D+C Development and Cooperation (No. 4, July/August 1999, p. 20-22)

In a globalised world, knowledge and information play an ever greater role in economic and social development. Development cooperation must respond to this process and adapt its policies and instruments accordingly. The poor countries must be put in a position to seize the opportunities arising from globality.

The 20th century was an era of national states and ideological confrontations across the world. The 21st century must be one of international cooperation. The global political system of the future will be characterised by international organisations and regimes playing a stronger role. National states on their own are overtaxed in dealing with global problems such as climate change, migration flows, increasing poverty in many parts of the world, environmental degradation, international terrorism and the drugs trade. In his keynote speech on foreign policy of the 21st century at the World Economic Forum in Davos in January this year, German President Roman Herzog once again posed the question of whether politics was in danger of becoming a "mere repair shop for economic developments which are damaging in human and social terms". He said politics must not be robbed of its essence. He also asked: "Is it possible to turn around the pressure to conform, which globality exercises on politics and to turn it to constructive purposes and thus to the aim of global social justice?"

Development policy is
preventive security policy

Development policy as part of international cooperation is preventive security policy, since Germany as a member of the Western alliance is interested in political stability in the world's developing regions and also is challenged to help shape the global changes now taking place. The key areas of global risk development are poverty and hunger, refugee flows, regional ethnic conflicts, environmental degradation and climate change, with all their impacts and economic interests. That raises a broader concept of security for national and European interests which goes beyond military instruments for preserving security interests ('human security'). Development policy can contribute to reducing risks, because development policy combats the causes of crises. The costs caused by crises, such as civil wars, destruction of the environment, climate change or refugee flows, are much greater than those for a preventive, farsighted policy. Investments by means of development policy are in each case more cost-effective than subsequent reparations. Not least, the war in Kosovo has made that clear.

A new global competitive arena has emerged with the liberalisation of world trade, the creation of the European Single Market, the disappearance of bloc and system frontiers, the revolutionising of international telecommunications and transport networks, and the development of new growth regions. The effectiveness and creative power of the political systems in establishing and expanding partnerships for political security and economic and social development is one of the main tasks of future development policy, which must contribute to them.

Political security alliances and
economic development partnerships

Under these conditions, which here have merely been outlined, new tasks also arise for the development dialogue with the partner countries. The traditional self-perception of development policy was the promotion of economic and social development in these countries. This was based on the conventional wisdom that the developing countries must model themselves on the industrialised nations. Now, however, development policy is seen as having to be founded on the emergence of stable regional security partnerships as part of international relations, which rest on economic and social development partnerships. Development policy thus is the third element of international relations, after foreign and security policy. The specific instruments of all three political sectors contribute to global security. On the whole, Germany's concept and implementation of its development policy has gained a good international reputation. Germany was one of the first industrialised nations to link the allocation of funds with criteria such as observance of human rights, the rule of law, and legal certainty. Other industrialised nations have followed suit.

The instrument of development dialogue with the partner countries must ­ under these changed conditions, and perceiving development policy as part of security policy ­ be continued, strengthened and expanded at the political, economic and cultural level. The guiding principles of the political dialogue remain the principles of openness and reciprocity, cultural norms and values due to disparate traditions, different and common interests, and finally the mutual recognition of cooperation strategies. At stake are reforms and changes, which also are required in the industrialised nations.

At the political level, development dialogue topics remain relevant in order to improve general conditions such as:

• human rights and democratisation;
• reform of multilateral cooperation;
• regional political and economic cooperation strategies;
• good governance;
• decentralisation and consolidation of local institutions;
• strengthening of civil society organisations (associations, trade unions, NGOs) and network building; and
• participation of the people in political decision-making processes going beyond parliamentary elections.

