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date: 17 February 2018

Development/Poverty Issues and Foreign Policy Analysis

Summary and Keywords

International development has remained a key part of global economic relations since the field emerged more than half a century ago. From its initial focus on colonization and state building, the field has evolved to encompass a wide range of issues, theoretical problems, and disciplinary traditions. The year 1945 is widely considered as a turning point in the study of international development. Three factors account for this: the end of World War II that left the US an economic hegemon, the ideological rivalry that defined the Cold War, and the period of decolonization that peaked around 1960 that forced development issues, including foreign aid, state building, and multilateral engagement, onto the global agenda. Since then, development paradigms have continuously evolved, adapted, and been reinvented to address the persistent and arguably widening gap between the prosperous economies of the “developed North” and the developing and frequently troubled economies of the “global South.” Today, a loosely knit holistic paradigm has emerged that recognizes the deficiencies of its predecessors, yet builds on their strengths. A holistic conception of international development embraces methodological pluralism in the scholarly study of development, while recognizing the multiple ways policy practitioners may productively apply academic theories and research findings in unique settings.

Keywords: international development, development studies, economic development, political economy, global economic relations


More than half a century after its emergence as a coherent field of study, international development remains a vital ingredient of global economic relations. Whereas relatively narrow concerns about decolonization and state building occupied development scholars in the field’s infancy, research today encompasses a wide range of issue areas, theoretical problems, and disciplinary traditions. Although the diversity of development studies lends a perpetual appearance of disarray, the greater theoretical self-awareness, greater attention to “situationally specific” variation (Maxfield 2002), and lessons learned from past experience make the field more vigorous and relevant than ever before.

This essay assesses the state of international development as an academic discipline that focuses on the production and distribution of economic resources within and among nation states, particularly nonindustrialized and impoverished areas inhabited by the majority of the world’s population. As such, this investigation is not purely academic in scope. As will be illustrated, predominant development paradigms, refined by scholars, are often reflected in state development strategies and in the implementation of social, trade, monetary, and fiscal policies. Long after their original advocates have left the scene, institutionalized ideas about development constrain the choices of policy makers and open pathways for government action (see Goldstein and Keohane 1993).

Ideas clearly matter in this interdisciplinary arena of international development, although the pervasive material pressures imposed on policy choices by government and private interests must also be accommodated. In this mix, discernible plans for action become attractive to academic theorists and, in turn, to policy practitioners. The relationship among prevailing models, which have gained prominence successively over time rather than clashing at once, provides international development a sense of theoretical progress, based on both theoretical and empirical cumulation, which sustains enthusiasm in the field despite the chronic shortcomings of hegemonic paradigms and the persistence of underdevelopment and extreme poverty across much of the world.

Consistent with Thomas Kuhn’s (1996/1962) notion of theoretical progress, new development paradigms emerge during periods when dominant paradigms are exposed to and challenged by a growing number of anomalies. As Kuhn explains, when the new theory finally bursts onto the scene, change is dramatic, for “[i]ts assimilation requires the reconstruction of prior theory and the re-evaluation of prior fact, an intrinsically revolutionary process that is seldom completed by a single [person] and never overnight” (1996:7). As such, Kuhnian theory building is cyclical yet progressive. Similarly, each development paradigm since World War II came to the fore amid enthusiasm and high expectations, both of which were frustrated “after a pronounced failure in the normal problem-solving activity” to achieve ever elusive development goals (Kuhn 1996/1962:75). New paradigms then emerged as correctives, only to encounter the same lifecycle of optimism and disillusionment. (For explicit applications of Kuhnian logic to the development context, see Fine 2006b, and Reinert 2005.)

Today, a loosely knit holistic paradigm has emerged that recognizes the deficiencies of its predecessors, yet builds on their strengths. An underlying assumption is that each paradigm offers useful insights and policy prescriptions in discrete cases, but provides neither theoretical coherence nor a proven guide to economic growth across a variety of settings. A broader perspective is thus needed that accommodates cultural, socioeconomic, and political differences, not to mention widely varying resource endowments and constraints. The “one-size-fits-all” models that characterized the successive paradigms identified below must give way to a more nuanced understanding of development and to greater cross-fertilization among disciplines, including political science, economics, sociology, law, and philosophy. Finally, a holistic conception of international development embraces methodological pluralism in the scholarly study of development, while recognizing the multiple ways policy practitioners may productively apply academic theories and research findings in unique settings.

