Development can be understood as an activity, a condition, an event, or a process. In natural science, it unfolds according to principles that humans do not control, but in social science, development is entirely the product of human decisions. Economic development is the subject of this essay: it can be understood as a very complex set of institutional activities that employ public and private assets to enhance the wealth and well-being of an entire population. Its institutions span the gamut, including families, communities, firms, media, governments, political parties, NGOs, and agencies and associations of many kinds. Development is a reflexive process, wherein policies, institutions, outcomes and analysis interact. It is distinct from its many objects of theory and measurement, such as economic growth. The process of development cannot be reduced to any specific set of policy goals, empirical trends, or normative statements, for it includes the definition of goals, setting of priorities, choice of policies, critical reflection, debate, relationships among people who decide what trends are important, and political efforts to change the direction of policy.

What appears to be objectively true about development at any moment in time is the product of debate, selection and erasure. Mainstream and dissenting opinions acquire empirical veracity as their contending forces generate and deploy appropriate data. The result is a vast literature on all varieties of development, using various yardsticks. In economic development, for instance, the aggregate increase in national wealth is a common measure of progress but national autonomy, food security, equity, poverty reduction, and social stability are typically important policy priorities. A state’s stability, revenue, military might, and cultural legitimacy may actually preoccupy development policy practice more than economic indicators. Contending forces conditioning development jostle for influence in policy practice and use various measures of success to bolster their positions in development debates.

Economics and Economies

The objective, scientific nature of economic development seems secure at first sight, but that appearance is deceptive. There is, most fundamentally, a definitive difference between ‘the economy’ and any particular ‘economy’. The ‘economy’ studied by economics consists of various elements and mechanisms described in economic theory, but ‘an economy’ includes natural endowments, social power, and political history, all officially confined by state boundaries that have no place in economic theory. The ‘world economy’ in which ‘globalisation’ occurs is a kaleidoscopic configuration of national economies, most of whose operations elude the conceptual field of economic theory.

The application of economics to development in any economy requires that economic ideas and empirical statements be understood by participants in the development process as compelling representations of reality in their own context. Thus, economic development embraces much more than economics: it includes all the institutional and material conditions that constitute economies. Most critically, economic development includes historical processes in which some particular set of economic ideas and empirical statements become convincing to leading participants in the development process.

Power and Authority

A development regime is an institutional configuration of effective power over human behaviour, and that also has legitimate authority to make decisions that affect the wealth and well-being of whole populations. It includes an official state apparatus but also much more. And, as we will see, one single state can participate in various regimes. A development regime includes institutions of education, research, media, technology, science and intellectual influence that constitute a development policy mainstream. The power and authority of a regime resides not only in government but also in physical instruments of power over nature and in cultural instruments of authority over people’s minds and morality. It is a techno-regime with a discursive regimen.

Composed of self-conscious, reflective, articulate people who work in specific contexts to direct the development process, a development regime is a documented historic formation. Its organised influence generates ideas and empirical knowledge that are most compelling for leading participants in the process of development in particular places and times. The history of development thus centres on regimes that chart trajectories of development from the past to the present and into the future [Ludden 1992].

II
An Imperial Regime

In south Asia, pre-modern regimes developed regional economies for many centuries, but the first development regime emerged under the British empire after 1840. Built upon conquered regions, south Asia’s first development regime subordinated conquered regional economies to imperial designs of globalisation.

In 1929, one erudite British agricultural officer, William Moreland, concluded from his research that the “idea of agricultural development was already present in the 14th century.” His conclusion can now be extended much further back in time, because now we know that ancient and medieval rulers in south Asia invested heavily to increase productivity, most visibly by building irrigation, roads and cities. By the 18th century, state investments had helped to develop agriculture, commerce, and manufacturing most remarkably around capital cities in Bengal, Gujarat, Indo-Gangetic plains, and peninsular river basins [Raychaudhuri and Irfan Habib 1970; Habib 1982].

Pre-modern regimes endeavoured to increase state revenue in political and social environments unfavourable to modern goals of development, because military and political struggles often destroyed investments in farming, manufacturing, and banking [Moreland 1929]. Though pre-modern states did accomplish economic development in their day, they were certainly not organised around the process of development in the modern sense of that term, because their efforts focused specifically on ruling elites.

The modern idea of economic development to increase the wealth of whole populations spread around the world in the 19th century. Its referent population was then, and still remains, the nation. One key early text was Adam Smith’s Wealth of Nations, published in 1776, which attacked the British Crown for its support for elitist monopolies like the East India Company and which advocated commerce that would benefit the whole nation.

The British nation came into being during the imperial expansion of Crown authority overseas. British conquest in south Asia was underway in Adam Smith’s day and continued into the late 19th century. At the same time, Britain became the world’s foremost industrial nation. British India became an official collection of regions in the world-economy of British imperialism. The British Empire organised a development regime that embraced Britain, British India, and also Ceylon and other colonial territories, all of which became territorially demarcated and distinctively national segments of an imperial economic design, whose legacy is still with us today.

The Business of Empire

By 1793, debates had begun in Britain about managing Britain’s ‘Asiatic possessions’ in the national interest, something Adam Smith never considered.¹  Two basic principles emerged. First, the empire must pay for itself. The East India Company fell foul of this principle, forcing the British parliament to assume direct control over Indian finance. Secondly, British business had to benefit. The Company ceased to serve this purpose adequately and imperial policy shifted onto laissez faire lines. In 1813, the British parliament ended the Company’s monopoly to allow private merchants freer access to British territories overseas. In 1833, Britain opened India further by making English the official language of state law, administration and education [Barber 1975].

