The challenges faced by nation states in the 21st century vary greatly in terms of economic development.
Specifically within a development economics context, a paucity of useful and successful policy guidance is prevalent. As a result, more often than not, broad policy prescriptions have been formulated to attempt to address the economic problems of developing world countries as one homogenous grouping.
With this standardised approach to development, often these prescriptions have tended to use advanced, developed world countries as a reference point or best practice case study for solving developing world economic challenges.
As a consequence of this approach, a plethora of economic theory and thought has either focused on isolating developing world countries from perceived inequity within the global economic system or more nefariously, blindly imitating and opening their economies to the developed world.
However, these homogenised economic policy prescriptions have, over a sustained period of time, failed to examine sufficiently the existing structural bottlenecks, as well as structural benefits that an individual developing world economy might have to offer.
There has traditionally only been limited recognition of how developing economies require different policies at different stages of development in terms of their own economic growth and development.
Therefore, the need to democratise development economics – specifically within the developing world – is now more critical than ever.
Continuous technological innovation and structural change is inherent in modern economic growth in both developed and developing world countries.
However, the policy challenges for achieving sustained economic growth and stability differ widely between developed and developing countries.
One of the most nuanced differences between the two is derived from the fact that industries in the developed world are generally on the global technological frontier, while industries in developing world are within the global frontier.
The former requires indigenous innovation in technology to push the frontier outward. The latter faces the challenge of developing their economies according to their comparative advantages and to tap into the delayed advantages of adopting already existing technology borrowed from the developed world.
With the result, there are different policy challenges for indigenous innovation versus efficient adoption.
As a consequence of these challenges, policy frameworks for developed and developing nations should not be identical.
Middle-income countries (such as South Africa) generally possess industries that represent a mix of frontier technology, and less advanced technology.
The economic theories that originate in the developed world have traditionally attempted to explain and promote growth levels strictly in a developed world context.
As such, they may not always be relevant within a developing world context because of the differences in the challenges and opportunities which have been discussed above.
Over the past three decades however, successful developing countries have generated many useful lessons for how to achieve dynamic growth.
Their experiences and policy implementations will thus be more relevant for other developing countries than the experiences of the developed countries because of the similarity of their opportunities and challenges.
Most developing countries that have followed the dominant theories of development have more often than not failed to achieve the goal of narrowing the income gap with developed countries.
Conversely nations that have managed to achieve levels of parity have tended not to follow the dominant development theories purported by the developed world. The theories and experiences that are generated from developing countries have proved to be more relevant for other developing countries over time, due to the similarity in their opportunities and constraints. As a result, there are many areas where policy innovation has come from the developing world itself.
In terms of macro-economic stabilisation, Chile has developed a cyclically adjusted fiscal rule that is a global model-for rich and poor countries alike.
Similarly, the African continent could learn much from Brazil’s successful models for expanding agricultural production in regions with similar climatic and soil conditions.
Additionally, innovative social policies in Brazil and Mexico, such as conditional cash transfers, have been adapted and adopted in numerous other developing countries.
East Asian economies, including Japan, Korea, China, Singapore and Indonesia, provide many useful experiences of developing from backward agrarian economies to modern industrialised economies through the state’s facilitation in a market-based mechanism.
The rise of “South-South” cooperation and exchange will also facilitate an increase in trade, financial flow, and the research capacity in developing countries over time.
As a result, the thinking that may have direct relevance for developing countries development is likely to come increasingly from the developing world themselves in the coming decades.