The essay is divided into two parts. The first section develops this evolutionary perspective on development, elaborating on the logic, policy implications, and applied experience of each paradigm. The second section examines the fit between theory and practice in a specific domain of international development: the transfer of Official Development Assistance (ODA) from wealthy to poor countries. Of particular interest is whether a coherent development aid regime has emerged that helps us explain the steep rise in aid flows in the past decade. If so, this pattern would affirm a longstanding theoretical proposition of regime theorists – that meaningful collective action can and increasingly does occur in North–South economic relations due to widespread recognition of transnational interdependence and the adoption of normative principles regarding global economic inequality and extreme poverty. The institutional architecture of this regime is described in this section, which anticipates that the recent surge in aid levels will be sustained, in large measure due to the increased density and staying power of this aid regime.

Evolution of Development Thought

In this section, we review the assumptions, policy implications, and experience of the successive paradigms that have animated the field of international development since World War II. The year 1945 is widely used as a breakpoint in the international political economy (IPE) literature, including the study of international development. Three factors account for this. First, the end of World War II left the US an economic hegemon that was willing and able to make fundamental changes to the world economy and to impose its neoliberal model of development on UN agencies and Bretton Woods institutions. Second, the ideological rivalry that defined the Cold War played a critical role in the discourse of global economic relations, especially during the 1960s and 1970s. Finally, the period of decolonization that peaked around 1960 forced development issues, including foreign aid, state building, and multilateral engagement, onto the global agenda.

Development theory has continuously evolved, adapted, and been reinvented to address the persistent and arguably widening gap between the prosperous economies of the “developed North” and the developing and frequently troubled economies of the “global South.” There is considerable disagreement in the literature on the extent to which this gap is becoming more severe. Recent studies that identify growing inequalities include Rapley (2001), Stiglitz (2002), Marglin (2003), Saul (2006), and Jomo and Baudot (2007). For more optimistic assessments, see Norberg (2004, 2007) and Walton (2004). See Amsden (2003) and Arrighi et al. (2007) and for more general discussions of this issue.

This section begins by introducing modernization theory, which comprised the first development paradigm in the immediate post–World War II era. Second, it describes structuralist theories that highlight global inequalities built into the international political economy, and related calls for their elimination by forceful and concerted action among developing countries and intergovernmental institutions. Third, the attention turns to an economic model, neomercantilism, which sought to rectify the prescriptive shortcomings of structuralism and emerged as a viable development policy alternative in East Asia. Fourth, it reviews neoliberalism with an eye to explaining the dominance of the Washington consensus and other market-based conceptions in the 1980s and 1990s. Fifth, it examines postdevelopmentalism as a distinct paradigm that also draws attention to previously neglected feminist developmental theories and ecological concerns. Finally, the section concludes by elaborating on the more eclectic holistic paradigm that was introduced earlier.

The Kuhnian framework does not presume clearly demarcated periods of paradigmatic hegemony, but instead sees considerable overlap among the contending development models. Nor does this approach presume that the field of international development embodies a formal or coherent “research program” (Lakatos and Musgrave 1970) whose findings are necessarily cumulative in nature. Instead, Kuhn’s notion of paradigm building and shifts represents a useful guide for understanding development theory and its refinement through real-world experience. Six paradigms are identified as described in this section and their key features are summarized in Table 1.