The administrative articulation of Empire with British business interests moved ahead noticeably in 1833, when the abolition of slavery triggered petitions from Caribbean sugar planters, who being deprived of slave labour, spurred the Indian government to send shiploads of indentured workers from Calcutta to English sugar plantations in the West Indies. By 1833, tariffs against Indian cloth were protecting Lancashire industrialists, who sent cloth virtually free of tariff to British India, driving countless weavers into destitution. English merchants sold Bengal opium in China to buy porcelain teacups and tea for English housewives and factory workers to sweeten with sugar from Caribbean plantations. Meanwhile, English businessmen came more often to work in India and displaced Indians from commercial partnerships with British firms, as India’s overseas trade moved more and more into British hands.

By the 1840s, the British parliament was directly engaged with the national business interest in empire. For instance, a commission considered ways and means to increase cotton supplies to Lancashire, so as to reduce England’s dependence on the American South. Bombay Presidency attracted special attention, along with Egypt.²  Resulting efforts to boost cotton exports from India and Egypt accomplished their goal, and when the US Civil War broke out in 1860, Egypt and the Bombay Presidency could fill the void in cotton supplies created by the Union blockade of Confederate ports.

Investing in Infrastructure

A new round of imperial globalisation, attached to industrial capitalism, had thus begun by the mid-19th century. With it emerged a modern development regime, whose initial construction began piecemeal during the decades between 1823 and 1854, when the real value of taxes in British India rose rapidly, as prices in India dropped steadily. During this long price depression, it became more cost effective to invest Indian taxes in India, where tax money could buy more in real terms than if remitted to England. At the same time, British businesses sought ways to invest state money overseas to improve the supply of raw materials and consumer goods. In the 1840s, as parliament considered how to invest state money to improve cotton supplies, government in British India began building infrastructure to cheapen imports and exports, to expand military operations, to increase revenue, and to extend the field of British private capital investment.

So began the promotion of state infrastructure investments in economic development. It focused first on plantations, railways, cities, roads, ports, shipping and irrigation. In the 1840s, an irrigation engineer, Arthur Cotton, led the way by arguing that Indian crop production could increase manifold with state irrigation that would pay for itself with higher taxes on more valuable land.³  In 1853, governor general Dalhousie announced a plan to build an Indian railway with state contracts that guaranteed English companies a minimum 5 per cent return, and to secure that return, government kept control of railway construction and management. In 1871, the government of India obtained authority to raise loans for productive purposes, and large irrigation projects began, following earlier success raising revenues from small projects.

Globalisation and Development

A development regime had emerged in south Asia by 1880, and it fed the unprecedented burst of globalisation that spanned the following five decades. By 1880, four basic modern development ideas were well established. First was the idea that the state would lead the development process in the public interest. Secondly, major state investments in infrastructure would boost private investment, expand and integrate markets, accelerate economic growth, enrich the state and benefit the public at large. Direct benefits to the people of British India would derive for instance from state irrigation projects that employed native contractors and benefit landowners who used new irrigation to produce commodity crops for expanding markets. Third, economic progress would benefit ‘the poor’, who for example were to be protected from famine by large irrigation works. And last but not least, advances in science and technology would be instruments of human progress in all nations, led by imperial regimes.

Underlying and energising this imperial development regime, vast market integration spawned regions of specialised commercial production around the Indian Ocean. Ceylon was a plantation economy. Coffee plantations expanded from 50,000 to 80,000 acres between 1847 and 1857, and peasants devoted another 48,000 acres to coffee for export. Coffee acreage expanded another 35,000 acres in the 1860s. In the 1880s, leaf disease killed coffee cultivation, which was rapidly replaced by tea, rubber, coconut and cinchona. British-owned plantations in Ceylon and Assam (including Sylhet) replaced China as the major suppliers of English tea. British investors eventually drove out most peasant plantation crop producers and controlled export markets.

Labour supplies posed the major constraint for plantations, and the solution was found in (eventually permanent) labour migration. Tea planters depended on labour migration from southern Tamil districts into Ceylon and from northern India into Assam. British plantations in Malay colonies likewise depended on migratory Tamil workers. By 1880, the modern age of vast labour migration to major sites of capital investment had begun.

The mobility of commodities, labour and capital that defines ‘globalisation’ increased more between 1870 and 1914 than ever before. Since then, it has only expanded. Our recent globalisation is another great burst whose magnitude has yet to surpass the first. By 1900, distant lands around the Indian Ocean – from the west Asia and eastern Africa to south and south-east Asia – had become extensively attached. Many of those attachments broke after 1945, and most have yet to be restored, while the west Asia connection has alone expanded.

By 1900, British Burma and East Africa developed within circuits of mobility anchored in British India. In Burma, Tamil Chettiyar bankers financed agricultural expansion in the Irrawaddy River delta, which generated huge exports of rice for world markets, including India, where urbanisation increased demand for imported rice. In East and South Africa, merchants from Gujarat and workers from Bombay, Calcutta and Madras provided labour and capital for railway construction, forming urban nuclei for modern economies. Between 1896 and 1928, 85 per cent of the emigrants leaving Indian ports went to work on plantations in Ceylon, Malaya, the Caribbean, Fiji and Mauritius.

