The New Realities by Peter Drucker

Author:Peter Drucker
Language: eng
Format: mobi, pdf
ISBN: 9780750619806
Publisher: Taylor and Francis
Published: 2012-08-20T14:00:00+00:00

10

The Paradoxes of Economic Development

Few people these days could imagine the excitement and enthusiasm when President Harry Truman committed the US to world-wide economic development in his 1950 Point Four speech. There was equal enthusiasm when ten years later President John F. Kennedy proclaimed the Alliance for Progress that was to pull Latin America out of poverty in a decade. President Kennedy’s picture still hangs on the walls of peasant huts from Mexico to Patagonia. Economic development – a term that had not even been in common use earlier – became the great exciting ‘discovery’! But as ‘everyone knows’ economic development has not worked. It is seen as a dismal failure.

Actually no earlier period in economic history saw as much economic development – and as large in scale and scope – as the forty years since President Truman’s Point Four. The key to this paradox is that the two sides – those who see failure and those who see success – look at two different things. One looks at what development was supposed to be – and it then has indeed been a failure. The other sees the development that no one expected but that actually did happen.

There is a second paradox and a new reality: the most popular and seemingly most successful of the policies that did work no longer do so. One – exporting to developed countries the products of low-wage but highly productive labour – requires that manufacturing in the developed countries be labour-intensive. It no longer is. Another – its nineteenth-century name is ‘infant industry protection’ – became counterproductive just when it had become most effective. It has become a root cause of the economic crises that now afflict the Third World countries which developed the fastest, such as Brazil and Mexico. It is grinding India’s industrial development to a standstill. And it is also at the bottom of the growing economic tensions between Japan and the West.

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