Table 1 Paradigm shifts in development theory and practice


Underlying logic

Epistemology/level of analysis

Normative or ideological goal

Policy implications

Experience in practice

Modernization (1950s)

Universal “stages of development”

Rationalism, state

Economic freedom v. state control

Adoption of market economies

Lack of utility in many settings

Critical structuralism (1970s)

Inequities built into “world (capitalist) system”

Historicism, class

Economic equality

Economic self-sufficiency

Costs of economic isolation

Neomercantilism (1980s)

Use of state power for economic growth, security

Rationalism, state

State security

“Strategic trade”

Unsound and unsustainable financial and trade practices

Neoliberalism (1990s)

Beneficial effect of market forces

Rationalism, systemic

Market-based globalization

Washington consensus

Lack of results in compliant states

Postdevelopmentism (2000s)

Development as social construct

Constructivism, cultural

Intellectual freedom

Fundamental reorientation of development policy

Unclear policy prescriptions

Holism (2000s)

Insights gained from multiple perspectives

Pluralism, multilevel

Multiple and varied

Selective policy choices based on context

Contextual differentiation


The emergence of international development “as a distinct subdiscipline” of economics in the aftermath of World War II paved the way for scholarly interest in political science, sociology, and other fields. Scholars engaged in development economics, as the nascent field was named, widely agreed that “market economies, harnessed to an interventionist state, were the wave of the future, [and] that [the] left and right had met up and become one” (Rapley 2007:25; see also Hettne 1995). As envisioned by the historian W.W. Rostow (1960) in Stages of Economic Growth, development was a unilinear modernizing process that would free underdeveloped countries from “tradition” in order to transition to a developed economy (Kreutzmann 1998:256). Rostow (1960:4) defined a traditional society as “one whose structure is developed within limited production functions, based on pre-Newtonian science and technology and on pre-Newtonian attitudes toward the physical world.” All societies, he argued, could be located on a continuum that featured five progressive stages of growth: traditional, preconditions for takeoff, the takeoff, the drive to maturity, and the age of mass communication. To Rostow, vital to advancement along this continuum was the embrace by traditional societies of modern science and their acceptance of political and economic reforms that encouraged capital accumulation and trade while restraining the role of government in private enterprise.

Modernization theory thus advocated a single, market-driven model of development that would be universal in scope. The theory maintained an explicit normative and prescriptive element, arguing that policy makers should hasten their transition to modern economies consistent with the free-market principles espoused most forcefully by the US. In this sense, modernization theory represented the “Americanization” of development thought in the field’s infancy. Emulation of all advanced industrialized states was the name of the game, in that development meant achieving economic specialization, urbanization, mobility, flexibility, democracy, secularization, an educated citizenry, and a homegrown intelligentsia. Little attempt was made to comprehend the particular needs and circumstances of each developing state. Rather, modernization theorists perceived that, once developing states were liberated from “primitive” and rigid social structures, schooled in democratic governance, and supplied by “generous Western governments [with] armies of modernizers” (Peet and Hartwick 1999:83), rapid economic growth would inevitably result.

The main error of this perspective, therefore, was to assume that underdevelopment was remediable via a universalized approach that merely required the removal of blockages to development. As Ronald H. Chilcote (1984:11) observed, such early theories were “ethnocentric, biased in favor of a particular economic path, ideological in their Western assumption of pluralistic politics, and dogmatic in their insistence upon a continuous progression through historical stages.” Underlying this myopic conception of development was the ideology of modernization, revealed in the subtitle of Rostow’s famous book: The Stages of Economic Growth: An Anti-Communist Manifesto. Development theory had clearly become a pawn, and later a casualty, of the Cold War.

By the late 1960s, the modernization model’s legitimacy had collapsed among both academic theorists and development practitioners across the global South. The primacy of the US economy steadily eroded from its peak in the immediate post–World War II years, an inevitable pattern given the recovery of European and Asian industrial states that was, paradoxically, encouraged and financially supported by the US. During the same period, dozens of new nation states were carved out of former European colonies, creating a numerical imbalance between industrialized and developing countries that favored the latter in the UN and other intergovernmental organizations. To these former colonies that were paralyzed by extreme poverty and political instability, it soon became clear that Rostow’s formula for economic “takeoff” was not only beyond their reach, but also irrelevant.

The modernization perspective was further undermined by concerns raised by Huntington (1968) and Gurr (1970) that rapid industrialization in many areas would threaten societal cohesion and political authority. These concerns were affirmed in many developing regions where civil unrest followed the introduction of economic reforms that promised to “jumpstart” improved living standards. This more conservative critique of modernization, whose primary concern had little to do with the global inequalities that preoccupied liberal economists, hastened the search for an alternative development paradigm that better captured the dynamics of the global economy.