Spatial Specialisation

Regional economic specialisation, based on consciously targeted capital investment and state-organised labour mobility, became a hallmark of the national economies that emerged in south Asia during this round of globalisation. Though regional specialisation is most visible in plantation and mining regions, it embraced the entire subcontinent.

Imperial development before 1920 gave economic regions in south Asia a distinct export-orientation, which faded in the first decades after 1947, but returned with a vengeance during the second great burst of globalisation after 1980. In 1914, almost all goods arriving at south Asia ports were destined for export: these were mostly cotton, wheat, rice, coal, coke, jute, gunny bags, hides and skins, tea, ores and wool. Most cotton came to Bombay from Maharashtra. All tea came to Calcutta and Colombo from Assam, Darjeeling and Ceylon. Most export rice came to Rangoon. Wheat came primarily from fields under state irrigation in Punjab and western United Provinces (Uttar Pradesh). Oilseeds came to Bombay from Hyderabad territory (Andhra Pradesh), the Central Provinces (Madhya Pradesh) and Bombay Presidency (Maharashtra). Coal, coke and ores came from mines around Jharkhand into Calcutta and Bombay. Eastern Bengal (Bangladesh) produced almost all the world’s jute.

Specialised industrial regions also emerged in British India. Imported machinery was rapidly domesticated in new Indian factory towns. The first Indian cotton mill had appeared in 1853 in Bombay. The Factory Act (1881) imposed working rules on Indian factories to reduce comparative advantages they enjoyed by virtue of low local labour costs and cheap raw materials. The impetus behind the Factory Act sounds familiar today, as western countries endeavour to raise compliance with international standards among industrial competitors in Asia.

But the Factory Act did not suppress industrialisation in British India. In 1887, J N Tata’s Empress Mill arose at Nagpur, in the heart of cotton country, and the Tatas became India’s industrial dynasty. Tata Iron and Steel Works at Jamshedpur consumed increasing supplies of ore and coal, which by the 1920s rivalled exports from Calcutta. In 1914, India was the world’s fourth largest industrial cotton textile producer: cotton mills numbered 271 and employed 2,60,000 people, 42 per cent in Bombay city, 26 per cent elsewhere in Bombay Presidency (mostly Nagpur), and 32 per cent elsewhere in British India, at major railway junctures. Coal, iron, steel, jute and other industries were developed at the same time, producing specialised regional concentrations of heavy industrial production around Bombay, Ahmedabad, Nagpur, Kanpur, Calcutta, Jamshedpur and Madras [GoI 1921]. In 1913, manufactured goods comprised 20 per cent of Indian exports, valued at 10 per cent of national income, figures never surpassed.

In 1914, war stimulated policies to enhance India’s industrialisation to make India less dependent on imports. The Great Depression, 1929-1933, again boosted incentives for industrial growth by reducing prices for farm output compared to manufactures. As a result, industrial output in British India grew steadily from 1913 to 1938 and was 58 per cent higher in 1936 than in 1914, compared to slower, more uneven rates of growth in the UK and Germany [Morris 1983].

A National Economy

By 1920, British India was a national economy within the Empire, with its own distinctive institutions and material conditions. Though dominated by agriculture, it included a large public sector and major industries. Native investors and nationalist politicians were by this time vocal advocates for increasing state development efforts: they were aspiring and increasingly influential leaders of the development regime.

By 1920, British India was also a land of opportunity for global investors. The US Consul at Bombay, Henry Baker, had called India “one of the few large countries of the world where there is an ‘open door’ for the trade of all countries”.⁴ England was still British India’s dominant trading partner, but losing ground. In 1914, the UK sent 63 per cent of British India’s imports and received 25 per cent of its exports; and by 1926, these figures stood at 51 per cent and 21 per cent, respectively. By 1926, total trade with the UK averaged 32 per cent for the five major ports (Calcutta, Bombay, Madras, Karachi and Rangoon). Bombay and Rangoon did 43 per cent of their overseas business with Asia and the west Asia. Calcutta did a quarter of its business with America.⁵ 

South Asia’s early 20th century globalisation also appears in migration data. In 1911, the British in British India numbered only 62 per cent of all resident Europeans. Four times more immigrants came into British India from other parts of Asia than from Europe; seven of 10 came overland from Nepal (54 per cent) and Afghanistan (16 per cent). In 1911, Nepalis entering British India (2,80,248) exceeded the resident British population by 50 per cent; and overall, Asian immigrants were three times as many. In addition, by 1921, emigration far exceeded immigration. Between 1896 and 1928, 83 per cent of 1,206,000 emigrants left British India from Madras (which accounted for only 10 per cent of total overseas trade), and they mostly went to work in Ceylon (54 per cent) and Malaya (39 per cent). Bombay emigrants went mostly to East and South Africa; Calcutta emigrants, to Fiji and the West Indies [Schwartzberg 1978].

In 1920, Britain still controlled the highest echelons of south Asia’s political economy, but by then, the overall process of capital accumulation inside south Asia had escaped British control. Before the first world war, London’s political position in south Asia seemed secure. After the war, London’s power declined visibly, both in relation to other imperial nations and in relation to nationalist forces in south Asia, which mobilised then on an unprecedented scale to wrest control of their national development from the British.