Political and economic stability are only sound on a lasting basis if common international legal standards are valid and realised. This applies above all to human rights and the democratic constitutional state. The German philosopher, Jürgen Habermas, has pointed out that at the global level human rights are still weakly institutionalised; he speaks of an "under-institutionalising of world civic rights". The Declaration of Universal Human Rights of 1948, the United Nations' two human rights pacts of 1996, the final recommendations of Agenda 21 of 1992, and the results of the UN Conference on Human Rights of 1993 make clear by mutual agreement that democracy, development and the realisation of human rights are inseparable, and that they strengthen each other. It is laid down that human rights are more than a moral orientation of political action; they are rights that must be implemented and realised in national constitutions. Habermas says: "Only when human rights have found their place in a global democratic legal system, like that of basic rights in our national constitutions, shall we be able to assume at a global level that the addressees of these rights are at the same time their authors." The democratic state ruled by law allows 'participatory democracy' for economic, social and cultural development, meaning participation by all sections of the population in political life ­ and not only on polling day. That is one of the basic preconditions for sustainable development that respects human dignity and eliminates poverty.

At the economic level, the main theme of the social market economy should be linked with ecological modernisation. In its present form, the industrialisation process cannot be continued in global terms. Extending the industrial societies' ways of production and consumption to all regions of the world would mean irreparable degradation of natural living conditions, which is already much advanced. Development policy entails also a reorientation of energy policy with emphasis on energy-saving. The industrial countries must accelerate the development of renewable sources of energy ­ and this in close cooperation with the private sector.

If large social groups drop out of the formal economy and social inequalities worsen, it will not only be a matter of addressing the concept of 'good governance' or 'development-oriented state action' at those responsible for government. Industry and companies will also have to be committed to 'development-oriented economic action'. That is why strenghtening of the market economy's social dimension is required in order to reduce the deep social divisions that present a considerable risk for the acceptance of democracy and the market economy.

At the cultural level, globalisation processes must be linked with intercultural understanding. Hardly any society can now avoid the dynamics of economic globalisation. Economic, political and social decisions increasingly will impact on the cultural identities of individual societies and regions. But understanding between cultures will be one of the preconditions for enabling rational and sustainable forms of co-existence in this world. Where it is not possible to free people from poverty, give them prospects of a life in human dignity, and building on that the chance to develop their mental potential and qualities, there can be no sensible understanding that spans the borders of national states, regions and cultures. And if it is not possible to translate awareness of these linkages into a political network and developmental dynamism on a global scale, the industrialised societies, along with the rest of the world, will also have no future.

The global communication possibilities offered by new technologies lead inevitably to more exchanges between cultures. Commutable elements of cultures will be integrated in others, giving rise to a growing diversity of behaviour patterns and values. Intercultural understanding is a basis of communication and reaching consensus. It can result in people seeing the world through the eyes of those of other cultures, whose perspectives should also be incorporated in one's own thinking in order to find common approaches to solving the problems of the future.

Opportunities for knowledge and
information: shape globalisation

The development dialogue of the future must take account of a reassessment of knowledge and information in the context of globalisation. In a globalised world, how can one bridge and perhaps narrow the clearly emerging gaps in knowledge and the information problems between countries and sections of the population? This process has meanwhile become all emcompassing: the impacts of globalisation are showing in commerce and industry, politics, society and culture. Its dynamics cannot be halted. The idea of getting control of it raises so far unsolved issues of effective mechanisms and institutions. Globalisation must be accepted as a fact so that it can be examined free of prejudices. Knowledge and information are crucial here. They take an economic point of view, particularly as the radical changes the world is going through are in fact to a considerable extent economically motivated, or are the effects of economic processes. Technological breakthroughs, the new industrial revolution towards a global information society, and the integration of markets are all making their impacts.

1. In future, the ability of national economies to absorb globally available knowledge and use it productively will define their economic power, and thus the well-being of their societies, even more than before.

The opening and openness of markets, as characterised by globalisation, usually is based on the benefits of increased exports, as well as direct investment, or imports of capital. But these benefits are perhaps often overvalued. Certainly, the import side is insufficiently differentiated. The openness of societies to imports of knowledge, ideas and information, and the ability of their national economies to integrate effectively and use productively ideas from across their borders has proven to be a major successful feature. Poor countries differ from rich ones not only in that they have less capital, but also less knowledge. This applies equally to economic, technological and social knowledge. Knowledge is difficult to generate and requires high investment, which is why it is produced in industrialised nations. Developing countries, however, can produce their own knowledge or adapt imported knowledge to their needs. This also is difficult, and demands appropriate investment in industrial and educational policy. Not only developing country governments, but also development cooperation institutions, must face the challenge of how they aim to implement this knowledge. Not least, we all should get to grips with the idea of a global knowledge and learning community. In its World Development Report 1998/99, titled Knowledge for Development, the World Bank did, in fact, set a signal. But practical answers are still missing.