Critical Structuralism

Critical structural theories of development emerged as a reaction against modernization theory’s uncritical acceptance of the classical economics of comparative advantage while ignoring the structural obstacles impeding development in the global South. The term critical structuralism differentiates this approach from liberal models of international political economy emerging in this period that focused on transnational institutions and their moderating impact on the political and economic policies of states engaged with them. The institutions imposed their own structural pressures on development, albeit largely in industrialized settings that are beyond the scope of this essay.

In the 1950s, Raul Prebisch of the UN’s Economic Commission on Latin America emphasized the “dualism” existing in international trade between the developed North and the underdeveloped South. The underlying cause for this disparity was perceived by Prebisch and economist Hans Singer to be a consequence of declining terms of trade in which developing countries would have to export ever-growing volumes of their primary commodities just to maintain trade balances with industrialized states. As a consequence, the global South would find itself on an accelerating treadmill running increasingly fast just to stay in place unless it altered the very structure of comparative advantage. (The “global North” and “global South” are enclosed in quotation marks to emphasize their potentially value laden status; see Roberts and Hite 2007. We recognize the dangers Edward Said (1978) described of adopting an “othering” perspective and thus refer to the global South as a heuristic device to differentiate impoverished states, which are concentrated in the southern hemisphere, from those states, located primarily in Europe, North America, and East Asia, which have created industrialized economies that meet the basic needs of a majority of their populations.)

Import substitution industrialization (ISI), the solution endorsed by Prebisch and other critics of modernization, advocated a “big push” to catch up with the industrialized countries through state-led development. Although ISI was practiced in various forms after World War I, Latin American governments did not adopt the model as a long-term growth strategy until the 1950s. In practice, this “big push” translated into a policy program adopted throughout much of Latin America, which required significant government involvement in a host of activities such as determining prices, protecting wages, allocating credit at low interest rates, and directing industrial development. This model proved to be unsustainable, however, for a variety of reasons, such as its tendency to cause corruption, poor export performance, rent seeking, and inefficiency, not to mention the oil shocks of the 1970s (see Hershberg and Rosen 2006; Roberts 2007).

Dependency theory, a related branch of critical structuralism founded by scholars such as Baran (1957) and Cardoso and Faletto (1971), rejected modernization theory’s benign view of capitalism. Dependendistas believed the industrialized world exploited the global South for its resources and left developing countries in a semipermanent position of dependence on wealthy states for their own economic survival. “While import substitution was growing,” Cardoso and Faletto (1971:158) observed, “the penetration of foreign capital was not regarded as a development problem even though it marginalized certain domestically owned industries.”

World systems theory came from the same starting point as dependency theory. To theorists advancing this view, the world system was dominated by “core” industrialized states and sustained by the exploitation of “peripheral” developing countries, whose natural resources and cheap labor were essential to the prosperity of core economies. “The core–periphery distinction,” Wallerstein (1979:97) noted, “differentiates those zones in which are concentrated high-profit, high-technology, high-wage diversified production (the core countries) from those in which are concentrated low-profit, low technology, low-wage, less diversified production (the peripheral countries).” A third category, semiperiphery, included relatively affluent developing countries that nonetheless remained dependent on core states for capital and export markets. While Wallerstein (1979:101) found these divisions to be deeply entrenched, he argued that peripheral states “need not accept this path as inevitable, much less laud it as the path of virtue, and dub it ‘growth, progress, and development’ […] For those who do not wish to ‘scramble to shore,’ the alternative is to seek to transform the system as a whole rather than profit from it.”

As with modernization theory, critical structuralism confronted numerous challenges once implemented in state development policies. Despite their populist appeal, calls for a wholesale retreat from the market-based world economy could not realistically be heeded by impoverished countries in need of foreign markets for their commodities and economic support from international financial institutions (IFIs). At the same time, governments trying to liberate themselves from the clutches of “core” economies found themselves plagued by soaring inflation, collapsing currencies, mounting budget deficits and national debts, and public discontent. The allure of critical structuralism as a basis for development policy was further dampened by the successful industrialization efforts of formerly peripheral states in East Asia (see below). Far from turning their backs on global trade, these countries plunged into export markets in critical sectors such as automobiles and consumer electronics. These states, it appeared, had defied the structuralists’ gloomy projections by “graduating” from the periphery to the core, in very short order.

