Perspectives on Development

Peters: It seems that we continue to define and refine our understanding of what sustainable development means and the models that characterize our approaches. Could you discuss this from your perspective, Professor Tay?

Tay: Your observation is right. We've moved from the initial idea of a take-off phase of development, focused on a major project -- sometimes a white elephant -- through a kind of overall economic model, and to a kind of structural approach focused on GDP (gross domestic product) per capita. But it is the Human Development Report of the UNDP (United Nations Development Program) and the concept of sustainable development that in an important way has refocused the way we look at development.

The keys to development, too, have come in for much rethinking. Since the Asian economic crisis beginning in 1997, the search has been on for new models and for new engines of growth, beyond capital input and exporting for development. We are now looking at things like innovation, use of technology, the idea of branding and design -- and how to tie these up with disparate goods and labor-intensive work, which continue to remain part of the necessity for many developing countries.

Mendis: Can you, Calestous, shed some light on development from your African perspectives?

Juma: I see the focus on technological and institutional innovation. The last decade has been characterized by efforts to stabilize the macroeconomic situation in Africa and to promote democratization.

The next phase should be devoted to looking critically at how to foster economic renewal. This will take two complementary approaches.

First, new policies will need to pay particular attention to the role of technological innovation, especially in promoting productivity in all sectors. This should be driven by the need to participate in the global economy and to meet human needs. Such a strategy will require greater investment in human resource development, especially in scientific and technical education with particular emphasis on the biological sciences.

The second part will involve innovations in institutions that can make it possible for science and technology to play a role in sustainable development. Of particular importance is the role of universities, which will need to become more entrepreneurial in the business, conservation, and social sectors.

Today, these institutions still focus on producing functionaries for the civil service and they lack the dynamism that is needed to enable them to serve as engines for sustainable development. New educational models are badly needed in Africa. A new generation of institutions of higher learning is urgently needed that combines research, training, and utility.

Peters: In the face of this change, do you think that there are people who still hold to the older models of the development process?

Tay: There certainly are. Their view is of a human development that is basically a very United Nations-centered type of global thinking. It is a view that has been very much divested by many of the private sector and public sector constituency.

Juma For Africa, the old view of the world has a stranglehold on the mindset of policymakers and academics. There are way too few institutions that are devoted to mapping out new directions for the continent. The field of strategic thinking and policy analysis is one of the least developed in Africa. Entrepreneurship is still a craft rather than an art. As a result, there are way too few genuine business schools that train people how to turn ideas into products and services.

Africa needs to start a genuine effort to reinvent institutions, including defining more clearly new roles of the public sector. Government has an important role of creating markets, and the blind downsizing of government has not helped the continent either. It is not the size of government that matters, but its functions and quality. Those concerned with good governance need to complement this with good diplomacy that uses international assistance to create a new leadership culture.

Peters: For many people, sustainable development is about environment, but you are talking about the concept in a different way. Where does the term sustainable development come from? Is it a product of the Rio Earth Summit?

Tay: Well, I suspect we should give credit where it's due. The term had already been used in some circles way before Rio, and even before the Brundtland Report ¹ there were people using the term.

But I think the Brundtland Report really put it on the map, and then the 1992 Rio Declaration, and documents associated with the summit really established the term among the world's governments. But I think that sustainable development remains very much a vision. We're still lacking an exact definition of what we mean by it. And in some ways the definition is still causing problems because of the compromises inherent in defining it.

Basically, there were global meetings before Rio, but I think Rio really was the summit attended by the most leaders. When you bring that many people together, and the amount of publicity attending that meeting -- you know, you establish a term, you take it out from the small circle of professors, people who know these things, and bring it into the public sphere. And I think that really established it. But as I said, while the term is established, the actual content of the term remains questioned and debated.

I think it's very contested. Many times when people in Asia and other countries talk about sustainable development, the emphasis is much more on development. I even hear people talk about sustainable growth, or sustained growth -- as if it were the same thing. It is not.

I think the idea of development requires us to look beyond the per capita GDP idea, and to really question the whole ambition of development -- what it is that they are trying to do. Do they want to make people rich? Put more money in their pockets? Or is that money supposed to be a way to do something else?

And I think in this sense -- a modern sense of freedom and development coming together -- then you are talking also about how development is supposed to be sustainable. I think what we're trying to do is suggest sort of a virtuous circle -- an activism in development that includes the little people, like women, children, the undereducated, the rural poor. And they will interact with the resources of development, which include the natural world, and then they have to work through the institutions of development -- the governments, but also the markets, the private sector -- all these things. And all this comes around in a sort of virtuous circle. It's uplifting.