2. The economic success of the Asian threshold countries is credited to their successful handling of knowledge, whereby the promotion of 'human capital' by education is only one factor among others. Education without openness to innovation and without knowledge in the broader sense does not lead inevitably to economic development.

Globalisation needs additional reasons to explain how economic growth takes place in a global economy. The Asian financial crisis and the way it spread by contagion have shown that all too clearly. Another example is the long lasting growth of the US economy in recent years, which can no longer be explained by conventional macroeconomic paradigms. Frequently, the theory of endogenous growth is cited. We shall say no more about that here other than that it raises the question relevant to the developing countries of whether specialisation in technologically less dynamic sectors is precisely what hinders growth. These are the sectors upon which, according to current conventional wisdom, the developing countries should focus. The experts have not yet decided how politics is to deal with this theoretical reorientation. But one thing is certain: knowledge, such as ideas on how the production process is to be organised, how a new product is to be made, or for which product there is a latent demand, is being seen more and more as a crucial determinant of growth. Growth strategy based on knowledge, however, is limited neither to technical knowledge nor to 'human capital'. Rather, it is based on knowledge in the broader sense, in that it combines investment in the knowledge components contained in real assets with investment in people and institutions in order to promote their ability to absorb and use knowledge. That includes opening goods and capital markets in an appropriate way. Although it is difficult to measure the aggregated effect of knowledge on growth, there is an opportunity to adjust concepts and practical approaches of development cooperation to the new demands.

3. Information problems inhibit development in both the social and economic sector. Appropriate institutions can reduce them. The institutional apparatus of a country and its proper functioning or capability to assert itself, as well as its promotion, must in future be paid more attention.

Poor countries have fewer public institutions to ensure the quality of the information their people need to be able to lead better lives. Often there are no quality guarantees for products, no standards for evaluation of market services, nor means to assert them effectively. For companies and customers alike, important information, such as the creditworthiness of firms, the promotion criteria of certain programmes, or the prices of services, is not collected or made available. This works against both consumers and producers, but is especially negative for poor people. Because of the overrating of their loan and insurance risk due to a lack of more precise information, private sector services for them are overpriced in terms of interest rates, and social security including health insurance is not available to them. Appropriate institutions and institutional arrangements to reduce "moral hazard" problems can contribute to dismantling these development obstacles. Furthermore, transparency is also a basis of democratic decision-making and delegation of political power.

4. Knowledge and information are decisive components of combating poverty. Knowledge and information determine economic and social strength, precisely in closed societies or social segments. Modern communication technologies offer an opportunity, if they are used meaningfully.

New communication technologies shrink physical and social distance and dismantle barriers, borders and time-zone problems. That means even remote locations and marginal groups can utilise a fast-growing body of knowledge. But that is offset by the equally growing danger that precisely the poor and the poorest of the poor will have no part in the communications revolution because they lack the material and personal prerequisites of knowledge and self-confidence. This risk should not hinder a grasping of the opportunity. More and more global networks are emerging which make efforts to provide access to knowledge and information to all, and/or create the preconditions for everyone, including the poor, to use it. This means NGOs and organisations of the poor will have an important role to play. By means of modern communications technologies, they can not only better inform their clients on such matters as prices and thereby break the monopolies of dealers, as the Grameen Bank in Bangladesh is aiming at with a mobile telephone network for its customers and decentral banks. They can also make themselves heard more clearly, as human rights organisations have shown by publicising rapidly, by e-mail and Internet bulletins, worldwide human rights violations at a single location, thus outflanking the information monopolies of authoritarian regimes. Development cooperation should examine these possibilities in order to adapt its promotional repertoire even more consistently in the future.