The Development Economist Who Wasn’t – Foreign Policy

Report on the Renewed Relevance of Hirschmanian Economics for Achieving Sustainable Development Goals

An analysis of historical development economics reveals a pattern of singular, universalist models, from the “Big Push” investment strategies of the 1960s to the post-Cold War neoliberal Washington Consensus. These approaches have demonstrated limited success in fostering holistic and equitable progress, necessitating a re-evaluation of development frameworks through the lens of the United Nations Sustainable Development Goals (SDGs). In the current post-neoliberal context, the theories of development economist Albert O. Hirschman offer a relevant, albeit cautionary, perspective on achieving these goals.

Hirschman’s Framework: A Contextual Approach to the SDGs

Hirschman’s work provides a foundational critique of one-size-fits-all development recipes, advocating instead for an eclectic, country-specific methodology that aligns closely with the integrated nature of the SDGs.

Core Tenets for Sustainable Development

• Rejection of Universalism: Hirschman opposed grand, universal designs, favoring localized and eclectic development projects. This approach supports the principle that strategies to achieve the SDGs must be tailored to specific national and sub-national contexts.
• Embrace of Unbalanced Growth: In contrast to models requiring massive, coordinated investment across all sectors, Hirschman argued that growth is inherently unbalanced. Strategic focus on key sectors can create productive tensions and bottlenecks, inducing policy reforms and stimulating wider development. This methodology can be applied to prioritize interventions that advance key goals such as SDG 9 (Industry, Innovation and Infrastructure) or SDG 7 (Affordable and Clean Energy).
• Acknowledgement of Complexity: A central tenet of his work is that policymaking operates with partial information and inevitably produces unanticipated effects. This calls for epistemic humility and adaptive management in the pursuit of the 2030 Agenda, recognizing that progress towards one SDG may have unforeseen impacts on others.

Geopolitical Constraints on the 2030 Agenda: A Hirschmanian Warning

While Hirschman’s embrace of eclecticism resonates with the needs of the SDG framework, his broader body of work highlights significant geopolitical challenges that threaten the viability of sustainable development strategies, particularly for nations in the global south.

Asymmetric Interdependence and its Impact on SDG 10 and SDG 17

In his 1945 book, National Power and the Structure of Foreign Trade, Hirschman analyzed how powerful states can create asymmetric economic dependence to exert political influence. This concept of “weaponized interdependence” directly undermines the principles of global partnership and cooperation enshrined in SDG 17 (Partnerships for the Goals).

1. Hindrance to Economic Growth: For smaller and less developed economies, dependence on a larger economic power for trade or strategic inputs narrows the pathway to achieving SDG 8 (Decent Work and Economic Growth) on their own terms.
2. Exacerbation of Inequality: Such power dynamics can worsen global disparities, running counter to SDG 10 (Reduced Inequalities). The risk of economic coercion forces smaller nations into policy concessions that may not align with their sustainable development priorities.
3. Contemporary Relevance: Current geopolitical trends, including China’s dominance in green technology supply chains and the United States’ use of economic leverage, illustrate the persistent dangers of asymmetric dependence that Hirschman identified.

The Erosion of Commercial Peace and its Threat to SDG 16

Hirschman’s later work, The Passions and the Interests, explored the long-held belief that economic interdependence could act as a pacifying force, taming conflict by focusing nations on material interests. The decline of faith in this “commercial peace” theory has profound implications for SDG 16 (Peace, Justice and Strong Institutions).

• The symbiosis between open economic policy and foreign policy has collapsed. In the neoliberal era, economic integration was seen as a dual path to prosperity and security.
• Recent events, such as rising Sino-American tensions despite deep economic ties and Russia’s invasions of its neighbors, have falsified this optimistic worldview for many policymakers.
• A global environment characterized by increasing autarky and conflict is fundamentally hostile to the cooperation required for the 2030 Agenda. It limits development choices and undermines the stable institutions necessary for sustainable progress.

Conclusion: A Constrained Path Towards Sustainable Development

The current global landscape aligns with Hirschman’s call for heterogeneous, context-specific development policies, which are essential for addressing the complexities of the Sustainable Development Goals. However, his complete oeuvre serves as a critical warning. The pervasive threat of weaponized interdependence and the breakdown of the commercial peace create severe constraints on development strategies. The absence of a collective Hirschmanesque optimism about what can be achieved through international cooperation poses a formidable barrier to realizing a just and sustainable future for all.

