Time, let alone change, waits for no-one. This is no more evident than in the recent trifecta of global summitry: the BRICS summit held in Kazan, Russia (Oct. 22-24); the APEC meeting in Lima, Peru (Nov. 16); and, most recently, the G20 in Rio de Janeiro, Brazil (Nov. 18-19).
The optics were one thing — as the saying goes, a picture is worth a thousand words. U.S. President Joe Biden was late to the group photos at both APEC and G20. At first, the attendees waited, but by the time the summit cavalcade got to Brazil, the willingness to wait for Biden (and Trudeau and Meloni) was exhausted.
Each of the summits ventilated concerns and aspirations, principally from the so-called Global South or global majority — concerns that the direction of global development was insufficiently inclusive and aspirations for a fairer, more inclusive and ecologically sustainable future. The failure of multiple decades of post-World War II institutions and policies to enable a more even pattern of economic development across the globe continued to cast a shadow over these multilateral summits.
Ever since the dissolution of the Soviet Union in 1991, the promise of the West was that a new era of peace and prosperity was within reach. Provided that nations abided by the prescriptions of Western-dominated institutions — what has become known as the “rules-based order” — economic development would surely follow.
The dominant discourse of modernization presented a singular narrative of how development could happen. The recipe was euphemistically described as the Washington Consensus and given academic gloss by the work of Daron Acamoglu, Simon Johnson and James Robinson (collectively dubbed AJR), claiming that Western democracy was the critical institutional ingredient for economic development. For their efforts, they were recently awarded the Nobel Prize in Economics, despite their work being criticized by an expansive and diverse body of scholarship as being simplistic, conceptually questionable, empirically fallacious and ultimately ideological in effect. Colonialism was whitewashed in this narrative, and there are significant case examples that falsify their core claims.
China is one of those cases. In the space of four decades, China has managed to break free of the shackles of poverty and underdevelopment. In that time, it has become the largest trading partner for more than 140 nations and a leader in various fields of technology and scientific endeavor. China is the world’s sole manufacturing superpower, contributing about 29 percent of total value-added manufacturing (2021). Household incomes have grown remarkably, rising sevenfold since 2012, together with literacy levels and health standards. Life expectancy in China today is among the highest in the world.
Its modernization was achieved without following the Washington Consensus recipe — ultimately to the chagrin of the American political establishment. China has worked its own model through ongoing processes of innovation and adaptation. By 2018, the U.S. establishment had concluded that decades of effort to change and mold China had failed. Beijing had — in the words of Kurt Campbell and Ely Ratner, in a Foreign Affairs article — “defied” America’s expectations.
While China extricated itself from the shackles of non-development, other nations around the world were less fortunate. Hamstrung by periodic balance of payments debt crises denominated in U.S. dollars, numerous nations were forced to seek liquidity support from the International Monetary Fund. Through the regime of conditional finance, the IMF enforced policy and institutional changes in borrower nations to align with the predilections of prevailing economic orthodoxy — i.e. the Washington Consensus. The results have been a disaster from a developmental point of view.
Studies have demonstrated that conditional IMF loans have impaired the efforts of developing nations to alleviate poverty. The loan programs have led to rising unemployment in borrower countries, according to a January 2023 study by Michael Chletsos and Andreas Sintos in the European Journal of Political Economy. Loan conditions have also required asset-stripping to fund loan repayment, undermining developing nations’ ability to achieve developmental sovereignty and protect people’s economic, social and cultural rights. Developing countries are not equitably represented in the governance mechanisms of either the IMF or World Bank. The United States retains veto powerover IMF decisions.
The institutions of global finance are not only out of step with the developmental aspirations of many countries but are in fact the cause of retarded development. As the voices of the global majority have remained sidelined in these institutions, as recognized by UN Secretary-General Antonio Gueterres on more than one occasion, countries of the Global South have been working on parallel, or complementary, institutions. That’s largely been the focus of BRICS and its New Development Bank. The Kazan Declaration meeting affirmed the collective commitment of member states to continue working toward expanding parallel financial institutions and systems.
The parlous state of global malnutrition and hunger also shows the failure of Western-led modernization and development theory and practice over the past few decades. Unsurprisingly, this was a key issue for President Luiz Inacio Lula da Silva of Brazil, as he laid out the core agenda items for this year’s G20.
According to a UN report, as of 2023 around 735 million people globally face hunger — a rise of 122 million since 2019. Almost 1 in 10 people around the world do not get enough to eat. In sub-Sahara Africa, 22.5 percent of the people have insufficient food; in South Asia, it’s 15.6 percent. And the situation is deteriorating. The launch of the Global Alliance Against Hunger and Poverty at the G20 in Brazil was a welcome development, though the challenge will be how good intent translates into outcomes.
Development also requires access to affordable and, increasingly, clean energy. Global macro data confirms the link between rising material conditions of living measured in production output and energy consumption. Historically, this pattern has come at an environmental cost. Nations adopted carbon dioxide emission reduction targets at the Paris Climate Accord in 2015, and the so-called clean energy transition necessarily occupies a large part of this ambition.
China’s emergence as a global leader in clean energy supply chains and technologies has brought significant domestic results, making clean energy available to global markets at ever-lower cost. Yet progress globally remains uneven. Further, long-standing equity concerns have dogged the resourcing of a clean energy transition in developing countries. Advanced nations continue to fail to meet their commitments of $100 billion in climate financing, according to Oxfam. More recently, the issue of a clean energy transition has been ensnared by geopolitics, with the European Union bemoaning the volume of Chinese exports of solar panels, wind turbines and electric vehicles and the incoming U.S. President, Donald Trump, claiming that climate change itself is a hoax.
But the issues of uneven development, global hunger and clean and affordable energy simply won’t go away. The legitimate aspirations of the global majority for opportunities to realize improvements in living standards have been amplified at recent multilateral summits. The chorus is getting stronger. The willingness of nations to find their own paths and not wait for the collective Western powers, gathers strength as the years go by.
The Washington Consensus has failed. Alternative pathways to development are possible, as demonstrated by China. As far as the developing world is concerned, global institutions are in need of an overhaul. Meanwhile, parallel and complementary institutions are being forged. Time and change wait for no one.