bank for assistance. These agencies arrange for more loans to enable debt repayments to be made, but on condition that a Structural Adjustment Package is accepted. This package obliges the country to do a number of things that are supposd to imporove the economy, such as cut government spending including assistance to poor people, open the economy to more foreign investment, increase exports (more plantations and logging), devalue (making exports cheaper for us in rich countries to buy, and making the country pay more for the imports from us), reduce government regulation, reduce government ownership and control and generally increase adoption of free trade policies.

These conditions are supposed to be designed to "get the economy going again", i.e., to increase business activity, investment, export earnings, and to cut spending, so that the country becomes more able to pay back its debt. (In fact the evidence is that these measures do not achieve these objectives; see Dasgupta, 1988, pp 109, 116, 136.)

More importantly, the package is a delightful bonanza for the rich countries and their corporations and banks. Their access to Third World resources is increased, they can buy up the firms that go bankrupt, they can hire cheaper labour, they can import commodities more cheaply from the country (because of the devaluation). Above all, the main point of the SAP is to enable debts to be paid to rich world banks. However the effects on the country's economy and on its poor majority of people are catastrophic. Many small firms fail, unemployment jumps, government assistance to the poor is reduced and food prices can double within days.

There has been an enormous amount of criticism of the Structural Adjustment Packages, which have now been imposed on more than 100 countries (...never on any of the rich countries of course; the USA is the world's most heavily indebted country but would never have a SAP imposed on it!) They have caused or contributed to havoc in many countries, including riots, civil wars (Yugoslavia, Rwanda; see Chossudowsky, 1997) and increased death rates from deprivation, and the fall of governments (e.g., Indonesia.) SAPs and the rules of the World Trade Organisation are now widely recognised as the main mechanisms ensuring that the global economy functions in the interests of the big corporations and banks. (For extensive documentation see Third World Development; Collected Documents.)

Economists proceed as if they are discussing development in general, but they are only discussing one very restricted form of development among many others, i.e., one that involves,

But these are only the defining characteristics of a capitalist economy, not of economics in general. There are many economies that do not function according to these principles and assumptions (e.g., aboriginal economies, or ancient Egyptian or contemporary Amish economies or a household economy) and conventional economists cannot deal with these. Conventional economists give the impression that development can not be thought about in any other way.

The principles of Appropriate Development flatly contradict these princiles of capitalist development. The fundamental point is that capital is not very important for development; Appropriate Development enables people to put local resources into producing what they need, and this can be done with little opr no capital. (See below.).

The living standards we enjoy in rich countries such as Australia benefit greatly from the way the global economy works. The global market system and the freedom of trade the corporations enjoy deliver most of the world's resources to us and draw the Third World's productive capacity into producing for our benefit. What would our tea and coffee cost if those who produced them were paid a decent wage, or if much of the land growing coffee was put into growing food for them?

To be more precise, there are three main groups who benefit from the way the global economy works. The transnational corporations and banks are by far the biggest beneficiaries. The second group includes the small richer classes in the Third World who own some of the factories and plantations or have highly paid jobs. It is in their interests to support the unjust economy and to cooperate with the transnational corporations and the rich countries to keep conventional economic and development policies in place. The Third group of beneficiaries includes the ordinary people who live in rich countries because they get far more than a fair share of world resources and they can go to the supermarket and buy many things produced cheaply from Third World resources.

In other words we have an empire and we could not have such high "living standards' without it. If you doubt this, think how well you would live if you got only your fair share of the world's oil production, or copper or fish, and what would your coffee cost if most of the land producing it now was devoted to food instead?

The injustice and exploitation is mainly due to the normal working of the global economy. Market forces automatically enrich the rich and deprive the poor. However people do not like being deprived, hungry and exploited. From time to time they tend to protest! In many countries people can only be kept working in the mines, plantations and sweatshops for starvation wages through violent repression.

A great deal of repression and violence are also often required to keep Third World people to the systems that benefit the rich. Often the brutality is inflicted willingly by the local ruling classes who benefit most from the situation, but often rich countries give arms, training and other assistance that is used to put down dissent, and often they invade to install or get rid of rulers.

