At the top of the agenda everywhere in the Global South was economic development, a process that meant growth or increasing production as well as distributing the fruits of that growth to raise living standards. This quest for development, now operating all across the planet, represented the universal acceptance of beliefs unheard of not many centuries earlier—that poverty was no longer inevitable and that it was possible to deliberately improve the material conditions of life for everyone. Economic development was a central promise of all independence struggles, and it was increasingly the standard by which people measured and granted legitimacy to their governments.

Achieving economic development, however, was no easy or automatic task. It took place in societies sharply divided by class, religion, ethnic group, and gender and in the face of explosive population growth. In many places, colonial rule had provided only the most slender foundations for modern development, as new nations often came to independence with low rates of literacy, few people with managerial experience, a weak private economy, and transportation systems oriented to export rather than national integration. Furthermore, the entire effort occurred in a world split by rival superpowers and economically dominated by the powerful capitalist economies of the West. Despite their political independence, most developing countries had little leverage in negotiations with the wealthy nations of the Global North and their immense transnational corporations. It was hardly an auspicious environment in which to seek a fundamental economic transformation.

Beyond these difficulties lay the question of what strategies to pursue. The academic field of “development economics” was new; its experts disagreed and often changed their minds; and conflicting political pressures, both internal and international, only added to the confusion. All of this resulted in considerable controversy, changing policies, and much experimentation.

One fundamental issue lay in the role of the state. All across the developing world and particularly in newly independent nations, most people expected that state authorities would take major responsibility for spurring the economic development of their countries. After all, the private economy was weakly developed; few entrepreneurs had substantial funds to invest; the example of rapid Soviet industrialization under state direction was hopeful; and state control held the promise of protecting vulnerable economies from the ravages of international capitalism. Some state-directed economies had real successes. China launched a major industrialization effort and massive land reform under the leadership of the Communist Party. A communist Cuba, even while remaining dependent on its sugar production, wiped out illiteracy and provided basic health care to its entire population, raising life expectancy to seventy-six years by 1992, equivalent to that of the United States. Elsewhere as well—in Turkey, India, South Korea, and much of Africa—the state provided tariffs, licenses, loans, subsidies, and overall planning, while most productive property was owned privately.

Yet in the last three decades of the twentieth century, an earlier consensus in favor of state direction largely collapsed, replaced by a growing dependence on the market to generate economic development. This was most apparent in the abandonment of much communist planning in China and the return to private farming (see “China: Abandoning Communism and Maintaining the Party” in Chapter 20). India and many Latin American and African states privatized their state-run industries and substantially reduced the role of the state in economic affairs. In part, this sharp change in economic policies reflected the failure, mismanagement, and corruption of many state-run enterprises, but it was also influenced by the collapse in the Soviet Union of the world’s first state-dominated economy. Western pressures, exercised through international organizations such as the World Bank, likewise pushed developing countries in a capitalist direction. In China and India, the new approach generated rapid economic growth, but also growing inequalities and social conflict. But as the new millennium dawned, a number of developing countries once again asserted a more prominent role for the state in their quests for economic development and social justice. In China, Russia, Brazil, Saudi Arabia, Mexico, India, and elsewhere, state-owned companies currently buy and sell shares on the stock market, seeking profits in an economic system that has been called “state capitalism.” Thus the search for an appropriate balance between state action and market forces in the management of modern economies continues.

A related issue involved the most appropriate posture for developing countries to adopt toward the world market as they sought to industrialize. Should they try to shield themselves from the influences of international capitalism, or were they better off vigorously engaging with the global economy? In the aftermath of the Great Depression of the 1930s, many Latin American countries followed the first path. Their traditional reliance on exporting agricultural products and raw materials had largely collapsed as the world economy sharply contracted (see Chapter 20, page 893). So they chose an alternative approach, known as import substitution industrialization, intended to reduce their dependence on the uncertain global marketplace by processing their own raw materials and manufacturing their own consumer goods behind high tariff barriers if necessary.

