Definition of Economic Development
Economic Development is the rise of a nation—based on the managerial and entrepreneurial competence of its own indigenous people—to meet the West and other developed countries as an equal, like China has recently done.
Definition of Persistent Economic Underdevelopment
Persistent underdevelopment is the ongoing inability of a country to rise and meet the West as an equal. This inability is due to a severe shortage of managerial and entrepreneurial skills among its own indigenous people. These skills are usually provided by expatriates from the West and from the developed countries of Asia. But a persistently underdeveloped country (PUC) always needs expatriate leadership in much larger numbers than it can afford or tolerate. Underdevelopment is permanent because the need has not been fulfilled.
With a few exceptions, all persistently underdeveloped countries (PUCs) happen to be formal colonial territories of the West. Most of them have been “politically independent” for decades or centuries and have retained the western economic model that was imposed by colonialism.
The Root Cause of Economic Underdevelopment
Higher education institutions claim to have a monopoly on teaching knowledge that will facilitate managerial and entrepreneurial skills. This widely accepted claim is usually not challenged. At least not loudly. Accordingly, society expects these institutions to train and graduate people who will become effective managers and entrepreneurs.
But after decades of obtaining university education, development has not happened. The PUCs now have armies of university graduates, but they still cannot do what expatriates do. So, the claim is false. Higher education does not provide the managerial and entrepreneurial skills needed to make development happen! Meanwhile, there is no competition for academia in the PUCs. There is no other way for these countries to acquire managerial and entrepreneurial skills for their people. Underdevelopment is an inescapable trap for the PUCs. This is the root cause of underdevelopment and the common thread of human misery.
The widely-held belief that development is gradually taking place in the persistently underdeveloped countries (PUCs) is false. Growth in a PUC is often modernization without development. Modernization does not meet our definition of development because it can happen without indigenous managerial implementation.
Modernization is growth or “development” led by expatriates. Hence, modernization can procure only limited and shallow growth because there are not enough expatriates to propagate and multiply its effects. The opportunities that modernization present are not fully availed. Furthermore, the leadership of expatriates is indispensable for maintaining the models of modernization that are in effect.
The illusion of development through modernization is not sustainable if the supervision of expatriates is disrupted for any reason. Disruption may come in the form of policies of nationalization or indigenization, or “political independence”, whereby expatriate managers are replaced by locals for political reasons. More commonly, disruption arises from financial reasons, in which case the salaries of expatriate supervisors can no longer be paid and they have to be replaced with locals. Either way, the result is the same. The facility or operation taken over by locals begins to deteriorate. It usually deteriorates to a shadow of its former self or collapses entirely.
The condition of a middle-income trap is merely the ultimate display of the fake development of modernization in a PUC. Countries caught in the middle-income trap will have a prosperous and affluent minority population of Western or Asian managers, administrators, entrepreneurs and their local cohorts. But the bulk of the indigenous majority is less prosperous and stuck in economic stagnation. There are instances where it might appear that the smaller but dominant group is withholding prosperity from the larger population. However, if that is correct, the power to do so stems directly from the permanent scarcity of managerial and entrepreneurial talent in the larger group.
Real development is either on or off. There is no gradual. China (and Korea before it) has demonstrated the only standard of economic development and growth that should be acceptable in our world. Development, in the present sense of the term, was gradual in the West because development could only keep pace with the level of technical knowledge and productivity in the Western free market. For the most part, there was no already developed country to set an example for the West.
In contrast, China shunned capitalist opportunities on ideological grounds, embraced isolation for decades (after ending imperialist meddling in its affairs), and allowed development to pass it by. But when it chose to participate in capitalist industry, the example of the West was already there to be followed. China’s development became less a question of developing, and more about putting to work the managerial and entrepreneurial competence or resonance of its people. Catching up to the opportunities of available technology, industry, and markets was simply a byproduct of that.
It is a matter of opinion whether China strolled or sprinted to catch up to the West in terms of development. But when managerial and entrepreneurial competence (resonance) is indigenous and not imported, development is in the “on” position. Development processes will become almost automatic and will happen inexorably fast. This should be viewed as normal, not extraordinary. This phenomenon is what we call the “Crusoe Effect,” named after Robinson Crusoe.
