Planning
for development: Aligning Elites with Development
Editor: Róbinson Rojas
Sandford |
Aligning Elites with Development
Alice Amsden, Alisa DiCaprio,
and James Robinson
To understand what role elites play in the process of economic
development, we need to establish first who they are. Though most
definitions are welfare neutral, in popular discourse elites take on a
negative connotation. This conceptual confusion has contributed towards
international assistance practices that assume elites are not
developmental. Here we turn to look at the missing concept of
developmental elites, the ways in which they diverge from other elites,
and whether it is possible to promote the conditions under which they
thrive.
Who are the "elite"?
The origins of the term are firmly rooted in Pareto's work on the
distribution of wealth and the ruling class. But today, the term goes
beyond its roots in class and is used to describe actors at various
levels of society. A working definition we adopt here is that elites
are "a distinct group within a society which enjoys privileged
status and exercises decisive control over the organization of society."
This does not require that the actor be either wealthy or a member of
the ruling class, but it does suggest that they have a measurable
impact on development outcomes.
If we look to the existing development paradigm, we are presented with
the idea this impact will be negative and that elites are a problem to
be solved. Increasingly, poverty reduction approaches are bottom-up and
seek to move decision-making power away from governments. But this
belies the fact that elites are not, by virtue of their position alone,
negative forces for development. Throughout history, there are examples
of elites who contributed to the provision of national and global
public goods — Lee Kwan Yew in Singapore, Nelson Mandela in South
Africa, and Bill Gates in the United States are examples. They changed
the direction of development in ways that were contingent on their
position as elites, and in ways that favoured the advancement of their
societies. Whether the welfare impact of elites is positive or negative
is determined by how the actor or elite group executes its influence.
Channels of Elite Impact on Development
The impact that elites have on growth and development exceeds their
actual representation within society. This disproportionate impact
stems from their control over the productive assets and institutions,
which enables them to influence both the allocation of resources and
the allocation of authority.
The ownership of resources enables elites to impact growth in two ways.
The most direct is through their decisions over resource allocation.
They can choose to redistribute resources in ways that increase
employment, economic efficiency, and reduce income inequality. Or
alternatively, they can act as rent-seekers and direct resources
towards their social groups.
In addition, their control over resources also gives elites the ability
to make decisions over production and technology. The owners of the
factors of production have influence over what is produced and how it
is produced. They can act as entrepreneurs and innovators and increase
factor productivity and diversification. Or they can overexploit
existing resources without regard for sustainability into the future.
Elites also impact development outcomes through their control over
decision-making processes that allocate political resources within a
society. This introduces two additional channels through which their
activities impact growth in the long run. The first is that elites have
the resources to design and implement institutions that favour their
interests. Such institutions may promote participation and information
flow. Or they may simply cement the position of a particular group
within the governance structure.
Another feature of elite control over institutions is that they are
able to influence how both elites and non-elites within a society
perceive different issues. Elites control how issues are framed through
their ability to distribute or withhold information, and their
influence over and within the media. Even where there is a free media,
it depends on elites for information, and can choose to present issues
that reflect a particular bias.
The extent to which these channels are used for social or personal
welfare gain varies among societies. But the fact that these channels
exist in every society highlights the fact that if elites can be
induced to adopt developmental behaviour, it can have a
disproportionately positive impact on growth and development.
Capturing Elites for Development
The benefits of bringing the objectives of elites in line with national
objectives are obvious. But the extent to which this is possible and
the levers to use to do so depend on what makes elites developmental.
On the one hand, it might be that there is some inherent characteristic
of some sectors of the elite that makes them different from predatory
elites. On the other, it could be that elites who have been positive
forces for development were responding to incentives that made them
developmental. Understanding which of these is the correct perspective
is important for understanding not only domestic elites in developing
countries but also the international elites who are building
institutions that embed their preferences into the workings of the
international economy.
There is little evidence to support the contention that some elites are
naturally more developmental than others. This is particularly
important given the design of international governance structures which
incorporate the assumption that there are fundamental differences
between the elites of developed and developing countries. There is
little to suggest, for example, that the objectives of elites in OECD
countries are relatively more altruistic and that the institutions
designed by such global elites focus on generating global public goods
to a greater extent than would be true if the institutions were
designed by alternate elites. For example, though institutions such as
the WTO can play an important role in sustaining international trade,
they can at the same time play the role of distributing the rents
towards developed countries, and by taking too simplistic a view of the
nature of comparative advantage can impede socially desirable policies
in poor countries. Thus an important element in the design of
international governance structures is the perpetuation of the
preferences of rich country elites.
