NQETW: From third world to first

Out of the maelstrom of economic and political crisis, the ‘Third World’ is not what it used to be; at the heart of most observations along this line, however, is the argument that as an analytical category the idea of the Third World is obsolete. A division of the world into First and Third fails to capture the heterogeneity of the economic and political trajectories of the great mass of the world’s countries, this line of argumentation claims.

A piece in last week’s Economist offers a different take in trying to chart the shifting place of what being a ‘developing country’ means. It reminds us that at the heart of the idea of the Third World is not just about aspirations to achieve raw wealth and brute power, but about influence in world politics; not hemmed in by superpowers, but aspiring towards genuine autonomy and policy choice in a world where leadership does not automatically fall on the shoulders of the ‘old’ great powers.

That moment may be on its way, the Economist’s correspondent writes. See an extract (some emphases in bold):

The term “third world” used to mean poor and dependent. In the 1950s and 1960s a branch of economics even emerged called “dependency theory”; one of its most eloquent voices, Fernando Henrique Cardoso, became president of Brazil. Almost by definition, third-world countries were economic failures (successes, like the East Asian tigers, were seen as special cases). “Third world” countries often ran irresponsible fiscal and monetary policies and, even when growing fast, they still relied on the West for capital and markets.

One part of this picture is still true. The world remains binary. Over 1 billion people live on $1.25 or less a day, more than did when the term third world was coined. Many live in countries, like Brazil and India, that seem to have escaped from the third world. And 60 or so small poor countries retain third-world characteristics: aid dependency, corruption, violence. Alison Evans, the head of the Overseas Development Institute, a British think-tank, argues that it makes more sense to talk about the changing composition of the third world, rather than to make sweeping pronouncements about the whole thing.

Still, some generalisations are justified. Most developing countries have rejected populism. Now, it is rich countries that are running vast budget deficits. The IMF has said capital controls and industrial policy might work, after all. The economic mainstream has moved and it is no longer possible to distinguish between third and first worlds on the basis of economic policy.

Nor are emerging markets as dependent on aid from the West as they used to be. China recently agreed to finance oil refineries in Nigeria worth over $23 billion—nearly twice the total increase in aid to Africa over five years in one deal. Private flows to developing countries are worth three times official aid and Ngozi Okonjo-Iweala, a Nigerian former finance minister, thinks “it’s high time Africa saw and presented itself as the fifth BRIC, an attractive destination for investment, not just aid.”

The upshot is that it is no longer clear who depends on whom. Poorer economies still depend on Western markets: their slump at the end of 2008 showed that. But their recovery reveals that they are more resilient than they used to be, partly because their economic policies are better and partly because they trade more with each other and protect one another from the worst of rich-nation recession. Trade between developing countries, and between them and the BRICs, is rising twice as fast as world trade.

Even more strikingly, while growth has headed south, debt has headed north, the opposite of what happened in the 1970s and 1980s, when poor countries ran up vast debts. Gross public debt in rich countries is rising, from about 75% of GDP at the start of the crisis in 2007 to a forecast 110% by 2015, says the IMF. Public debt in emerging markets is below 40% of GDP and flat.

As a result, the prudent members of the third world are becoming safer places to invest than the profligate ones of the first. South Africa has a higher credit rating than Greece. Brazil, Indonesia, Turkey and Peru have all had their credit ratings upgraded this year. Those of the PIGS—Portugal, Ireland, Greece and Spain—have all been downgraded. Remarkably, the yield on ten-year government bonds is the same in Thailand as it is in America. Amar Bhattacharya, the head of the Group of 24 (a body of poorer countries), argues that the first world depends at least as much on the third as vice versa because the large and growing contribution to global demand and high returns in poorer countries are indispensable to rich ones in their attempts to return to growth and reduce debt.

The upshot of the correspondent’s argument is nevertheless that this coming of age is still the sign of the end of the Third World. The reasoning may be in how real power and influence are accruing to this group of countries, rather than its untenable fragmentation, but proclaiming “the reality of the third world’s end” is how the piece concludes.

And yet, the somewhat insurgent tone of Third World-ness still holds resonance, even (regardless?) if the developing world is the engine of growth in the world economy or holds more cards than it ever has before. The aspiration for greater influence in the face of the old order may not be belligerently expressed, but this normative underpinning still holds true for many.

Power means little if it isn’t coupled to purpose. For as long as this self-image that marries quasi-historical victimhood with a sense of entitlement continues, so too will the salience of ‘being a developing country’ as a rallying cry. The economic-political material bases of Third World-ness has clearly changed over the years, as the Economist illustrates; but the stickiness of the idea remains.

Note: NQETW is my rather catchy acronym from a previous post, Not Quite the End of the Third World, which is the jumping-off point for a new, occasional series of themed posts on the continuing traction of the ‘Third World’ and what lies beneath the idea of ‘being a developing country’ in contemporary international affairs.

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One thought on “NQETW: From third world to first

  1. Nick L says:

    I think you are right in this. My view, broadly is that there is a gap currently between the momentum and growing weight of this group of successful developing countries and their influence in the process of decision making over global issues. This gap stokes idea of solidarity amongst nations outside of the core of OECD nations.

    The idea of the ‘Third World’ has generally been strongest when less economically developed countries were doing best, not when they were doing worst. So from decolonisation to the oil crisis there was a strong banner around which Third World countries organised. During the lost decade of the 80s and on into the 1990s, the idea of the Third World faded away. Now we are seeing a quiet resurgence, although the claims are phrased in the language of Davos and development organisations rather than that of national liberation struggles.

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