Brazil, for example, largely followed such policies from the 1930s through the late 1970s with some success. Between 1968 and 1974, the country experienced rapid industrial growth, dubbed the “Brazilian miracle.” By the early 1980s, the country produced about 90 percent of its own consumer goods. But Brazil’s industrialization was also accompanied by massive investment by foreign corporations, by the accumulation of a huge national debt to foreign lenders, by periodic bouts of inflation, and by very high levels of social inequality and poverty. Brazil’s military president famously remarked in 1971: “The economy is doing fine but the people are doing badly.”

The classic contrast to Latin American approaches to industrial development lay in East Asia, where South Korea, Taiwan, Hong Kong, and Singapore chose a different strategy. Rather than focusing on industrial production for domestic consumption, they chose to specialize in particular products for an export market—textiles, electronic goods, and automobiles, for example. Many of these industries were labor-intensive, drawing large numbers of women into the workforce, though at very low wages. Initiated in the 1960s, this export-led industrialization strategy generated rapid economic growth, propelling these countries into the ranks of the industrialized world by the end of the century. In the 1980s and 1990s, Brazil too entered the world market more vigorously, developing export industries in automobiles, steel, aircraft, computers, and more.

Other issues as well inspired debate. In many places, an early emphasis on city-based industrial development, stirred by visions of a rapid transition to modernity, led to a neglect or exploitation of rural areas and agriculture. This “urban bias” subsequently came in for much criticism and some adjustment in spending priorities. (See Snapshot: Global Urbanization.) A growing recognition of the role of women in agriculture led to charges of “male bias” in development planning and to mounting efforts to assist women farmers directly. Women were also central to many governments’ increased interest in curtailing population growth. Women’s access to birth control, education, and employment, it turned out, provided powerful incentives to limit family size. Another debate pitted the advocates of capital- and technology-driven projects (dams and factories, for example) against those who favored investment in “human capital,” such as education, technical training, health care, and nutrition. The benefits and drawbacks of foreign aid, investment, and trade have likewise been contentious issues.

Economic development was never simply a matter of technical expertise or deciding among competing theories. Every decision was political, involving winners and losers in terms of power, advantage, and wealth. Where to locate schools, roads, factories, and clinics, for example, provoked endless controversies, some of them expressed in terms of regional or ethnic rivalries. It was an experimental process, and the stakes were high.

The results of those experiments have varied considerably. (See Snapshot: Global Development and Inequality in Chapter 23.) East Asian countries in general have had the strongest record of economic growth. South Korea, Taiwan, Singapore, and Hong Kong were dubbed “newly industrialized countries,” and China boasted the most rapid economic growth in the world by the end of the twentieth century, replacing Japan as the world’s second-largest economy. In the 1990s, Asia’s other giant, India, opened itself more fully to the world market and launched rapid economic growth with a powerful high-tech sector and an expanding middle class. Oil-producing countries reaped a bonanza when they were able to demand much higher prices for that essential commodity in the 1970s and later. By 2008, Brazil ranked as the eighth-largest economy in the world with a rapidly growing industrial sector, while Turkey and Indonesia numbered in the top twenty. Limited principally to Europe, North America, and Japan in the nineteenth century, industrialization had become a global phenomenon by the early twenty-first.

Elsewhere, the story was very different. In most of Africa, much of the Arab world, and parts of Asia—regions representing about one-third of the world’s population—there was little sign of catching up, and there had been frequent examples of declining standards of living since the end of the 1960s. Between 1980 and 2000, the average income in forty-three of Africa’s poorest countries dropped by 25 percent, pushing living standards for many below what they had been at independence. But in the early twenty-first century, a number of African countries began to experience encouraging economic growth, an expanding middle class with some money to spend, and more international investment. Some observers began to speak about “Africa rising.”

Scholars and politicians alike argue about the reasons for such sharp differences in economic performance. Variations in factors such as geography and natural resources, colonial experiences, regional cultures, the degree of political stability and social equality, state economic policies, population growth rates, and forms of involvement with the world economy—all of these have been invoked to explain the widely diverging trajectories among developing countries.