Is DFID rowing back from the centrality of the Asia model of economic development?

by 30th Jul 2018
Woman employed in the construction industry in Cambodia. Woman employed in the construction industry in Cambodia.

As previously noted, the House of Commons Select Committee on International Development (IDC) has just published its report on DFID’s economic development strategy. In my earlier blog, I characterised the report as “lacking punch, misunderstanding gender but with some positives”. I want to highlight here one positive (as I see it), yet many of you might see it as a strange positive: DFID appear to be rowing back on the centrality of the ‘Asia model’ to their economic development strategy.

The Asia model is the view that Africa can follow the path set out by the ‘East Asia Tigers’ of Japan, Korea, China, Singapore etc. of throwing open their markets, engaging in global value chains and using export growth to drive industrialisation and an enormous growth in jobs, leading to development.

A number of people have been sceptical of the likelihood of this Asia model working in sub-Saharan Africa. As ICAI wrote: “There are concerns among some stakeholders and in the literature about the extent to which the Asia model of mass job creation through industrialisation can be replicated in Africa. DFID will need to be realistic about the pace of change and open to the idea that job creation in Africa may take different forms, including a higher level of informality”.

The basic economic development concerns include:

In other words, there is scepticism about DFID investment in a model that looks unlikely to work, even in relatively favoured nations looks VERY unlikely to work in the fragile states where increasingly the world’s poorest people live, and even if it does work at the level of national economic development, looks like it will not reach the poorest people.

However, it seems fair to say that the Asia model has been central to DFID’s economic development strategy (although it was more explicit in DFID’s earlier economic development strategy framework).

Now however, the IDC report (on page 19) says: ”DFID were very candid in their acknowledgement of this [the ICAI criticism]. Melinda Bohannon, Head of Growth and Resilience recognised that the impact of automation on low skilled labour was an unknown but economic trends were suggesting it could be very high. This meant that DFID’s current economic transformation plans were potentially at risk. [emphasis added] DFID was watching these trends very carefully and at the same time considering the opportunities of the e-economy which could allow for ‘leapfrogging’ into new technologies.”

So DFID now thinks that its view of the route to economic transformation may now not work. Well, as I have said above, I have always been sceptical of it. But what is interesting is that DFID are taking the topic of mass automation as the reason that they now see their economic transformation plans at risk.

It is worth remembering that the DFID economic development strategy was published in January 2017. The discussion about the impact of automation on jobs was already well under way by then (see for instance, a special report in The Economist June 2016).

So the worry about the impact of automation on DFID’s approach to economic transformation seems a bit disingenuous to me. Instead, I wonder if the always rather shaky foundations of the approach are becoming a bit more apparent in DFID country offices, and the views of a different Secretary of State have allowed a few alarm bells to ring, with DFID then hopefully rowing back from the suitability of the Asia model in Africa?

Gerry Boyle

I lead CARE International UK’s policy analysis and advocacy around value chains and dignified work. I originally joined CARE as the Senior Policy Adviser on Private Sector Engagement. With the advent of our new Global Programme Strategy which put a particular emphasis on women’s economic empowerment, my focus changed a little, although I still work extensively with issues in the private sector and with CARE’s corporate partners.

Until recently I spent a lot of my time on financial inclusion, now looked after by my colleague Fiona Jarden. I also co-chair the Bond Private Sector Working Group.  Immediately before I joined CARE I worked for Oxfam as Head of Business Relations for about three years, but the vast majority of my career was spent as a management consultant including being a consulting Partner at Deloitte, where for a time I led Deloitte UK’s Consumer Business consulting practice, serving many major multinationals. My original degree was in Law from Oxford University, and in 2008 when I left Deloitte I did an MSc in Philosophy and Public Policy at LSE.

One good thing I've read

Amartya Sen’s Development as Freedom. It provides a framework for many people’s modern understanding of what is development, based on a profoundly human-centred approach rather than anything instrumental. And to check whether one personally is doing enough to fight poverty, I recommend Peter Singer’s The life you can save: Acting now to end world poverty – it’s very clear and easy to read but very challenging! Finally, Ha-Joon Chang’s Bad Samaritans: Rich nations, poor policies, and the threat to the developing world is a very readable guide to economic development which argues strongly against many of the prevailing orthodoxies.

Email: boyle@careinternational.org

Twitter: @gerryboyle10