THE LIMITS TO GROWTH PERSPECTIVE;
OVERLOOKED IMPLICATIONS FOR DEVELOPMENT

It is remarkable that the development literature has given so little attention to the "limits to growth" analysis of our global predicament. If this analysis is at all valid it will be totally impossible for all people to rise to the material living standards presently enjoyed by the 1/5 who live in rich countries, let alone those we aspire to. These are therefore the over-developed countries while the rest are the never-to-be-developed countries. (For detailed analysis see The Limits To Growth Analysis on this Web page.)

This "limits to growth' perspective requires the total rejection of any view of development which assumes growth and trickle down, or which takes Western affluent living standards as the goal of development. There is no chance that the world's resources and ecosystems will allow this approach to bake a sufficiently big cake for trickle down effects to solve the problems of the poor majority, let alone allow all to develop to rich world living standards.

Following are the basic principles of Appropriate Development. These flatly contradict conventional development theory.

1. Enable people to immediately begin applying the existing resources and productive capacity to producing the things that are most needed to give all people the highest possible quality of life at the least cost in labour, resources and environmental impact. Most if not all Third World regions have all the resources they need to build the basic structures and systems which would provide a high quality of life to all in a few years at most, via relatively simple technologies, lifestyles and systems.

The concern should be to ensure that all people have adequate shelter, food, basic health services, extensive and supportive community, security, leisure-rich environments, peace of mind, a relaxed pace, worthwhile work, a sustainable environment, and access to a rich cultural life. Achieving these goals is possible with little or no foreign investment, trade, heavy industrialisation, aid, external expert advice or sophisticated technology. Little more is required than the land, labour and traditional building and gardening skills the people usually have. Appropriate development does not depend on material affluence or economic growth or on access to large amounts of capital.

In other words totally reject any notion of trickle down development, which accepts that it is in order to put vast resources into developing things that are not most urgently needed on the expectation that the poor will derive some benefit someday. If the available labour and resources are applied fully and immediately to producing what people need the benefit to them will be huge in comparison with what they could ever hope to get via any trickle down mechanism.

2. Priority must be put on cooperation, participation and collective effort. Organise and contribute to town meetings, working bees, cooperatives and town banks. Enable villagers to largely govern themselves and take control of their own development mostly through cooperative and participatory procedures (as distinct from all competing against each other as acquisitive, entrepreneurial individuals trying to get richer, which will inevitably result in a few getting very rich while many are impoverished.)

Thus, reject the absurd conventional economic assumption that the best for all results if individuals compete against each other pursuing their self-interest in free markets. In a satisfactory economy there could be much freedom for individuals, many small private firms, and a place for market forces (under careful social control), but you cannot expect to have a satisfactory society unless the top priority is what is best for all, unless the main institutions and procedures are basically cooperative and collective, and unless there is considerable regulation of the economy for the public good. Thus it is very important to develop shared facilities, village commons, working bees, community workshops, committees, cooperatives, and to encourage giving and sharing, helping, civic responsibility and social cohesion.

3. Very simple material living standards must be accepted. Affluence and rich world living standards must be rejected as impossible for all. All the world's people cannot live affluently. This does not mean there must be deprivation or lack of necessities or inconvenience. The goal of development cannot be to rise to rich world affluent living standards. The goal must be material sufficiency on the lowest viable levels of per capita resource consumption for convenience and a good quality o life.

4. Local economic self-sufficiency is the key to appropriate development. Most of the goods and services used by people must be produced in and very close to the towns and suburbs they live in, by local people using local resources in local firms. Therefore mostly develop small, simple industries serving villages close by, exporting only small quantities of surpluses.

5. Capital and sophisticated technology are not very important for appropriate development. It is a serious mistake to assume that development cannot take place without large volumes of capital or without modern technology. A well developed village or region can be achieved with little more than traditional hand tool technology which can build highly satisfactory houses and dams and can plant thriving gardens. People can get together in voluntary working bees to build the dwellings, firms, clinics, stores, premises, gardens, dams, workshops and leisure facilities their community needs, using local materials such as earth and timber. Of course a relatively few important modern items such as radios and medicines must be obtained through trade. Very little heavy industry is needed . States should aim to distribute mostly light industry across the rural landscape. The production or importation of many items should be banned or severely limited, e.g., cars, aircraft, fashionable clothing, soft drinks, expensive luxury goods.