III
National Regimes

In the 1920s, a national development regime emerged inside British India. In 1920, the Indian government obtained financial autonomy from Britain. Nationalist forces focused their critique of government sharply on economic issues. The Indian National Congress had first met in Bombay, in 1885, and then met every year in late December in a different city of British India. Following the great Deccan famines, Dadabhai Naoroji had published in 1879 The Poverty of India to document the negative economic impact of imperial policies on India. It was, in effect, a nationalist revision of Adam Smith, with even greater impact, because of its political location. Naoroji presided at Congress meetings in 1886, 1893 and 1906, where delegates from all the provinces discussed government policy and argued for lower taxes and increased state development expenditure. In 1905, the Congress launched a Swadeshi movement to induce Indian consumers to buy Indian-made cloth rather than British imports. Economic nationalism had been established [Chandra 1966].

Perils of Globalisation

The end of this first globalisation phase in the history of development regimes in south Asia came in the 1930s, when the Great Depression dramatised beyond doubt the perils imposed on a nation when its economy is open wide to the world economy under imperial managers. Depression sparked peasant and worker’s movements demanding economic security, and it spurred nationalist efforts to make government accountable to the nation.

By this time, the government in British India had gained experience as economic manager and investor in infrastructure. The government owned and managed most mineral and forest resources. Government agricultural departments, colleges, and experiment stations supported scientists and engineers who worked on state-funded development projects. Yet, the vast state sector of the imperial economy was managed within a laissez faire, free-market policy framework that favoured big investors and delivered benefits disproportionately to foreigners.

During the 1930s, nationalists concluded from hard empirical data interpreted within mainstream nationalist economic thought that a laissez faire free-market development regime discriminated against politically subordinate regions: it enriched imperial nations with taxes, remittances and countless indirect benefits; and it provided imperial investors profits, and their consumers, cheap raw materials and consumer goods, while draining wealth from colonies and depriving subordinate nations of the just rewards of enterprise. Having reached this conclusion, national leaders devised new ambitions for development.

In 1931, Jawaharlal Nehru pushed economic thought in a new direction by saying, “the great poverty and misery of the Indian People are due, not only to foreign exploitation in India but also to the economic structure of society, which the alien rulers support so that their exploitation may continue”. He went on to proclaim, “In order therefore to remove this poverty and misery and to ameliorate the condition of the masses, it is essential to make revolutionary changes in the present economic and social structure of society and to remove the gross inequalities” [Zaidi 1985].

Planning Regimes

The 1930s and 1940s brought peoples of south Asia as bitter an experience of state failure as any population has ever endured, including mass suffering, death and dislocation during the Great Depression, Bengal Famine and Partition. Disastrous experience of failed imperial governance induced nationalists to lay the groundwork for nationally planned economic development, which stressed autonomy, security and national integration under strong central state leadership. In 1951, prime minister Nehru chaired India’s Planning Commission, and in the 1950s, all south Asian countries wrote national plans stressing self-sufficiency and addressing problems of national economic growth, poverty and inequality.

The 25 years between 1950 and 1975 were the heyday of nationally planned development in south Asia. Uniquely in Bangladesh, however, independence arrived only in 1971, and during most of the heyday of the planning era, the regime centred in West Pakistan had rejected legitimate demands for regional development in East Pakistan. Though Pakistan started national development in what became Bangladesh, it also delivered intensely discriminatory, uneven development, which spawned mass discontent, upheaval, and eventually brutal war. In 1971, Bangladesh emerged determined to pursue progressive, planned national development for all citizens.

Notably for Bangladesh, but to some degree for all post-colonial regimes, national planning faced serious constraints: financial, infrastructural, administrative, political and intellectual. All these were quite severe in Bangladesh. The imperial regime had stranded this region on the outer margins of public and private priorities. Administrative and judicial systems, transport and educational infrastructure, and financial resources were notoriously weak, compared to other parts of British India. To address these weaknesses, Lord Curzon had established the province of East Bengal and Assam, in 1905, but this innovation died in 1911, under nationalist pressure. Regional development in eastern Bengal remained subordinate and marginal under both imperial and early national regimes. Raw materials, zamindar rents, interest payments, tax revenues and plantation and industrial profits moved systematically out of eastern Bengal to enrich people in Calcutta, Delhi, London and Islamabad; while the inflow of public and private investment was minimal. Imperial development had designed all dependent regions to serve dominant metropolitan regions, but even so, comparatively large public and private investments had flowed into favoured regions of British India, particularly the western Ganga basin and Punjab [Ludden 2005].

During the heyday of planning, systematic inequalities in wealth and power among social groups and regions remained starkly visible in development thinking. The Bangladesh freedom struggle dramatised inequalities, which in other ways also became prominent in India, Sri Lanka and (West) Pakistan. Planning regimes tackled inequalities with administrative and legal action, supported by the burgeoning academic field of ‘development studies’, endowed in these decades with policy-oriented research centres focused on nations emerging from imperial regimes. In post-colonial countries, the political character of development – and the necessity of changing power relations in order to redesign development regimes, to serve national citizens – pervaded mainstream development thought.