As in the case of the former Soviet Union, the neo-Marxist critique of capitalism fared better than its policy prescriptions and remains compelling despite this track record in practice. Indeed, recent years have seen a reemergence of critical structuralism, albeit in somewhat modified forms (de la Torre, 2007; March, 2007; Roberts 2007). Charismatic Latin American leaders such as Hugo Chávez of Venezuela, Evo Morales of Bolivia, and Rafael Correa of Ecuador have adopted populist policies that, as with critical structuralism, demanded more equitable development through state intervention in the market (Roberts 2007). The rise of these leaders and popular movements once again demonstrated the ideological roots and political branches of international development thought. As such, critical structuralism, with its focus on the contradictions in market economies that preclude a broadly based improvement in living standards, remains a highly relevant branch of development theory (Canovan 1999).


The sagging fortunes of the “new international economic order” coincided with a burst of economic dynamism far from its intellectual base in Latin America. The 1970s witnessed a transformation of East Asia’s political economy, especially that of Japan, which emerged as the world’s second largest producer of goods and services by the end of the 1980s. The Japanese government’s combination of support for infant industries and export-led growth was rooted in the earlier arguments of thinkers such as Alexander Hamilton, whose vision of mercantilism was well known for its description of globalizing struggles for market share in a decidedly zero-sum game (Woo-Cummings 1999). Mercantilist state policies were thus aimed at increasing state power, which was equated with overall economic might.

The centrality of the “developmental state” is the object of considerable scholarly debate (see Fine 2006a). To Chalmers Johnson (1982), Japan’s neomercantilist experiment represented an alternative model of development altogether. Specifically, the notion that growth could best be achieved through market-enhancing government interventions struck a particularly discordant note to the inner ear of prevailing structural critiques as well as the emerging neoliberal theories of the time. Neomercantilism relied on “government-business cooperation to achieve catch-up development” (Denzau and Roy 2007). From this perspective, an assertive, nationalist state exerts sufficient political strength to resist capture from contrary organized interests while exploiting opportunities on global markets through “strategic trade,” in which key decisions regarding sectors and terms of trade are made by a consortium of state and corporate leaders. “This form of the government–business relationship is not particularly or uniquely Japanese,” Johnson (1982:311) observed. “The Japanese have merely worked harder at perfecting it and have employed it in more sectors than other capitalist nations.”

For a time, the economic success of Japan and the Asian “tigers” (including Hong Kong, Singapore, Taiwan, and South Korea) was difficult to dispute. During the height of their success in the early 1990s, even the World Bank extolled “the contribution of fundamental and interventionist policies to East Asia’s remarkable growth” (Waeyenberge 2006:31). A World Bank (1993:6) study commissioned by the Japanese government conceded that while such policies as sectoral targeting and trade protections “violate the dictum of establishing for the private sector a level playing field,” in Japan and other states in Northeast Asia “government interventions resulted in higher and more equal growth than otherwise would have occurred.”

Yet, the region’s financial crises of 1997–1998 produced abrupt disillusionment and abandonment of the neomercantilist model by much of the world due to concerns over its long-term viability. To some analysts (e.g., Krugman 2003), the “miracle” was abetted by massive inputs of capital and labor into regional economies that were unsustainable. Other familiar explanations for the bursting of Japan’s bubble economy include the proliferation of poor lending practices leading to massive defaults, a subsequent banking crisis, recession, and real estate and stock market collapses (Hartcher 1998). Much of this blame was laid at the doorstep of the same interventionist bureaucratic state system that had received the credit for the economic boom of the earlier decades.

