This is a genuine request as opposed to ‘oh yeah, prove it’ … can you supply a few other sources that substantiate this high-pressure salesmanship story? I’d love to read them. (I ought to read Perkins’ book too – I have a bunch of other development industry ‘insider’s stories’ sat in my Amazon queue).

my tuppence: I would think poor countries can end up getting in a lot of trouble via debt funded development projects, even if those projects are sincere attempts to help, just if these projects fail to result in an eventual increase in tax revenues, as would be needed to repay the debt (either because the project itself doesn’t produce the return or because the infrastructure to capture the return via taxation does not exist). You can even ascribe this to do-gooding development lenders not being hard-nosed enough about returns (i.e. they lend where a commercial lender would not) – it doesn’t have to be about money grubbing bastards (although I don’t doubt that goes on too).

Um ok. The fact that when debt forgiveness has taken place, many of the forgiven have promptly gotten themselves back in debt suggests that there’s a lot of causality going from bad governance to debt. The reverse channel might be there but governance surely has an important and independent role to play.

I’m only sorry for all the poor Italians that bought Argentine debt retail.

whereas in the neoliberal era when they were paying a huge interest bill, the Argentine economy was completely insulated from commodity price shocks? The fact that they’ve now had seven years of strong growth which would otherwise have been a pretty nasty depression is quite important in and of itself.

Personally I find Kirchner quite a buffoon but opinions differ. Argentines are happy now because the economy is better but if commodity prices take a turn down opinions will change pretty quickly.

I do think that underdevelopment is in considerable part the result of rich countries’ control of the global economy and world politics, and that over the last 60 years seemingly well-meaning attempts to help the third world didn’t always help, in part because various players were doing some looting and otherwise fulfilling their won agendas.

Don’t assume this. China has something more to offer investors than raw materials and labor and they use this to their advantage. If a foreign company wants to do business in China, they do so by China’s rules. The Chinese are leveraging access to their enormous markets to develop their economy. The increasing wealth generated by domestic economic development increases the value of market access. I didn’t see this factor addressed in Daniel’s post, and it’s antithetical to Chomskyite thinking.

And, yes Seth, this is government policy, but policy alone can’t produce wealth.

China and India ran protectionist economies for decades. Only defensive nationalism protected them from the vagaries of the “free” market. The creation of a middle class in China and India are the result of government policy.

In other words the return on the investment depends more upon increasing affluence of the domestic population than on exploiting their resources or labor. This is a completely different strategy than any of the Chomskyite variations.

Rich countries are rich for many different reasons, but I don’t think there is any doubt that they exploit poor countries – their natural resources and their labor.

As far as workers in rich countries being productive and trading with other countries, that is not a very convincing explanation. Workers in rich countries mostly produce services (for each other) and they typically consume much more stuff (real, industrial stuff) than they produce.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

Poor countries are, at the end of the day, poor. That means they are a relatively small part of the economic universe of rich countries.

In the same way, I guess, that slaves in the US South were poor, meaning that they were a relatively small part of the economic universe of the South.

Regurgitated dogma about the wonders of Trade is no substitute for making sense.

Poor countries are, at the end of the day, poor. That means they are a relatively small part of the economic universe of rich countries. It has been documented plenty of times before that the vast majority of global trade is between rich countries. And in the two greatest development successes of my lifetime, China and India have started trading more with the rest of the world… and they’re developing and getting richer. And before them, Japan and Four Asian Tigers followed that path.

Rich countries aren’t rich because they exploit poor countries. They’re rich because workers are productive in rich countries. And part of the reason workers productive is that there are formal and informal institutions and frameworks that help those workers become more productive by trading with other countries (selling the widgets they make globally instead of locally, for example). In fact, I’d argue that the poverty of poor countries makes rich countries poorer (not richer) – since it means that there are fewer opportunities for mutually beneficial trading.

I’m not going to argue that there aren’t individual people in rich countries who benefit from exploiting poor countries (of course there are). And I even probably agree that such people have too much influence on rich country development policy. But the important point is that these machinations, in the time-honored tradition of many other scam artists, make rich countries poorer, not richer. And believing otherwise is nutty.