In that historic context, development theory and practice converged on planning, whose central goal was to reorient development around national priorities. Imperial regimes had turned resources of subordinate regions into objects for laissez faire allocation by markets in the world economy. National planning separated national and global market priorities, enclosing national economies and instituting state redistributive systems to make national markets serve national citizens [Myrdal 1968].

Most national regimes around the world became more self-contained in the 1950s and 1960s. Traumas following the earlier burst of globalisation made most national regimes more inward looking and self-protective. Foreign direct investment (FDI) declined globally from roughly 10 per cent of world output in 1913 to less than 5 per cent in the 1960s, when the rate of increase in world merchandise exports remained well below the 1.7 per cent that pertained from 1870 to 1914.

In south Asia, as elsewhere, national plans focused on national markets. Planners devised priorities for allocating public and private resources, acquired internally and externally. External funding came in grants and loans directly from countries that sought to wield influence in former imperial dependencies, and indirectly also from the richest countries, for the same reason, through Bretton Woods institutions, the World Bank and International Monetary Fund (IMF). Among the rich capitalist countries, the US became most aggressively expansive.

Following the basic working principles of their imperial predecessor, national planning regimes in south Asia strove to enhance and supplement private investment. They were not anti-market, but rather, pro-national market. Planning instituted a combined public-private apparatus for monitoring and managing national economies. Planning agencies organised initiatives like cooperative societies and community development programmes. Governments set up public food procurement and distribution systems. They expanded national health and education. They added to large inherited portfolios of state-owned assets heavy industries, public utilities, banks and insurance [Bagchi 1989; Bardhan 1984; Chaudhuri 1979; Frankel 1978; Kothari 1971].

During the heyday of national planning, economic progress became a central feature of national life. Public intellectuals and organisations representing farmers, workers, businesses and many other economic interests became intensely involved in development debates. Public interest groups of many kinds mobilised politically. As in earlier nationalist times, economic self-interest preoccupied urban middle classes, which became more populous, diverse and politically active.

To address development demands pressed by all these groups, national politicians deployed deficit spending, which increased their need for external funding. International and bilateral funding agencies, as well as national donors and lenders, thereby obtained more leverage on post-colonial national economies. Funding needs and national pride pushed politicians in south Asia to emphasise economic growth, and increasing national wealth per capita eventually became an end in itself, which turned policy priorities toward the interests of investors, as competitive politics pushed governments to undertake larger projects demanding more external finance.

Pragmatic Strategies

While in theory, expanding popular political participation would favour the inclusion of all citizen interests in the development process, in fact and in practice, financial pressures to meet citizen demands made governments more dependent on people with money to invest in development. Launched in the 1960s, the green revolution represents a strategic amalgamation of these contending forces, for on the one hand, being based on the intensive use of pesticides, fertiliser, tractors, tube wells and high-yielding hybrid seeds, it favoured investors in agriculture and industry, and on the other hand, because it raised wheat and rice yields tremendously, it secured basic food requirements for national populations and spread benefits widely, though unevenly. Green revolution provided a strategic blueprint for national development by encouraging regimes to: (i) increase national wealth and security by; (ii) spreading new productive technologies; (iii) with the help of lavish state subsidies that; (iv) favour richer investors; (v) so as to generate more private investment; and (vi) bring producers throughout national economies into more wealth productive systems of combined state-and-market asset allocation.

South Asian planning regimes substantially reorganised market economies inside their borders. This activity was in tune with development thinking, which supported land reform and redistributive policies to favour disadvantaged groups. Development theory also supported industrial import substitution and public sector production of basic goods and services, essential for public welfare and for business alike, including transportation, energy, banking and insurance.

Yet in theory and practice, national economies remained predominantly market-oriented, and mostly under private control. Private enterprise still dominated agriculture and industry. Even in India, where national planning had the largest impact, 80 per cent of industrial production remained in the private sector, where public output lowered input prices and state import protection expanded national markets for private enterprise. The result was slow but steady economic growth and visible progress in shifting development benefits toward groups that would not have benefited as much from free-market allocation in post-colonial economic conditions, especially farmers, industrial workers, and big business [Tomlinson 1997; Johnson 1983].

Unplanned Problems

Regulatory systems established under planning regimes also pushed national markets in unforeseen directions, which became counterproductive. Most notably, bureaucratic controls on imports, exports, and business generally spawned corruption as well as black and grey markets. Foreign exchange shortages put private and public sector companies into financial competition, driving profit seekers underground. One estimate put the value of India’s black market at nearly half the GDP in the late 1970s.

In addition, political pragmatism mixed development administration with political patronage. This sparked opposition from groups left out of the patronage circuit, deprived of development benefits. In the 1970s, this opposition became volatile in Pakistan, Bangladesh, India and Sri Lanka. Charges of corrupt, inefficient, domineering and discriminatory state development practices became effective weapons in competitive politics. By the 1970s, leading and aspiring participants in national regimes clashed openly over control of development. Bureaucrats, politicians, the military, domestic investors, and international financiers were tearing at the fabric of national planning regimes.

Transitional Decades

In retrospect, we can see a transformation in national regimes beginning in the late 1960s that yielded new development regimes by 1990. The transition began slowly, soon after Nehru’s death in 1964, when famines struck India in 1967. Bangladesh independence gained political force at the same time, and then in 1974, famine hit Bangladesh. In both famine periods, foreign aid became critical, and in response, national regimes put new energy into the green revolution. Planners concentrated on investing state funds in sites of intensive cultivation, where well endowed landowners controlled local labour, finance, and political institutions. Critics called this strategy “betting on the rich”. Defenders called it the only road to national food security.