In retrospect, some have argued that condemnation of “crony capitalism” was driven by a Western political agenda embodied in the “neocivilizing mission” of the International Monetary Fund (IMF), as encouraged by the US Treasury Department and other international actors (Hall 2003:95). From this perspective, IMF conditionality, requiring significant structural reforms to Asian economic institutions following the crisis, was driven by a desire to open Asian markets. Indeed, attempts to debunk the Asian developmental state through a concerted, normative delegitimation discourse in favor of a neoliberal agenda (see below), conveniently overlooked the longstanding success of this neomercantilist model in achieving dramatic economic gains, such as lifting approximately 400 million people from abject poverty over a relatively brief period (Hall 2003:73). This perspective simultaneously downplayed the destabilizing role of reckless speculation against Asian currencies by foreign investors and their subsequent “panicked rush for the exits, induced by a herd mentality” when the crisis ensued (Hall 2003:73, 87).

Nonetheless, the alleged failures of neomercantilist economic policies undermined the intellectual legitimacy previously granted by the World Bank and other IFIs. Whereas, in Kuhnian fashion, these policies had earlier sought to remedy the insular statist inclinations of critical structuralism, the seeming contradictions built into the neomercantilist model left theorists of international development in a theoretical void. As with modernization, the neomercantilist model of development had apparently failed to deliver the sustained economic benefits that were anticipated. Furthermore, the small number of relatively affluent developing countries to which the neomercantilist model seemed applicable left the vast majority of poor states without a coherent roadmap for economic growth. Scholars responded by returning to market-based solutions for underdevelopment at a time when the end of the Cold War seemed to vindicate capitalism as the most effective engine of growth for the global South.


Although grounded in the scholarship of the 1950s, the neoliberal era of developmental policy began in the early 1980s, an era personified by the leadership of President Ronald Reagan in the US and Prime Minister Margaret Thatcher in the UK (Auerbach 2007). A debt crisis in many developing countries, which peaked in 1982, triggered the new era, as the World Bank and IMF were thrust into the position of bailing out national economies that were paralyzed by hyperinflation, low savings rates, and a lack of investment from domestic and foreign sources. In granting large-scale relief to distressed economies, particularly the Latin American states of Argentina, Brazil, and Mexico, the IFIs were in an ideal position to impose a new development model that extolled “the magic of the market” (Snyder 2006).

The Washington consensus, a reference to the IFIs’ prescriptions for economic growth in the global South, called on aid recipients to eliminate budget deficits, restrict the circulation of new currency, privatize and deregulate industries, eliminate subsidies, protect private property rights, and open their domestic markets to international trade and investment (see Williamson 1990). Once having created stable, liberal, and efficient markets, the consensus perceived the primary mission of government as assuring that “private markets would allocate resources efficiently and generate robust growth,” thus allowing the state to withdraw from the marketplace (Stiglitz 2005). In sum, this approach advocated “a set of mechanisms, or more exactly, one mechanism for achieving development, that is, reliance on the market through a minimal state” (Fine 2006b:6). Indeed, the very premise of neoliberalism is the “death of economics, because if the market works perfectly, there is no need to study it” (Fine 2006b:12).

As with the modernization model, the policy prescriptions of neoliberal economists are universal in scope. Economic efficiency, the hallmark of the neoliberal model, may be achieved anywhere that market reforms are put into place. This expectation is reinforced by the same rationalist scholarship, presented in prominent development economics journals, that dismisses the importance of historical experience along with regional and cultural variation in the development process. At the very least, neoliberal theorists presume, these contextual differences may be overcome once governments are in place that are willing and able to “roll back the state.”

As the dominant perspective driving development policies, neoliberalism has since been the subject of attack. Critics note that vast disparities between the North and South persist despite the adoption of market-based reforms imposed by IFIs (see Bush 2007). In Latin America, the governments of Brazil, Mexico, and other states that acceded to the IFIs’ conditions for financial support continued to struggle with widespread poverty even as their economies became more integrated in global trade and financial markets. Indeed, the penetration of these markets across the global South seems only to reinforce the structural weaknesses of developing states, a pattern eerily reminiscent of the modernization era that prompted challenges by critical structuralists.

Consequently, neoliberalism underwent critical reevaluation and revisions resulting in a “post–Washington consensus” proposed by Joseph Stiglitz (2002), the former World Bank chief economist, who called for a broader set of development goals that sought not only to enhance economic growth but also to improve living standards, safeguard sustainable development, and achieve equitable development (see Walton 2004). Still, the continuing failure of neoliberal reforms in a wide variety of developing countries to accelerate economic growth led to disillusionment with the paradigm and a search for other models that would exploit the resources and energies of the state in the pursuit of broad-based growth.


