“We are at a point in history where we need to rethink the assumptions,” said STIAS Permanent Fellow Ian Goldin of the Oxford Martin School, University of Oxford. “The development paradigm needs to be re-examined. It’s unfit for purpose. We need fundamental change. But, we need to think differently. Cities, states, companies, movements and individuals have power now. It’s a different game to change the world.”
“The model of economic development which evolved in the post-War period is being challenged,” he explained. “The East Asian development trajectory cannot be replicated and it is not yet clear what other pathways will be feasible for the majority of African, South Asian and other low-income countries. Technological change, combined with shifts in patterns of consumption and supply chains have reduced employment-generating opportunities and are removing the middle rungs of the development ladder. The implications are particularly severe for Africa, where demographic trends demand a rapid rise in employment opportunities. Climate change and environmental destruction, in addition to demanding a sustainable and fossil-free development model, is limiting rural options and simultaneously poses great risks for both inland and coastal towns and cities. Meanwhile, COVID-19 has undermined government institutional and budgetary capacity, accelerated the democratic recession and laid bare the dwindling international solidarity with developing countries. The pandemic and environmental risks reflect a broader trend in the rise of systemic risk which is exacerbating inequalities within and between countries. This is undermining social cohesion and polarising national and geopolitical relations.”
In a wide-ranging seminar Goldin presented data and ideas stressing the challenges and exploring why existing development paradigms no longer work. He highlighted the need for research that identifies how development and the management of systemic risks can be advanced in an increasingly complex and fragile world, and explained the basis of a new five-year programme at the Oxford Martin School looking at how we reach a future of shared prosperity and economic justice.
“I’m thinking about the future,” he said. “What we need to learn. Unless we grasp the complexity of the changes we won’t be able to handle our own lives and those of our families, communities, societies.”
The good, bad and ugly
Starting with an image of the fall of the Berlin Wall in 1989, Goldin pointed to the massive changes experienced since then – over 30 new countries; 50 elections in the five years after the wall fell; hugely increased flows of goods, services and people across borders; increasing life expectancy and declining illiteracy; the rise of China and growth of new markets in the East; technological developments, hyper-connectivity, increased knowledge generation; and, the ability of ideas and movements to cross borders and time.
“Developing countries dominate – 7 out of ten of the top economies are now emerging markets,” he said. “By 2030 only 2 or 3 of the old economies will be in the top ten.”
However, amidst the good, have been equally negative consequences.
“Sub-Saharan Africa, parts of South-East Asia and Latin America have not done well,” he said. “In South Africa about 70% of people in their 20s are unemployed.”
There is also widening inequality within and between countries.
“There has been a rapid increase in inequality particularly since the 2008 financial crisis. Extreme inequality is rising everywhere.” he said. “Inequality is an outcome of globalisation with offshoring and tax havens a major source of lost revenue for governments.”
Even the seemingly good outcomes like reduced fertility have some less-predictable consequences.
Goldin explained that there has been a collapse in fertility in many countries – including many in Africa, Latin America and Asia. The cause is multifactorial including education transformation, the availability of contraception, technology, and the rising cost of living versus the benefits of having children. Population pyramids are changing shape with a rapidly aging populations in many parts of the world (although the situation in southern Africa is unusual due to the deaths from HIV/AIDS). Collapsing fertility has huge implications on the workforce (it’s estimated that China will have 4 million less workers this year) and also adds an increasing burden of sustaining the elderly – especially women who outlive men.
Turning to climate change, he pointed to a problem largely created by the rich countries that will have a big impact on the developing world. “We have looked at how to show this in data – lights at night is one. New York State consumes more energy than the whole of Sub-Saharan Africa.”
“Pollution is now a much bigger killer than deaths from crime almost everywhere in the world,” he added.
“China is now double the US in terms of emissions. If we look at emissions per capita – South Africa is an outlier with highest level amongst developing countries.”