Of course, this also means that our vision of sustainable development must include many more countries, continents, and societies in the world, rather than just the OECD (Organization for Economic Cooperation and Development).

Peters: I'm very captured by the term "virtuous circle." What does that mean?

Mendis: It contrasts with the "vicious circle of poverty" in development literature. The phrase "virtuous circle" is meant to improve on "the three pillars of human development" that the UNDP proposed: economic growth, social development, and environmental protection. These pillars are measured by per capita income level in terms of purchasing power parity, life expectancy, and literacy rate as elements of human development indexes.

Peters: So the new concept of sustainable development goes beyond per capita indexes and the calculus of economics?

Tay: Yes. We have to see that sustainable development, sustainability of it all, must be a social idea as well. There must be a more inclusive approach for the beneficiaries of the development process.

Juma: There is a strong case to be made for addressing "growth with equity." The concept of sustainable development as articulated by Brundtland is particularly strong on this. But more work needs to be done to figure out how to make it happen.

I would risk the suggestion that the most important starting point is not redistribution of wealth as such, but to redistribute human capabilities by providing quality education -- especially in the technical fields -- to a wider section of the population and particularly to women. For example, "women in science and technology" is today largely a clich��that needs to be translated into real programs.

Mendis: I agree. This is not only with women but also with under-represented minority groups as well.

In the history of development, we went from the infrastructure development approach of the Breton Woods institutions in the 1960s to the integrated rural development approach in the 1970s; then in the 1980s, the IMF (International Monetary Fund) and World Bank constructed a different program that led to the opening of economies in developing countries through Structural Adjustment Programs (SAPs). Now we are in the next stage, which began in the early 1990s with the Human Development Report by the UNDP, and which captured the essence of sustainable development with the confluence of the environmental community and UNEP (United Nations Environment Program).

The question is how all this fits into a model of global governance, transparency, openness, and rule of law in a market-driven open economy? Professor Tay, expand on that point-of-view from your own observations in Asia?

Tay: What I'm saying is not only have our concepts changed, but the engines of development and the beneficial actors have changed as well. In the earlier periods, the actors were very much the governments that provided the funds. We now recognize that while governments have a role obviously, the private sector -- I don't just mean the big multinationals, but the vibrant private sector including indigenous companies, small and medium-size enterprises, as well as foreign direct investment -- is critical in providing resources for development, in giving everyone a stake in society.

Juma: I agree that the private sector is the most effective way of translating knowledge into products and services.

It is critical for governments in Africa and other poor regions of the world to figure out how to create space for the emergence of private enterprises. Universities, for example, should serve as incubators for enterprises. They should nurture new enterprises just like they nurture students. Graduation ceremonies should honor students and enterprises alike.

Business and conservation plans should have the same standing as dissertations. Universities should set loan schemes for students, and professors should continue to advise students in their new business or conservation ventures. Business or conservation ventures should be intertwined with universities to form new institutional ecologies governed by rules about sharing profit, managing conflicts of interest, and promoting beneficial confluences. This is just one example of new ways that we can take advantage of new stakeholders.

Peters: I like that idea of stakeholders, because it obviously looks at them both as resources to be leveraged and as the beneficiaries.

Tay: Yes, stakeholders are beneficiaries. One of the key developments today is this connection to another troubled word: "globalization." Many people argue that globalization is necessarily harmful to development -- sustainable development -- as well as to the environment.

I don't think that's necessarily the case. I think we can get the right policies and the right execution so that we benefit from globalization. Singapore is an example of how this has been effectively achieved. Openness to the global economy does not necessarily mean the destruction of indigenous society or local environment.

Juma: There is fear of globalization. This is partly because many developing countries are not part of it; certainly this is the case with Africa. One of the reasons they are not part of it is because they have long been dependent on the export of raw materials and not finished goods. Their technological capability is still low and hence they are hardly competitive.

We must find ways to nurture these economies and to foster creativity and innovativeness by giving them a chance in the global market place. It is therefore important that the technology transfer provisions of the World Trade Organization's TRIPS (Trade Related Intellectual Property Rights) Agreement are implemented through the appropriate bilateral and multilateral channels. The more these countries participate in the global economy as exporters of industrial products, the more they will realize the benefits of globalization.

Africa is at a turning point. The old orders are not doing very well but the new have not been born. I see this as a unique opportunity for reinvention; probably the most important opportunity that the continent has had.