This strategic blueprint led states to adopt development plans that called for increasingly expensive investments, which demanded more external finance, more in the form of debt. At the same time, the World Bank dramatically increased its lending under Robert McNamara, who led the charge to increase development loans and aid from rich countries and private banks.

These new loans came with new conditions, collectively called Structural Adjustment Programmes, which began in the 1970s, and gained force and reach in the 1980s and 1990s. Under these programmes, the World Bank and IMF demanded that borrowing governments drastically reduce their regulatory and provisioning role in their economies, to assume the role of supporter and facilitator for private investors, who would, according to emerging mainstream economic thought under the so-called Washington consensus, engage rationally in market activity to allocate resources most efficiently for the increase of national wealth. Freeing markets from state control became the mantra of the international development mainstream [SAPRIN 2004; Leys 1996].

Planning regimes unravelled under structural adjustment. Sri Lanka, Bangladesh and Nepal led the way in south Asia, starting slowly in the 1970s and accelerating in the 1980s. With declining relative prices for primary product exports, the burden of external debt grew heavier, while raising funds for large development projects, (epitomised by the Mahaveli scheme in Sri Lanka, then the largest irrigation project in the world) became more pressing. At the same time, rising oil prices brought Europe and North America recession, inflation, and petro-dollars in need of circulation, while they brought south Asia higher costs for industrial growth, middle class consumption, and the green revolution.

The smaller countries first began borrowing on a much larger scale and succumbed quickly and decisively to structural adjustment. In 1981, India began to rely foreign debt, and by 1991, internal and external pressures forced economic liberalisation. In the 1980s, neo-liberal free-market orthodoxy conquered the economic mainstream, where harsh critics of state planning, provisioning, and regulation become most influential. Development strategies emphasised private sector leadership in market-driven economic growth, emphasised imports and exports, and shifted the balance of power in national state-and-market asset allocation towards national and international business interests [Hossain et al 1999].

In India, private capital and state governments have both gained increasing independence from New Delhi. The Congress Party lost its old hegemony, national government came to be composed of shifting coalitions of regionally-based parties, and state chief ministers now compete fiercely to attract FDI to their individual states, all of which has effectively made each Indian state a distinct development regime. In Nepal, electoral democracy was established in 1991, opening development to wide public debate, as foreign investments grew, and as did a Maoist insurgency carving the nation into regions of war and allowing the king to stage a royal coup in February 2005, purportedly to secure Kathmandu against revolution. Sri Lanka has endured civil war since 1981, and the nation that existed in 1970 has effectively disappeared. In Bangladesh, struggles over development brought military coups and a popular movement that established democracy in 1991, amidst a deep dependency on international finance and trade. In Pakistan, a government wracked by struggles for regional autonomy has experienced disruptions from two decades of war in Afghanistan, leading to more stringent authoritarian dependence on the US.

History in the Present

Contemporary development regimes are currently in flux. Dismantling government controls to expand the private sector has accompanied domestic and foreign demands for more public scrutiny and popular participation to make state regimes more accountable and transparent to citizens and investors at home and abroad. A vast reinterpretation and reorientation of national government is occurring. States are officially intact, and nations remain the basis of development, but national states no longer govern development.

No wonder governance is now such a prominent concern in development discourse. No coherent set of institutions has the power and authority to establish norms and enforce rules that govern development.

How is development governed today? The question is more than contentious: it is a conundrum, which we can analyse historically and spatially. As we have seen, imperialism established modern development regimes, which redesigned regional economies to serve the world of markets managed by imperial nations. The British Empire designed territories of development in south Asia, which nationalists captured and redesigned by disciplining markets inside independent states. Thus, the spatial framework of development shifted from empire to nation, in the middle decades of the 20th century.

In the last 20 years, another shift has occurred. States have lost much of their disciplining power over markets, and thus their leadership role in development. As that has occurred, national territory has lost its definitive role as the spatial framework that determines who is authorised to govern development and what people development must serve. Territorial boundaries had previously defined participants, populations, and priorities in the development process. Now links between development and territory are ambiguous. Leaders of development have diversified, they are now scattered all over the world, and their border crossing is ubiquitous.

National states still define official territories of development, but national powers to govern development vary tremendously. In general, these powers decline as national wealth does, until they reach virtually zero in the world’s poorest countries.

Growing inequality of wealth and power among nations is an increasingly visible feature of the development process, but also increasingly, invisible in the mainstream development discourse, which treats all countries as equally sovereign territories in the world of globalisation. Disproportionate rich country influence is pervasive globally, in government circles, business, finance, technology, international agencies, consumerism, education, media, fashion, language, and other realms. A new imperial formation is emerging and globalisation today has much in common with globalisation a century ago. Then there was British Empire, now there is US Empire. Even India, the most powerful economy and state in south Asia, has now succumbed under its current leadership to pragmatically strategic subordination to the US.

Yet imperial authority is a thing of the past. In a world of nations, empire can no longer provide legitimate governance. But most states cannot provide effective governance for development. So who then will govern development?