“Seaboard cities have the greatest economic growth potential and are central to development prospects but they are highly vulnerable due to rising sea levels.”
He also highlighted the vulnerability of the food system. “In Africa there are reduced growing seasons but also the immediate devastating impact of that one hailstorm, windstorm, or extreme temperature fluctuation. This means more nutritional deficiencies which means slower educational progress.”
“Nature doesn’t respond to market forces – it can’t immediately replenish what we take away. Climate change is an urgent emergency. We know the answers – the science is clear – stop fossil-fuel emissions, re-forest – but we don’t seem to know how to get there.”
Focusing on technology, he described it as “a huge disruptor, a force for good or bad. We’ve seen, for example, how health technology can prolong life but also that AI and robotics eliminate jobs especially low-skill ones which is particularly disadvantageous to developing economies.”
Reverberating shocks – a world unstuck
Turning to the last two years, Goldin pointed to the heightened impact on all of this due to COVID-19.
“The pandemic cuts across all these forces,” he said. “An estimated 140 million people have become desperately poor in the past two years, there has been a major reversal in many advances, money to spend is limited, sectors have collapsed. We need to worry about sustainability.”
“The pandemic was predictable although not the source or timing. I’ve been banging on about it for ten years. The intensity of human and animal habitation – particularly near airport hubs – created a pressure cooker for a pandemic.”
“We’ve had many pandemics – the Black Death killed up to 50% of the population,” he said. “But the speed, pace and global extent of COVID-19 is new.”
“We have also failed to grasp what’s going on. Systems are unravelling globally, governments are becoming overwhelmed, many international organisations are no longer credible players. Increasing complexity has led to increasing instability. Countries are like cabins on an ocean liner who don’t understand that we have a shared destination and so must agree on the navigation of our voyage.”
“A key challenge is managing our common resources – for example, plastics are good to have but not if they pollute the oceans; antibiotics and antimicrobials save lives but if overused they will have no effect in the future.”
In discussion, he pointed to the need for regulation to manage the power of technology particularly platforms; the need for Africa to learn from successful continental models; the future role of global institutions as creative, problem-solving coalitions; the potential to reduce inequality by regulation, tax and incentives; and, the future of democracy.
“Inequality is mostly about the wealthiest 1%, in some countries 0,1%, of individuals and companies paying less tax. It’s a question of what you tax and how you do it. This is a big problem but doesn’t affect that many people.”
“In the last 20 years we have seen a subversion of democracy – examples include Zuma in South Africa and Putin in Russia. But social democracy is not dead. The recession of democracy reflects political tensions not people’s will. They are losing faith – we have to ask how democracies deliver what people want. Equally I think the communist party in China will survive because growth is at 6%, and for the past 40 years income doubled about every ten years.”
“Technology is not a leveller. It’s a tool and requires policies to manage it. AI and robotics mean job loss but, equally, free people to do things humans are good at – the arts, things requiring empathy, creativity.”
He concluded on a hopeful note:
“I am optimistic. Despite the desperate tragedy, the pandemic has unveiled new ways of doing things at the level of individual behaviour, at government level, and in our understanding of science and technology.”
“A similar thing happened during World War 2 when leaders like Churchill were forced to tear up the rule books to create a vision for a new world order. Their ideas were radical and I think we are at that moment again in history.”
“The world is no longer run by cigar-smoking, old, white men,” he added. “Diversity has energised everything. There are more partners with increased powers. There is lots more genius in the world, more teams, sparks and creativity. People coming together in new ways to do new things. This is happening at warp speed.”
“I’m hopeful because of movements like #MeToo, Black Lives Matter and young people like environmental activist Greta Thunberg. Individuals have the power to change consciousness and shape the world in ways that were unimaginable and unthinkable before. The energy of people wanting a better world is greater than ever. It’s now a battle of ideas. If we don’t join in, we will definitely lose.”
Michelle Galloway: Part-time media officer at STIAS
Photograph: Anton Jordaan