Guided by the knowledge of what he knew was possible, Robinson Crusoe, the fictional character, combined the wreckage of his ship with the natural resources on the desert island on which he was trapped, to recreate the world he left behind. He combined the technology he salvaged with the technology that he improvised, and learned new skills, alone, to accomplish a contemporary standard of living. All this happened without him being a certified specialist in every area of what he did. He was self-programming.
This is like acquiring in education, the latest knowledge about what is possible, using the knowledge to combine foreign technology with local resources to make development happen, while innovating and inventing as necessary along the way. For persistently underdeveloped countries that tend to be rich in natural resources, this is the operational definition of development.
The Crusoe Effect means that, no matter how meager the available resources, the maximum possible productivity will be derived from it, limited only by available knowledge. Incremental resource improvement, in quantity or quality will, at the very least, increase output proportionately. At the individual, group, or national level, the use of technology and its knowledge will operate at close to the level of the state-of-the-art, limited only by available resources. Furthermore, such effectiveness is not sourced primarily by individual will, or determination, or ambition. Instead, it is a matter of being. The operations of the economic model are too numerous and contingent for orderly implementation in any other way. That is what takes place among expatriates despite the obstacles in a PUC.
The Crusoe Effect and Higher Education
The purpose of any program of higher education “for development” should be to facilitate the Crusoe Effect in the graduate. The ability to turn development to the “on” position is what higher education claims to have imparted to graduates. The promise that the graduate will solve problems because he or she has become multi-functional and especially self-programming is the claim to fame of the university Liberal Education curriculum. And like Robinson Crusoe, the managerial, entrepreneurial, and improvisational qualities imparted by higher education will instantly be measurable in the workplace and in society in the form of increased efficiency and productivity through problem solving. Now! Not as some unknown future date. These promises and expectations are the familiar selling points of higher education, regardless of the graduate’s area of specialization. Also, graduation ceremonies and speeches loudly proclaim that these promises and expectations have been fulfilled by the institution.
After more than 50 years of political independence and building armies of university graduates, the expectations of higher education have not been met in the PUCs. The claims and promises have consistently proven false.
Nevertheless, these false claims are hardly ever challenged. Instead, everything goes on as if the expectations are being met. Institutions and individuals consider investment in higher education “for development” as prudent. The academy is credited in graduation speeches for turning “on” development within students who are ready to “take on the world.” And as if that’s indeed the case, development organizations set vision 2020 and 2030 goals. Development agencies and PUC leaders draw up plans for economic diversification. Moreover, the measurement of development is conducted everywhere with zero reference to abject dependence on expatriates and the limits and costs of this dependency.
But the reality is that these plans have failed to make development happen in the past and will fail to do so in the future. It is wishful thinking to expect something different to happen. An increasing number of people in the PUCs must perform as well as expatriates. Period! Without that, development did not happen and will not happen. Our job here is to explain how to get this done.
Marshall Plan Fallacy
The Crusoe Effect was what we saw take place under the Marshall Plan. The Marshall Plan is the economic aid rendered by the U.S. to war-devastated Western Europe in the 1940s and 1950s. The aid provided Europe with the material resources needed to successfully rebuild its economy and to resume growth. But the aid would have been squandered if managerial and entrepreneurial competence had been lacking there. The Marshall Plan would have failed in the same way that development aid has failed to meet expectations in today’s underdeveloped countries. Europe would simply not have been able to rebuild its economy so quickly back then, or to the level where it stands today.
A plan with the same intention, called Alliance for Progress, was implemented for Latin America by the U.S. in the 1970s. It did not work, and these countries remain persistently underdeveloped. The pervasive shortage of managerial and entrepreneurial competence precludes the Crusoe Effect from taking hold on a scale that will make development happen in a PUC.
Nevertheless, the lesson continues to be ignored that material aid and technical training are largely useless for development without the critical component of managerial and entrepreneurial competence. The success of the Marshall Plan is often portrayed as solely the result of financial and material assistance. So, we continue to hear intermittent calls for a Marshall Plan for Africa and others.
Without the means to systematically develop managerial and entrepreneurial skills in the workforce of these countries, calls for a Marshall Plan if enacted, will end in disappointment.
Samuel A. Odunsi, Sr.