Balanced precariously between the real power of contemporary imperialism and the real authority of national states, in the shifting sands of globalisation, leadership in development today has no clear guidelines of organisation. Leaders have disparate loyalties and priorities. Their institutions pursue disparate goals. Their relationships with one another are messy, filled with competition, conflict, resistance, and negotiation among old, new, emerging, and aspiring leaders. Television images of protesters at World Bank and WTO meetings, or of the carnivalesque World Social Forum raised against staid G-8 meetings, represent only the most visible surface of the disorderly contestation underway in development regimes today.

Can Finance Govern?

The overarching influence of finance capital in development suggests it may now be dominant. Financial interests take many forms but have in common their ability to suborn and discipline the needy. The first order of business in development work today is gathering finance, and the power and authority of financial institutions have grown exponentially in the last 20 years. The striking absence of diversity in poor country economic policies and the uniformity of policy trends and economic problems in these countries following structural adjustment result from the vast power and authority of Bretton Woods institutions.

Most international funding agencies have followed the World Bank leadership when using money to increase their influence over development. In the age of structural adjustment, they have by-passed national governments and supported the rise of non-governmental organisations (NGOs), which now play independent leadership roles. 22,000 NGOs operate in Bangladesh, and the largest, BRAC, rivals ministries. Launched on a small scale in 1976, the Grameen Bank now counts its clients in the millions and values its loans in billions of dollars. In India, NGOs employ more people than the central government. Using individual access to financing, and working independently of government, NGOs have effectively scattered governance in the development process among countless fragmented geographies and institutions, many with strong intellectual and other links with international agencies, and though grounded in specific countries, also dispersed around the world.

Funding worth hundreds of billions of dollars circulates in networks of development finance, which is wide open for NGO entrepreneurship. Yet garnering these funds no more makes an NGO a mere tool of funding agencies than receiving NGO goods and services makes pawns of village beneficiaries; and no more, indeed, than taking a bank loan makes a business a banker’s mute instrument. NGOs have minds and agendas of their own and funding agencies need NGOs, as well as governments, to utilise funds effectively and keep finance circulating. The growth of NGOs reflects the rise of a relatively autonomous leadership sector in development, while state dependence on donors and lenders indicates that governments remain indispensable.

Immeasurably more money moves through business networks, seeking profits. Numerous multinational corporations control more finance than all development agencies combined. Indeed, it might be said that what goes under the name of ‘development funding’ only makes sense economically when synchronised with business interests. Making places and people attractive for investors now seems the dominant concern for most development agencies. From this perspective, we can see the World Bank as a conduit for the power and authority of major business interests and of its major rich country financiers.

Yet financiers and businesses need sustainable sites for profitable investment, which they cannot create themselves. However dependent governments and NGOs may be on funding agencies that serve profit-seekers, businesses rely on governments, and now also on NGOs, to secure investment environments in national territories to which all the world’s population are variously attached [Ludden 2003]. Structural adjustment did not intend to demolish national governments, but rather to make them better serve financial leaders in an emerging global development regime, which articulates the power of many rich countries in authoritative international institutions, including the Work Bank, IMF, UN, OECD and WTO.

A Global Regime

In global development discourse, each national state governs its economy, and each ‘developing economy’ is developing itself, in a global context, but in south Asia and elsewhere, national development regimes can also be understood realistically as officially but not operationally independent territories in a global development regime. Imperial histories underpin the global regime, which includes difference and competition as well as collaboration among its leaders. Yet the integration and coherence of the global regime have increased dramatically in the last 20 years, under the authority of the World Bank and increasing impact of globalisation.

As a result, each country in south Asia now inhabits more than one development regime. National regimes still operate, but each has various local and regional sub-units with distinctive rules of operation, and each must also abide by international rules. In this light, we can consider, for instance, the Tuesday Group – composed of diplomats from donor countries who meet each week in Dhaka to make their will known to government – as a part of the Bangladesh regime. US embassy and World Bank offices act like global headquarters in Dhaka. Numerous NGOs and government agencies, such as DFID in Dhaka, serve as articulating institutions that knit together local, national and global regimes with cross-border activities to connect rich and poor capital cities with ‘target’ sites and populations throughout Bangladesh.

Thus, populations served by development regimes are now difficult to delineate geographically. Each country’s national citizenry is ostensibly its target population, but national regimes must please donors, lenders, investors, and financiers, whose compelling interests lie elsewhere as well.

Like the leaders of imperial development in British India, contemporary leaders all claim to be serving ‘the poor’. Viceroy Lord Curzon once famously quipped that he had done more for India’s poor than all the raving nationalists who attacked him. With this in mind, it is worth considering that programmes which proclaim their goal to be poverty reduction also have other functions. Moreover, their geographical reach is important today, as national states steadily lose the capacity to undertake poverty reduction effectively on their own, inside their own borders.

All the major globally active development institutions have now adopted Millennium Development Goals (MDGs). This unprecedented common framework for policy thought and action adds coherence to the global regime, whose leaders seem to agree that national states only serve their own poor peoples adequately by meeting uniform targets set by international agencies. “Targeting the poor”, “listening to the poor”, and “learning from the poor”, also preoccupy NGOs, donors, funding groups, and action groups of many kinds, with various territorial attachments. “The poor” now represent a global population living in countries saddled with MDG performance targets under global surveillance. Poor people are thus no longer conceived primarily as national citizens. They are targets, beneficiaries, and participants in a development process wherein leading financiers, intellectuals, activists, policy-makers, and disciplinarians travel the globe, measuring, monitoring, cajoling, and rewarding state performance according to global standards rendered acceptable in most countries through the operations of international agencies like the World Bank and United Nations.

