Reclaiming development: using industrial policies to create more and better jobs

Thursday, March 17, 2016 - 14:37

ActionAid’s new report explores how industrialisation can drive the creation of more and better jobs. The report comes at a crucial time, when policy makers around the world are coming to realise once again the need for industrial policies that focus on generation of good quality employment. This shift is badly needed, because that policy focus had been lost for almost a generation, to the serious detriment of the development project in many countries.

Sometime around the 1980s, economists stopped talking about development economics, the process of structural transformation that generates value and helps to lift the workforce out of low-paying activities. Instead, the focus was on “poverty alleviation”, which in turn was based on a very limited view of what poverty is or how it is generated. In such discussions, typically no link is even hinted at between the enrichment of some and the impoverishment of others, as if the rich and the poor somehow inhabit different social worlds with no economic interdependence at all, and the rich do not rely upon the labour of the poor.

But we know that the processes of wealth creation and impoverishment can be closely related. To take only one example, a significant part of the economic boom experienced in India was related to the ability of the rich and powerful to take advantage of gender, caste and ethnic discrimination to pay workers very low wages and exploit resources by displacing people with no political voice from their lands and sources of livelihood.

These silences enable a rather two-dimensional view of the poor, who are given the dignity of being treated as subjects with independent decision-making power but apparently inhabit a world in which their poverty is unrelated to a wider social, political and economic context and is more a result of their own particular circumstance and their own often flawed judgments.

This shuttered vision that looks at poverty in isolation from broader economic processes is particularly evident in the neglect of the international dimension in such analyses. There are many ways in which global economic processes and rules impinge on the ability of states in less developed countries to even attempt economic diversification and fulfilment of the social and economic rights of their citizens.

Unfortunately, this is still not adequately recognised in the global discourse. The recently adopted Sustainable Development Goals recognise the importance of economic diversification and job creation, but are completely silent on the ways that the international architecture prevents countries from achieving these goals.

So this is the moment to think about alternatives. Governments need to generate more bargaining power vis-a-vis investors and to insist on retaining value within their economies. They need to act in solidarity with others, developing regional arrangements to enforce minimum wages and workers’ rights, so that investors cannot say that they will simply move to the next country if these provisions are enforced.

In this report ActionAid have provided a rich, comprehensive and remarkably accessible overview of debates about economic transformation. Perhaps more importantly, they have started to fill a gap in thinking and practice about how to do this in a way that respects human rights and creates decent and dignified jobs. I hope that this report starts and stimulates a lively discussion about the models of development we really want to see in the future.

Jayati Ghosh is one of the world's leading economists. She is professor of economics at Jawaharlal Nehru university, New Delhi, and the executive secretary of International Development Economics Associates (Ideas). She is a regular columnist for several Indian journals and newspapers, a member of the National Knowledge Commission advising the prime minister of India, and is closely involved with a range of progressive organisations and social movements. She is co-recipient of the International Labour Organisation's 2010 Decent Work Research prize.