The Economic Degradation Process

Abstract

As a student of agricultural development for over thirty years and as an economic policy trouble shooter in many countries for much of that same period, I have observed a recurring policy pattern or process among countries experiencing economic difficulties. This economic degradation process, or EDP, degrades economies worldwide-ranging from latent discomfort in developed countries such as the United States, to severe retardation in centrally planned countries such as Poland and Nicaragua, to immiserization of millions in numerous developing countries. EDP analysis focuses on the web of policies causing economic breakdown and not on the more familiar remedial economic stabilization and structural adjustment policies following an economic breakdown. The EDP emphasizes that corruption in government, parastatal inefficiency, autarky, indebtedness, or overvalued currency cannot be viewed in isolation but are symptoms of a larger process. The economic degradation process stands in contradistincton to the economic immiserization process (Bhagwati, Bodenheimer). The latter attributes third world poverty to external factors, such as declining international terms of trade, transnational corporations, dependency, and colonialism. In contrast, the economic degradation process attributes poor economic performance to internal factors, such as culture, a late start in development, and, especially, domestic policies. EDP places the responsibility for economic growth or decline not on outsiders but principally on the policy choices made by each country. The purpose of this essay is to define the economic degradation process and analyze its causes and cures. I first address stages in the process and implications for agriculture before defining elements of economic policies to avoid the EDP. The third main section lists hypotheses explaining why nations experience the process.