Given these observations, the answer to the question of how elites can
play a positive role in development needs to focus on how to create the
incentives that will lead elites to act in a developmental way. There
are three considerations that can direct the process of building
incentives without recommending specific institutional forms.
The first step to creating incentives for elites to incorporate social
welfare into their activities is to understand the source of elite
influence. Elites that draw their status from the ownership of
resources will react differently than elites that draw their status
from political influence. The proper incentives will be adjusted to the
source of power.
The second step is to identify how elites interpret the need for
development in society. For some elites, the volatility caused by
poverty may create incentives for them to support development, for
example by inducing them to disburse some of their influence to other
groups in society. For others, development may be a threat which
induces them to try to capture as much rent as possible before they
lose power.
A third step is to look at how elites translate the interests of their
constituency. Elites are a decisive group within their society, and
there is evidence that leaders of political parties and unions are
often more tolerant of reform and change than the masses they
represent. Incentives need to reflect this.
Bringing Globalization into the Equation
The rise of globalization in the current period has had conflicting
impacts on elites. On the one hand, it offers new sources of influence
for existing elites. Development aid is channelled through elites
before it reaches the poor. FDI allows commercial elites to spread
their business model and their products beyond national markets. The
need to address global public goods ties governing elites and empowers
those technocrats with the ability to create solutions.
On the other hand, globalization constrains the domestic activities of
elites. Rules set by the international institutions give non-elites
enforcement power. The MDGs pressure elites to at least acknowledge
that poverty in its many forms must be dealt with. Mobile phones enable
coordination of protesters in authoritarian states to act against
ruling elites.
The power of elites is that they will continue to exist in every
country in every environment. This was one of the great insights of
Pareto and Michels. Their persistence ensures that they will always
play a key role in development and growth outcomes. The challenge that
remains is whether their societies can identify the incentives that
will align elite incentives with society’s goals.
WIDER Angle newsletter, August 2009
ISSN 1238-9544
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Publications from
WIDER Conference on the Role of Elites in Economic Development:
- Sam
Wong - July 2010
Elite Capture or Capture
Elites? Lessons from the 'Counter-elite' and 'Co-opt-elite' Approaches
in Bangladesh and Ghana
Community-based development has been
criticized for its inadequate understanding of
power relationships at the local level, which thus leaves room for
elite capture. This
paper compares and contrasts two case studies, both of which take power
seriously in
their institutional designs. The solar home system in Bangladesh,
represents the
‘counter-elite’ approach and explicitly excludes local elites from the
decision-making
process. The trans-boundary water governance project in Ghana, in
contrast, adopts the
‘co-opt-elite’ approach and deliberately absorbs local elites into the
water committee.
This paper suggests that, while the ‘counter-elite’ approach is not
necessarily effective
in challenging elite domination, because of the structural asset
dependence of poor
people on the elites, the ‘co-opt-elite’ approach risks legitimizing
the authority of the
elites and worsening poverty by implementing ‘anti-poor’ policies. This
paper
concludes that the success of dealing with elite capture lies in the
flexible use of the
‘counter-elite’ and ‘co-opt-elite’ approaches together with the need to
secure alternative
livelihoods and to achieve empowerment with the poor.
- James
A. Robinson - July 2010
Elites and Institutional
Persistence
Particular sets of institutions, once they become established in a
society, have a strong
tendency to persist. In this paper I argue that understanding how
elites form and
reproduce is key to understanding the persistence of institutions over
time. I illustrate
this idea with a simple political economy theory of institutions and
through examples
from Liberia, the US, South Africa and Germany I show how elites
influence
institutions. To change institutions requires having an understanding
of how reforms
influence the preferences, capabilities and strategies of elites.
- Alice
H. Amsden - October 2010
Elites and Property Rights
An elite derives its status from its
relationship to property, whether physical or human
capital. While stable property rights are necessary for everyday
business, unstable
property rights that result in major institutional changes (such as
land reform) may have
a positive impact on economic development. When are the ‘wrong’
property rights
right? Institutional changes have a positive impact on economic
development when a
country’s elite can manage them. To support this generalization we
examine the
managerial capacity associated with elite status, highlighting which
capabilities enable
them to control changes in property rights regimes to their individual
and national
advantage. We compare how nationalization of foreign firms, a radical
change in
property rights, was managed in Argentina, China, Korea and Taiwan
after the Second
World War.