6. Social and ecological goals must take priority over economic goals.
Do not allow development to be determined by what is most profitable, what capitalists want to do, what market forces decree or what would maximise the GNP. Base development decisions on morality, justice, tradition and what is best for community, the environment, social cohesion and people in general.

7. The most important elements in appropriate development are organisational and social. These include working bees, rosters, committees, participatory government, town banks, community development cooperatives and especially the climate of solidarity, good will, energy and cooperation that will ensure that people come together eagerly to build and to run their local systems.

8. Preserve and restore cultural traditions. Do not assume that you must "modernise" and therefore adopt Western consumer culture.

9. No attention whatsoever should be paid to the GDP. Whether it increases or falls is irrelevant. What matters is whether the quality of life, economic security, social cohesion and ecological sustainability are improving. In fact to adopt appropriate development strategies will in general be to reduce the GNP. In a well-developed Thailand there would be far less work, production, consumption and GDP than there is now! Develop a wide range of measures of important factors such as the quality of life, social cohesion, social problems, and especially ecological sustainability.

10. Minimise economic connections with the rich countries and the global economy. Borrow very little if anything. (There will be relatively little need for capital and conventional heavy infrastructure development; e.g., ports and freeways.) Export only a few surpluses in order to be able to import only a few important items. Allow into your nation foreign investors only if they will produce necessities on your terms.

11. Be quite clear that appropriate development is not a path to rich world living standards or "prosperity", a consumer society, glamorous cities, high incomes or great national wealth, power and prestige. The outcome will not be expensive possessions, palatial houses full of gadgets, or jet-away holidays. Most things will be produced much less "efficiently" than the transnational corporations can produce them. "Living standards" will be far lower than they are in the rich countries. But these things are not important for a high quality of life or an admirable society. The aim will be to guarantee simple but satisfactory living standards to all, and to preserve culture, traditions and ecosystems. In other words the conventional conception of the goal of development must be abandoned.

(For further detail, especially on practicalities, see Development; The Radical View.)

The world economy is extremely unjust and exploitative. The rich one-fifth of the world's people hog most of the wealth, resources and income, while half the world's people are so severely deprived that millions die every year of hunger and disease. This appallingly bad situation is due mostly to the market system and the "growth and trickle down" approach to development. These automatically and inevitably enable the rich to take most of the resources available and to gear the Third World's productive capacity to the benefit of the rich. (Of course other factors such as corruption and difficult climates are also important causes.) Third World elites are happy to go along with conventional economic development strategies because they benefit from them.

The globalisation of the world economy and the Structural Adjustment Policies of the World Bank are rapidly worsening the conditions in which most people live because they are imposing greater freedom for market forces, i.e., they are facilitating even more access for and takeover by the corporations and banks.

Arndt, H. W., (1983), "The trickle down myth", Economic Development and Cultural Change, Oct., 32, 1, 1-10.

Bornschier, V., et al., (1978), "Cross national evidence of the effects of foreign investment and aid on economic growth and inequality; A survey of findings and reanalysis," American Journal of Sociology, 84, 3, Nov., 651-683.

Chossudovsky, M., (1997), The Globalisation of Poverty, London, Zed Books.

Dasgupta, B., (1988), Structural Adjustment, Global Tade and the New Political Economy of Development, London, Zed Books.

Goldsmith, E., (1997), "Development as colonialism", in J. Mander and E. Goldsmith, The Case Against the Global Economy, San Francisco, Sierra.

Rist, G., (1997), The History of Development, London, Zed Books.

Schwarz, W., and Schwarz, D., (1998), Living Lightly, London, Jon Carpenter.

Trainer, T. (F. E.), (1995a), The Conserver Society; Alternatives for Sustainability, London, Zed Books.

Trainer, F. E. (T.), (1999), "The limits to growth case in the 1990s", The Environmentalist, 19, 329 -339.