It is also an important moment for reeducation among industrialized countries. The hubris that has guided international development policies over the colonial and post-colonial period should give way to new ideas, especially those coming from Africa itself. The diversity of the continent is also an asset that allows for greater experimentation and increased chances of success. We should build on this diversity; not condemn it.

Tay: Yes, I think we can use these terms for people in all the developing regions. We must strongly emphasize the human development aspect, so that our people can have a reason to develop their skill sets to get a better life for themselves, and opportunities and the wherewithal to seize the opportunities for development.

Peters: There's a lot of talk about capacity building when talking about sustainable development. Does capacity building refer to just developing an educated populace? Are we talking about developing skill sets, or is there something that goes beyond that, when we talk about capacity building?

Juma: I use the term capacity building to mean three things: human resources development, organizational development, and institutional innovation. The first one is critical because individuals are a critical part of the system of economic change. But individuals must interact.

This is where the diversity, character, and dynamism of organizations become important. These elements provide the media through which human potential is transformed into goods and services.

Then there is the wider institutional context that includes rules, routines, and procedures. This is where the systems of governance must be strengthened for societies to function effectively.

Ultimately, institutions perform six key functions that are essential for societal evolution: reducing uncertainty by providing information and knowledge; providing incentives for adaptation and improvement; managing conflicts; promoting cooperation; allocating resources; and maintaining continuity.

Institutional dynamism is influenced largely by the interactions between continuity and adaptation. This approach reveals that capacity building is a more complex theme than is usually portrayed. We are in a phase where this term has been vulgarized and reduced to the level of petty activities involving seminars and workshops. And clearly, it is more than just education.

Tay: But the question about education is a critical one. We mustn't assume that everyone is getting the education they need. If you look at some of the schools of developing countries, they are overwhelmed. They don't have the facilities to cope with the vast number of young.

If you look at the quality of education some countries are providing, you may also be quite concerned. There is no money for technical or job-related education, to do a lab, or to do a workshop. Part of capacity building to me is developing a formal education process and making it something that can help a person find a place in the world. Oftentimes you will find very well-educated people who don't have that capacity, that experience, or the particular skills that the market needs or wants.

Mendis: That's true. Well-educated people are forced into choosing between unemployment and leaving their countries -- contributing to the brain drain. Or, their hopelessness may translate into them becoming a destructive force as we have seen in some developing countries.

Tay: They become a loss for their country -- maybe a temporary loss only, but certainly a loss. If you look at, say, Silicon Valley -- if you look at the number of Asians there -- and then you wonder, why is it that Asia doesn't have its own Silicon Valley? Why should qualified and educated people have to go to America to find an opportunity? We can make capital of them if we have the right policies. All these factors must come into play for countries to really have the capacity to use their own people.

Juma: This is an important point that reinforces the need to look critically at the kind of education provided by countries and opportunities that the government creates for the effective use of such capabilities.

There are a number of countries where universities place a great emphasis on training people in the social sciences with emphasis on social critique. This is what they do after they graduate. It should not surprise us that some of these countries also remain in constant states of political instability.

But I can think of a different form of critique -- inventive activity. Every improvement on an existing product is a form of creative critique. Patents are statements about existing products. Each patent says that the job can be done better in an improved way. This kind of critique is equally destabilizing, but it is creative market instability, which is the essence of growth.

This is the lesson we learned from Schumpeter's ² logic of creative destruction. Thus, we see that we need innovations in political and economic systems.

Peters: How do you get the right conditions for this kind of dynamic growth? Is that part of the role of government, or does it go beyond that?

Tay: I think that clearly governments -- particularly in developing countries -- will have to play an important role. They have to figure out what their possible competitive advantages are, what their possible niches are in a globalized world economy.

For these countries, that's a policy that will remain much more important than it has been for, say, the United States. I hope it doesn't come to picking winners and making cronies out of certain companies, but I think the idea of finding a key sector is important. If you're in southern India, you have a certain strength in information technology in the people -- you have the infrastructure. You must think about what you do with that, what you add on to that.

If you are in Shanghai, then what are the strengths you can offer? If you're on mainland China, what are the strengths you can offer?

I think these are all questions that the national and local governments must look at when they think about development and sustainable development.

Juma: I see a lot of possibilities in combining advances in information technology with advances in genomics to create new market niches for developing countries, especially building on their natural resource base. This is an avenue we should certainly explore in Africa. These opportunities exist in industrial, environmental, agricultural, and medical biotechnology.

Mendis: But all of this is going to take money, and for many development experts that means Official Development Assistance (ODA). There's a big debate in the United States on that, whether we want to promote ODA or do we want to help promote trade? What is your view on this?

