Bad Samaritans: How Rich Country "Help" Hurts the Developing World: The Bad Samaritans Think That They Are Helping the Developing Countries, but They Are Actually Harming Them

Article excerpt

An Interview with Ha-Joon Chang

Ha-Joon Chang is a professor of economics at the University of Cambridge and the author of Bad Samaritans: Rich Nations, Poor Policies and the Threat to the Developing World (2007). He has consulted for various international agencies, including the United Nations, the World Bank and the Asian Development Bank. Chang is also a fellow at the Washington, D.C.-based Center for Economic and Policy Research. He is also the author of Kicking Away the Ladder: Development Strategy in Historical Perspective (2003), which won the 2003 Gunnar Myrdal Prize.

Multinational Monitor: What is a Bad Samaritan?

Ha-Joon Chang: By Bad Samaritan I mean the rich countries and the international organizations, like the IMF [International Monetary Fund], World Bank and the WTO [World Trade Organization], that are controlled by these rich countries, which collectively recommend or sometimes even impose policies that are supposed to help developing countries. These policies have never been used by the rich countries themselves, nor have they produced satisfactory results in other developing countries. The Bad Samaritans think that they are helping the developing countries, but they are actually harming them.

MM: What is a thumbnail sketch of the Bad Samaritans" recommendations?

Chang: They have a very strong belief in the market. They say the government should minimize its involvement in the economy and adopt a free trade, free market policy. The government should impose the basic rules of the game and protect the value of the currency by keeping inflation low; the rest will basically be done by the market and the private sector. So they recommend free trade; they recommend that the government not impose any restrictions on foreign investment; they recommend privatization of state-owned enterprises; they recommend very strong anti-inflation macroeconomic policy. These are known as neoliberal or Washington Consensus policies. They are based on a strong belief that the market, if left to itself, will produce the best economic outcome.

MM: In July, WTO Members met in Geneva to negotiate something called the Doha Development Round. The core of the deal under discussion was that rich countries would open up their markets for agriculture in exchange for developing countries opening up their manufacturing markets. What's your take on that kind of exchange?

Chang: First of all, the rich countries have repeatedly broken their promises when it comes to opening up their agriculture markets. Even if this agreement had come together, I would have wanted to see whether they actually delivered.

Second, the winners in the deal would have been producers in rich countries that export agriculture, like the United States, Australia, New Zealand and Canada, and only a few developing countries that export so-called temperate products like wheat and beef; countries like Brazil, Argentina and Uruguay. Most of the other developing countries would either not have benefited very much or may even have been hurt somewhat in this process. For example, some developing countries are net food importers and import subsidized European and American food stuffs. In the long run it might be good for Americans and Europeans not to subsidize their food, but during the transition period, it means that all of these countries are going to get access to less or more expensive food.

Third, the deal suggested that the poor countries should remain agricultural forever. The deal was that in order to receive agricultural concessions, the developing countries basically would have to abolish their industrial tariffs and other means to promote industrialization. That means the current division of labor would be frozen and the poor countries would not be able to industrialize. Unless they are extremely lucky countries with oil or some kind of rich soil condition enabling them to live comfortably on agriculture, it means that they would remain poor forever. …