Analysis of the Article in Relation to Sustainable Development Goals

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article’s central theme is the theory and practice of economic development. It critiques various historical models, such as the “Big Push” and the “neoliberal Washington Consensus,” and explores Albert O. Hirschman’s alternative, context-specific approach to fostering economic growth in “poorer countries.” The entire discussion revolves around strategies to achieve sustainable economic progress.

• SDG 10: Reduced Inequalities

  The article directly addresses inequalities between countries by discussing the vulnerability of “smaller and less developed economies.” It highlights Hirschman’s warning about “asymmetric dependence,” where larger economies can use trade to exert power over smaller ones, thus perpetuating global economic disparities.

• SDG 17: Partnerships for the Goals

  The role of global partnerships, particularly in trade and finance, is a key topic. The article examines the function of “international financial institutions” and the structure of foreign trade. It also analyzes the breakdown of cooperative partnerships through concepts like “weaponized interdependence” and “geoeconomics,” where major powers use economic leverage for political concessions, undermining the principles of a fair multilateral system.

• SDG 16: Peace, Justice and Strong Institutions

  The article connects economic policy to peace and security by discussing the “commercial peace” theory—the idea that “complex economic interdependence could act as a brake on conflict escalation.” It then notes the “decline of faith” in this theory, citing how Russia’s economic integration with the EU did not prevent its aggression against Georgia and Ukraine, linking development strategies to global stability.

• SDG 9: Industry, Innovation and Infrastructure

  While not the main focus, the article implicitly relates to this goal by discussing different strategies for industrial development. It mentions the “Big Push” school’s advocacy for a “surge of investment across every major economic sector” and Hirschman’s focus on “sectoral targets of opportunity” and “forward and backward linkages,” which are core concepts of industrial policy and infrastructure development.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Under SDG 8 (Decent Work and Economic Growth):

  • Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article is fundamentally about the debate over the best “recipe for economic development” to achieve this growth, contrasting universal models with Hirschman’s call for a “contextual, country-specific approach.”
  • Target 8.2: Achieve higher levels of economic productivity through diversification and technological upgrading. Hirschman’s strategy of focusing on “sectoral targets of opportunity” and leveraging “forward and backward linkages” is a direct method for promoting economic diversification and increasing productivity.

• Under SDG 10 (Reduced Inequalities):

  • Target 10.a: Implement the principle of special and differential treatment for developing countries. The article’s discussion of “asymmetric dependence” and the vulnerability of smaller economies to pressure from larger trade partners underscores the rationale behind this target, which aims to create fairer trade conditions.

• Under SDG 17 (Partnerships for the Goals):

  • Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system. The article highlights threats to this target by describing how “geopolitics can trump market economics” and how major powers like China and the United States use economic leverage to “extract a variety of economic and political concessions,” a practice known as “weaponized interdependence.”

• Under SDG 16 (Peace, Justice and Strong Institutions):

  • Target 16.1: Significantly reduce all forms of violence and related death rates everywhere. The article connects to this target by analyzing the failure of the “commercial peace” theory. It notes that deep economic ties did not prevent conflict, as seen when the “European Union consciously pursued a strategy of engaging with Russia as a means of pacifying it: Ask Georgia and Ukraine how well that has worked out.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Implied Indicators for Target 8.1:

  • Annual GDP growth rate: The entire discussion of economic development strategies implicitly uses the rate of economic growth as the primary measure of success or failure of a given model.

• Implied Indicators for Target 10.a:

  • Trade dependency metrics: The concept of “asymmetric dependence” implies the use of indicators that measure a smaller country’s reliance on a single, larger trading partner. A high concentration of exports or imports with one dominant partner would indicate vulnerability.

• Implied Indicators for Target 17.10:

  • Incidence of coercive economic measures: The article’s mention of “weaponized interdependence” and the use of economic leverage by the U.S. and China implies that the frequency and scope of tariffs, sanctions, and other trade pressures used for political ends can serve as an indicator of the erosion of a rules-based trading system.

• Implied Indicators for Target 16.1:

  • Frequency of armed conflict between major trading partners: The article uses the conflict between Russia and its neighbors (Georgia, Ukraine) despite their economic ties with the EU as evidence against the “commercial peace” theory. This suggests that the outbreak of such conflicts is a key indicator of the failure of economic interdependence to ensure peace.

4. Table of SDGs, Targets, and Indicators

Source: foreignpolicy.com