Nations Inside Out

Nationalist preoccupations had guided national regimes during the heyday of planning, and they still pervade national politics, education, and cultural institutions. But national economies have become increasingly ‘outwardly oriented’ in the last 20 years, and so have national cultures. Today’s educated youth, the next generation of national leaders, is more outwardly oriented every day. This represents a reorientation of national culture that corresponds with the ‘opening up’ of national economies to world markets and globalisation generally.

The techno-regime propelling this trend includes communications systems that shape national ideologies and politics. Television media owned by multinational corporations have flooded public information systems in south Asia, at the same time as national economies have become more export-oriented and thus more sensitive to what people see going on in rich countries. The import-export reorientation of national economies, under the influence of global information and communications systems, repeats and magnifies globalisation trends a century ago, and likewise, accompanies increasing domestic investments by rich country businesses.

In the past 20 years, imports into countries affected by structural adjustment policies have grown much faster than exports, straining state treasuries, compelling more export production, and inducing national needs for more foreign direct investment (FDI). The growth of exports from south Asian countries measured 13.5 per cent annually in the 1990s, almost four times the rate of the 1970s. FDI also grew rapidly, though it remains a small proportion of south Asia’s GDP. In the 1990s, FDI increased in India, Sri Lanka, Bangladesh and Pakistan roughly by factors of 50, 30, 10, and 3, respectively.

National imports, exports, and FDI forge linkages between national and foreign business, which in south Asia typically subordinates needy domestic business to the needs of richer external partners. Thus national territory turns into a collection of strategic sites for geographically dispersed operations by international investor networks. Externally oriented governments compete to make their territories attractive for investors. Success increases the capital resident at least temporally inside their borders and it compels governments to adjust policies so as to attract ever more external investment and to hold it as long as possible, a compulsion reinforced by structural adjustment policies, which effectively continue today, when the Bangladesh finance minister has announced dramatic tariff cuts to meet World Bank loan conditions.

Disarticulation

Inside outwardly oriented development regimes, national territories fragment spatially into a collection of potentially profitable sites for business investment, at the same time as national problems and populations fragment into global ‘target’ groups, interests, and issues. Women, poor people, indigenous people, the environment, health, microcredit, and governance: the list goes on and on of specific topics of global development specialisation, each with its own experts and leading institutions, each focused on some particular feature of national space. The World Bank’s World Development Report represents an annual compilation of leading global issues, to be tackled in each country separately under the discipline of the global regime.

Meanwhile, in the world market economy, a repeat of the core trend of the first globalisation – the creation of specialised sites for capital investment and labour control – is well underway. In Nepal, tourist sites and hydroelectric projects attract foreign and domestic partnerships. Sri Lanka is a free-trade zone. India is now a collection of regional development histories [Dreze and Sen 1998]. Bangalore and Hyderabad are growth nodes for global high technology business collaboration. In Bangladesh, an urban garment industry has been the fastest growing employer, primarily of women, relying on imports of material inputs and exporting all its output and specific rural sites for shrimp cultivation, natural gas extraction, and coal mining preoccupy development news. The Sylhet region of Bangladesh specialises in the restaurant business in Britain, and in natural gas production, complete with recurring disasters caused by foreign investors who buy rights to national resources at bargain rates dictated by national needs for FDI and secured by shady deals with government officials.

The territorial basis for development has thus become ambiguous, and a spatial re-articulation of development regimes along the kinds of clear territorial lines that gave national regimes such firm coherence in the past seems unlikely in the near future. Disarticulation is continuing under the combined influence of historical processes that include (i) outward reorientation of national policies, economies and cultures, (ii) localisation of economic specialisation in world markets, (iii) isolation of groups and issues for targeting by development institutions, and (iv) increasingly forceful, coherent control of national economies by the global development regime. The global regime is ambiguously territorial – or we might even say, hypocritically so – because it proclaims national sovereignty and undermines it at the same time.

There is some international movement toward a reterriorialisation in Asia, but SAARC, for instance, remains weak. Added territorial coherence might be gained by cooperation among contiguous countries, but for the most part, their governments and businesses compete for shares in world markets and squabble over border crossings they cannot control.

As markets escape states, border-crossing eludes regulation and monitoring. Cross-border labour migration is massive but impossible to regulate minutely. Only a fraction of remittances are recorded and most move through informal channels to finance domestic consumption, investment and foreign trade in the migrants’ home locality. Illegal trades flourish in drugs and arms; organised crime has gone beyond its old interest in black market radios and videos to trafficking in women and child sex-workers. Markets without borders thus thrive at the expense of national economic coherence and political authority.

Such mobility is only one indication that much of the citizenry has acquired an ambiguous attachment to national territorial authority. Many poor people may be more effectively attached to local and regional institutions and NGOs than to national governments. Aspiring educated urban classes were the historic font of nationalism, but their lifestyles and trajectories also attach them now to rich countries where they study, work, travel, invest, marry, send children, and emigrate, often to return. The disarticulation of middle classes also pervades NGOs, which deal with development problems using ideas and finance that travel the world into national localities where they employ suitably trained employees and experts.