I got this one from the Globalisation Institute’s blog:
Hilary Benn, the UK’s International Development Secretary, used a speech yesterday evening to attack the anti-capitalism embedded in some of the left-wing NGOs. He said:
The Make Poverty History and other campaigns last year focused on more and better aid, debt relief and international obstacles to trade – on education, on HIV/AIDS – all absolutely critical and where we have made considerable progress.
But I do feel that many of these campaigns say little explicitly about the creation of more and better jobs for poor people. I think there is little real debate about growth.
Amongst some there is even hostility to the idea of international integration into the global economy. Some argue that globalisation is a race to the bottom. And amongst others there is a mistrust of the private sector.
In calling for greater attention to be paid to free market development to lift people out of poverty, Hilary Benn makes a number of very important points in addition to the ones noted above; none, however, more important than his emphasis on institutions and effective government.
Perhaps more important than anything else, is the ability of governments to promote development – to prioritise wealth and economic growth and job creation.
Unless you have a capable and effective state it is impossible to make progress in the areas I described earlier. Strong institutions matter more than anything else in explaining the difference in growth performance between different countries.
It’s necessary for making markets work properly, for regulating markets. For example the interests of consumers and workers need to be protected along side the legitimate interests of producers.
CIPE has long recognized the important role that good government [and good governance] plays in development. One of the myths of development is that economic growth will take place when government gets out of the way. There is also a view out there that government needs to micromanage and control the economic process to make sure that it is “fair.” Experience suggests that neither is true. As Nobel Prize winning economist Douglass North argued, the proper role of government is to set up “the rules of the game” and, most importantly, enforce those rules in a fair and consistent manner. For more, see CIPE’s democratic governance policy paper.
And I join the call for more organizations that promote free market development. I am a firm believer that free markets do work and they are, ultimately, the solution to poverty.
Published Date: January 26, 2006