- Johan
Fourie and Dieter von Fintel - October 2010
The Fruit of the Vine? An
Augmented Endowments-Inequality Hypothesis and the Rise of an Elite in
the Cape Colony
The arrival of European settlers at the Cape
in 1652 marked the beginning of what would
become an extremely unequal society. Comparative analysis reveals that
certain
endowments exist in societies that experience a ‘persistence of
inequality’. This paper
shows that the emphasis on endowments may be overstated. A more general
explanation
allows for ‘non-tropical products’ to contribute to the rise and
persistence of an elite, and
consequently inequality. The focus shifts to the production method used
in the dominant
industry – in this case, slave labour in viticulture – and the
subsequent ability of the elite to
extend these benefits to products that were typically not associated
with elite formation in
other societies (such as wheat). The Cape Colony is used as a case
study to show how the
arrival of French settlers (with a preference for wine-making) shifted
production from cattle
farming to viticulture. A large domestic and foreign market for wine
necessitated an
increase in production volume. Given differences in fixed and variable
costs, this resulted in
knecht (wage) labour being supplanted by slave labour, an event which
institutionalized the
elite and ensured that the Cape remained a highly unequal society, with
ramifications for
present-day South Africa.
- William
I. Robinson - January 2010
Global Capitalism Theory and
the Emergence of Transnational Elites
The class and social structure of developing
nations has undergone profound
transformation in recent decades as each nation has incorporated into
an increasingly
integrated global production and financial system. National elites have
experienced a
new fractionation. Emergent transnationally-oriented elites grounded in
globalized
circuits of accumulation compete with older nationally-oriented elites
grounded in more
protected and often state-guided national and regional circuits. This
essay focuses on
structural analysis of the distinction between these two fractions of
the elite and the
implications for development. I suggest that nationally-oriented elites
are often
dependent on the social reproduction of at least a portion of the
popular and working
classes for the reproduction of their own status, and therefore on
local development
processes however so defined whereas transnationally-oriented elites
are less dependent
on such local social reproduction. The shift in dominant power
relations from
nationally- to transnationally-oriented elites is reflected in a
concomitant shift to a
discourse from one that defines development as national
industrialization and expanded
consumption to one that defines it in terms of global market
integration.
- Elise S. Brezis - January 2010
Globalization and the
Emergence of a Transnational Oligarchy
The aim of this paper is to examine the
evolution of recruitment of elites due to
globalization. In the last century, the main change that occurred in
the way the Western
world trained its elites is that meritocracy became the basis for their
recruitment.
Although meritocratic selection should result in the best being chosen,
we show that
meritocratic recruitment may actually lead to class stratification and
auto-recruitment.
In this paper, I show that due to globalization, the stratification
effect will be even
stronger. Globalization will bring about the formation of an
international technocratic
elite with its own culture, norms, ethos, and identity, as well as its
private clubs like the
Davos World Economic Forum. We face the emergence of a transnational
oligarchy.
- Andrés
Solimano and Diego Avanzini - October 2010
The International Circulation
of Elites
International migration analysis often
focuses on mass migration rather than on the
international mobility of elites, which is the focus of this paper. The
paper offers a
three-fold classification of elites: (a) knowledge elites, (b)
entrepreneurial elites and (c)
political elites. We explore the concept of elites and their main
motivation to move
across nations and review indirect empirical evidence relevant to this
type of mobility,
highlighting some channels through which elites can affect
international development.
- Thomas
Cantens - November 2010
Is it Possible to Reform a
Customs Administration?
An ethnographic approach is applied to
Cameroon customs in order to explore the role and the
capacity of the bureaucratic elites to reform their institution.
Fighting against corruption has led
to the extraction and circulation of legal ‘collective money’ that
fuels internal funds. This
collective money is the core of the senior officers’ power and
authority, and materially grounds
their elite status. Nevertheless, when reforming, wilful senior
officers face a major problem. On
the one hand, the onus is on them to improve governance and
transparency, which can challenge
the way they exert their authority. On the other hand, goodwill is not
sufficient. ‘Reformers’
depend on a violent and unpredictable appointment process, driven by
the political will to fight
against corruption and the fact that the political authority has to
keep a close eye on the customs
apparatus that tends towards autonomy, thanks to its internal funds.