Tay: I think it's not a question of do we use ODA all the time or do we just rely on trade all the time. It's a more complex issue. In China, for example, you can have a very developed Shanghai, but you may have rural development that very much needs ODA.

I would suggest also that we have to ask ourselves how accurately developed countries understand how much they are giving in ODA. My impression is that Americans think they're giving, I don't know, 5.0 percent of GDP or whatever, but really it is between 0.3 and 0.4 percent.

Juma: I think that ODA should be restructured so that it serves as an incentive for leveraging local resources and change. It should serve as a challenge. In the past, ODA served as a reward for adopting certain positions in the context of the Cold War. This period is over.

We need new models that reward creativity. We need approaches that promote innovative cultures. ODA should help to underwrite local institutional experiments, not a career of misplaced practices. ODA should help local people take risks. It should be used to support innovations, not standard activities.

And above all, ODA should focus on supporting activities that have long time frames. Less funding over longer periods is more useful than more money over shorter time frames.

Tay: There is an important role for ODA, and more is needed. But there has been a lot of shameful waste of ODA -- a lot of white elephants, a lot of corruption, and a lot of mismanaged projects -- which don't help to make an argument for more ODA.

And we have to look beyond ODA. Governments can give ODA, but what can other people do? There are so many times that companies can do the right thing. Companies can invest well, they can train local populations, they can transfer knowledge, they can help with marketing techniques, and they can help develop local suppliers -- all without harming the bottom line and while making a profit. They can observe a development bottom line.

Juma: The issue may not be the magnitude of ODA, but its character, quality, and objectives. This is what we need to focus on.

For Africa, the largest gap in any field lies in the area of institutional innovation. This is where ODA should contribute. Paradoxically, donors have always been reluctant to support institutional development and have remained in favor of project activities. This should change.

Mendis: The choices are not only trade or ODA. Singapore has a high level of science and technology development compared to other neighboring countries. How much importance do you put on intellectual property rights as an incentive for further economic development?

Tay: The way I see it is that Singapore has made a transition. Like many developing countries, in an earlier period we were sort of a pirates' haven. You could get these fake watches off the street, free software when you bought a computer. But I think that, because of the pressure of America as our largest trading partner and because of the development of our own innovation and intellectual property, that has changed quite dramatically.

Peters: So Singapore has a growing stake in the protection of intellectual property rights?

Tay: Yes. One of the challenges of intellectual property is for the countries that have great promise for the future development of their biological resources -- some of those African countries that Dr. Juma mentioned. Some intellectual property provisions would allow foreign companies to make an exclusive property out of what would otherwise be a resource for a local company or a communal resource. We don't want to authenticate bio-piracy. I don't think we should be in the position of allowing a foreign company to come in, refine something a bit, put their stamp on it, and say, "Well, it's ours and only ours."

We must respect the rights of the indigenous person or the local community. This is an ongoing debate, especially here in Asia. We did see progress with the agreement of pharmaceutical companies to lower the prices for HIV/AIDS medicine. This seems to me the start of something bigger.

Juma: Let's look at the situation in Africa. I think that these countries badly need intellectual property institutions. But the focus should be on promoting inventive activity, in addition to protecting intellectual property rights. The objectives of the Kenyan Industrial Property Act first adopted in 1989 provide a good example.

Patent offices that seek to promote inventive activity will also help these societies figure out how to make use of technologies that are already in the public domain. This way there will be less political pressure to get stuck on the presumed impacts of the protection of intellectual property rights.

As countries move up the inventive ladder and start to add their own patents, they will start to appreciate the importance of intellectual property protection. But I would caution against using a standard model law for developing countries.

I would go further and say that each country needs separate laws and institutions that promote innovation along the lines of the draft law that is now being discussed in Brazil. Going along this path will also be in line with the results of the 2001 World Trade Organization Ministerial Meeting in Doha in relation to technology transfer.

Peters: The WTO meeting in Doha was hailed by many as an important success. What do you think the chances are that the World Summit on Sustainable Development in Johannesburg will be viewed in a similar favorable light?

Tay: Actually, I'm not sure what the outcome will be. I'm not optimistic about a strong outcome. What I hope is that we will see some commitment on the part of developed countries to re-examine what I would call the real bargains and to offer some genuine technical, financial capacity building and to help developing countries address their own domestic issues, as well as the global issues.

