What are the consequences of the shift from a two hump to a one hump world?

March 7, 2019

     By Duncan Green     

I’ve been using this idea in a few recent talks, and thought I’d test and improve it by bouncing it off FP2P readers. It uses a simple pair of graphs on global income distribution to start thinking through how the ‘aid and development’ sector is changing, or resisting change.

Two humps in global income

The starting point is that we have moved from a two hump to a one hump world – long since pointed out by Branko Milanovic, Max Roser, Hans Rosling et al. In 1974 the two humps shaped the global narrative on development – there is a poor hump (‘the South’) and a rich hump (‘the North’). Asia largely accounts for the South. Screengrabs from the wonderful Gapminder.

Key to colours
Key to graph colours

Development was about the North helping the South catch up (remember First and Third World?), whether through aid, or a fairer deal on trade and capital flows – a ‘New International Economic Order’ was proposed by the UN in 1974. That North-South thinking became a deep frame which lingers on, especially among the older cadre of aid workers and activists, Northern politicians and in the UN system.

Fast forward to 2015 and we now have a one hump world. China and much of the rest of Asia have moved up the income scale. What does this mean for aid and development?

One hump in global income

North-South is no longer a particularly useful view of the world, (with the partial exception of sub-Saharan Africa). That’s the point brilliantly made by Hans Rosling. But what else follows from the shift? I see three trends, each of which is being resisted by the status quo ante.

Firstly, inequality: Instead of the nation state being the most useful unit in understanding global differences, what matters are the divides between social groups within and between countries – that is partly why inequality has shot up the agenda in recent years. The other reason is the unequal distribution of the wealth generated by the global economy over the last 30 years, memorably described by Branko Milanovic’s elephant graph (two camels and an elephant – nice). But talking about inequality is far more threatening for elites than talking about poverty, so there’s plenty of push back, or dilution of the concepts (think ‘inclusive growth’).

Second, the localization of politics: an increasingly vocal, literate and organized civil society and growing local middle classes have shifted the focus of social and political change to domestic arenas – issues like taxation, governance, welfare systems are now where they should be – primarily topics for national debate. In the aid sector, the rise of southern civil society organizations has prompted increasing pressure for aid to be channelled through them, rather than northern aid agencies, but the aid sector is proving highly resistant to reform. The same goes for academia, where tension is growing over the northern domination of research and even the definition of what constitutes knowledge about development.

Third, a shift to common challenges. With the exception of a shrinking number of aid-dependent countries, many of them with fragile or predatory states, and/or conflict affected, the rest of the world increasingly faces challenges that are either shared or collective: shared = road traffic, pollution, obesity, mental health, which are issues to be addressed in any country; collective = climate change, tax evasion etc, where solutions have to be collective, or they won’t work. For both shared and collective challenges, aid $ may not be the main issue – it’s more about joint action, exchange of ideas and experiences – i.e. a more grown up conversation between equals than the inherently unequal dialogue between donor and recipient. But much of the political and social appeal of the aid business is built on the exotic – diseases the North doesn’t have, farmers that barely exist, the poverty porn of extreme hunger. Mental health, road traffic or tobacco addiction don’t seem to work as well and struggle to get the attention they deserve.

So there’s 3 consequences of the shift to a one hump world – any others?

March 7, 2019
Duncan Green