Violence and collective
representations weaken the legitimacy of the senior officers, even the
reformers, by pushing
individual skills into the background. This paper questions whether
Cameroon’s use of official
customs data to evaluate individual performance can open up fissures
among customs elites
such that reformers are distinguished from others.
- Joseph
Hanlon and Marcelo Mosse - September 2010
Mozambique’s Elite – Finding
its Way in a Globalized World and Returning to Old Development Models
What makes elites developmental instead of
predatory? We argue that Mozambique’s
elite was developmental at independence 35 years ago. With pressure and
encouragement from international forces, it became predatory. It has
now partly
returned to its developmental roots and is trying to use the state to
promote the creation
of business groups that could be large enough and dynamic enough to
follow a
development model with some similarities to the Asian Tigers,
industrial development
in Latin America, or Volkskapitalisme in apartheid South Africa. But
Mozambique’s
elite has also returned to two other traditions – that development is
done by the elite and
by foreigners. There is little support for development of local SMEs
and agricultural
development has been left to foreign-owned plantations.
- Chipiliro
Kalebe-Nyamongo - November 2010
Mutual Interdependence
between Elites and the Poor
There has been a growing recognition among
scholars that politics matters in the
distribution of resources in society. However, attempts to use a
political economy ‘lens’
with which to explore causes of poverty and strategies for poverty
alleviation have
largely ignored elites. By failing to embrace the crucial role elites
play in the
implementation of pro-poor policy, existing research has not produced a
holistic
understanding of the underlying factors which inhibit or promote action
towards propoor
policy. Historical accounts of the evolution of welfare states in the
UK and USA
inform us that elites prioritization of poverty reduction is driven by
the extent to which
elites and the poor are interdependent, such that the presence of the
poor has a positive
or negative impact on elite welfare. Drawing on research into elite
views of poverty and
the poor in Malawi, this paper argues that in formulating effective,
responsive, and
comprehensive strategies for poverty reduction, the role of elites must
be considered in
addition to the adoption of democratic, economic, and social
institutions.
- Bjorn
Gustafsson and Ding Sai - October 2010
New Light on China’s Rural
Elites
This paper analyses political elites,
economic elites, hybrid elite households and non-elite
households in rural China using household data for 1995 and 2002. We
seek to understand the
determinants of belonging to each of the three elite categories. We
find that education and
military experience positively affect the probability of being a
political elite. The probability of
becoming an economic elite is linked to the age of the head of
household and to the income
level of the county, indicating that opportunities to become an
economic elite have increased
over time, but in a spatially uneven way.
We also investigate disparities in household per capita income as well
as in household per capita
wealth. Asia Market Transition Theory, we find that the relationship
between education and the
household’s economic status became stronger from 1995 to 2002. This
theory also predicts that
payoffs from belonging to the political elite decrease during
transition towards market economy.
Our results show that in the richest counties in 2002, the economic
gain from being a political
elite household was higher than elsewhere and higher than in
high-income counties observed in
1995. We also found that although elite households on average have a
better economic situation
than non-elite households, income inequality and household wealth
inequality in rural China
would decrease only marginally if such disparities were to vanish. In
contrast the spatial
dimension is much more important for income inequality and for wealth
inequality in rural
China.
- Elisa
P. Reis - September 2010
Poverty in the Eyes of
Brazilian Elites
This paper discusses data from a survey and
in-depth interviews on elite perceptions of
poverty in Brazil. De Swaan tried to identify the circumstances under
which elites are
willing to mobilize resources in order to promote poverty reduction.
This paper
questions if de Swaan’s analysis applies to Brazil. The main finding is
that two parts of
de Swaan’s thesis do apply: that poverty is a problem for the rich in
the sense that it
generates negative externalities that they would like to reduce; and
that the elite believe
that there are effective remedies. What is missing for Brazilian elites
is the third element,
namely that the elite see poverty as their responsibility to do
something about it.
- Rekindling Governments from
Within
- The Simple Analytics of Elite
Behaviour Under Limited State Capacity
- Two for the Price of One? The
Contribution to Development of the New Female Elites
- Why Are the Elite in China
Motivated to Promote Growth?
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Maio/2011