We also need to do simple practical things such as instill greater confluence and coordination between international institutions. Because one of the chief problems is that when we talk about sustainable development of environment, we have broadened the conception -- both of the environment for protection as well as the idea of development.

Juma: The WSSD should have three main outcomes. First, there should be a short declaratory statement that confirms the concept of "sustainable development" as a central theme for advancing the goals of the United Nations. This should build on the language already provided in the Millennium Declaration.

Second, there should be a clear decision strengthening "sustainable development governance" in the United Nations. This could include the recognition of the Economic and Social Council as a council for sustainable development, with the Department for Economic and Social Affairs serving as the department for sustainable development. Sustainable development conventions should be directly linked to the department of sustainable development. The various programs and funds of the UN should report to the sustainable development council.

The UN Commission on Science and Technology for Development will need to be strengthened, and measures for effective science and technology advice on sustainable development must be provided.

Regional economic commissions should assume the logical role of being regional sustainable development commissions with their own structures that are analogous to the department of sustainable development. They should also produce sustainable development reports. Finally, the United Nations Deputy Secretary-General should have the responsibility of coordinating with the heads of organizations such as WTO, IMF, and the World Bank.

With these proposals, it would be possible to strengthen sustainable development governance without creating new structures. The structure of these organizations may need additional human resource competence but the United Nations is diverse enough to adapt to new developments without requiring new organizations. This should also bring to a close the futile claim that we need a new World or Global Environment Organization to address environmental issues.

The final set of outcomes should focus on alliances or partnerships for sustainability, and so WSSD should serve as a platform for global sustainability learning. All in all, WSSD should look like a hybrid between the UN General Assembly and the World Economic Forum.

Mendis: There have been some attempts to have a closer coordination between international organizations like UNEP and WTO to try to address the connection between environment, development, and trade -- for example, the WTO Committee on Trade and Environment.

Tay: But who's in charge? The WTO refuses, almost blatantly, to talk about sustainable development in a meaningful way. They think they are a trade organization. The IMF, the World Bank -- these are the "development organizations." Then we have the organizations that look at the environment.

So, these sets of institutions -- not a single government -- will need to achieve much more dialogue among them, and those which are considerably weaker, like UNEP and the International Labor Organization (ILO), may need some strengthening in order to have a place at the table where these bigger international issues are.

Peters: Do you think that the role for defining the balance between these organizations lies with the cohort of international actors, or is it the responsibility of countries and actors within countries?

Tay: There must be assistance from the outside, but the actors should be national and local. There is an appropriate role for assistance from both the developed countries and international institutions. Otherwise, we are leaning too much on people who have too little. The resources among the developing countries are not thick. They are thin.

If we want to emphasize with the international organizations the trade, the globalization we are always talking about, then the international organizations must also have the right frameworks to address these initiatives at the national level.

Juma: The talk about cooperation among the various agencies is sometimes misplaced. These organizations need to do more within their own mandates before they can find meaningful avenues for cooperation.

UNEP, for example, has done way too little in helping to develop technical standards and norms that could help to strengthen work in the trade regimes. Its current preoccupation with governance is a poor substitute for the urgent work that needs to be done at the technical level.

Indeed, technical issues such as standards are powerful governance tools. This is partly why markets are self-organizing; they do so through wide networks of standards that guide corporate behavior. This is what many are describing when they refer to the "rules of the game." UNEP needs to do more in this field as do multilateral environmental and sustainable development conventions.

The WTO, on the other hand, needs to do more under its Committee on Trade and Environment.

It is through the strengthened efforts in these bodies that we will find more areas of mutual cooperation and the creation of a more stable and robust international institutional ecology. Global sustainable governance will be strengthened through such self-organization and not through outmoded approaches that emphasize conflict and juxtaposition between trade and environment.

Discussions about "sustainable development" can be futile and frustrating. We must define our areas of action, as we have been doing in this conversation.

I think that the critical turning point is in the Brundtland Report, especially in its emphasis on the revival of growth and the need to rethink its quality and direction. What is particularly important in this case is the emphasis on human ingenuity as expressed in technological and institutional innovation. This is what is most enduring in the Brundtland Report and what has been lacking in the follow-up to the Rio Conference. This is the legacy that WSSD should build on.

Countries like the United States reward innovation and creativity and lead in the world of science and technology; they are better positioned to contribute significantly to the improvement of the human condition in the developing world.

We are entering what could be called innovation-based development where the United States and other developed nations have a competitive advantage over other nations. Technological and institutional innovation should become the crucible of America's international development policy. There are many other countries that are tilting in this direction and they can benefit from decisive leadership from the United States.

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