Despite grave differences of opinion, proponents of critical structuralism and neoliberalism are readily able to debate, as their metrics of empirical data collection and analysis for determining the success or failure of development policies are, more or less, equivalent. In contrast, postdevelopmentalism is a more revolutionary perspective that injects cultural difference into the development discourse, thus freeing “local communities [from] […] the economistic Western logic of the market” (Müller 2006:306). Articulated by scholars such as Arturo Escobar (1995), this perspective is “interested not in development alternatives but in alternatives to development, that is, the rejection of the entire paradigm altogether” (Escobar 1995:215). As John Rapley (2007:187) describes the divergence of postdevelopment thinking from statism and liberalism, “[i]t is […] inclined to question the whole development project, which it sees as destructive of traditional societies and natural environments.” The desired consequence is “to demystify and deconstruct the rationalist premises upon which [neoliberalism’s] public legitimation has been predicated” (Hay 2007:68).

Postdevelopmentist scholarship recognizes social and cultural impediments to equitable economic development along with a variety of global problems that must be resolved for development to be truly sustainable. As such, postdevelopmentalism is broad enough to encompass a variety of different perspectives. Importantly, placing feminism in a historical context reveals that it should not be classified as simply a branch of postdevelopmentalism. Since at least the 1970s, feminism has seen the appearance of numerous developmental theories such as Women in Development (WID), Women and Development (WAD), Gender and Development (GAD), Women, Environment, and Development (WED), and Postmodernism and Development (PAD), all of which approached development in unique ways (Peet and Hartwick 1999:179). The postmodernism and development feminist perspective, for example, focuses on deconstructing the predominantly Western discourse that stigmatizes “Third World women” by imagining them as victims or sex objects (Peet and Hartwick 1999:191).

Another strand of postdevelopmentalist scholarship falls within the political ecology school of thought that melds “political economy approaches [involving] the analysis of resource use and environmental conservation […] with constructivist approaches” (Woodhouse and Chimhowu 2005:193). The poststructualist branch of political ecology focuses on the metanarrative of “development,” seeking a better understanding of the risks to the environment of unsustainable development practices. One indisputable contribution of political ecologists has been to help redirect attention to the long-term effects on the environment of unbridled development, resulting in new understandings such as the groundbreaking Earth Summit Declaration (or Rio Declaration) of 1989 (Rao 2000:10–15). Thus, similar to other strains of postdevelopmentalist thought, elements of the political ecology perspective represent yet another attempt to reconceptualize the goals, purposes, and foundational precepts that will drive development projects in the future.

In the scholarly literature, postdevelopmentalism found expression in constructivist theory, whose discursive focus on the fabrication of state and societal identities had broad appeal in political science, history, sociology, and other academic disciplines. Particularly offensive were phrases such as “backwards” in referring to pre-industrial societies, with the inference that they merely need to “catch up” to enjoy the benefits of “modernity.” Indeed, the very notion of development as a Western construct is subject to scrutiny.

For some scholars, the implications of this critique run far deeper. “Post-development authors reject pragmatic development studies completely,” Maxfield (2002:472) observed. “They denounce universities for perpetuating the notion that we can train development technicians. The post-development scholars universally reject development as either a pragmatic or social scientific endeavor.” In this sense, the postdevelopment paradigm challenged not only the universalist pretensions of neoliberalism, but the rationalist scholarship that provided its intellectual foundation. Once again, the proof for this proposed paradigm shift was in the persistence of extreme poverty across the global South, even in areas that had embraced the Washington consensus only to find the “magic” of the market to be beyond their reach.

Still, the postdevelopmentalist critique lacked a concrete model for economic growth. Identifying the discursive biases of mainstream scholarship and policy, while important, did not translate into development policy alternatives. The same could be said for the paradigm’s emphasis on neglected social and ecological problems. Even so, turning back the clock to one of the earlier paradigms was clearly not an option, given their flaws that had been revealed when their underlying theories were put into practice. Instead, development theorists sought a more synthetic approach that would accommodate contextual variation as well as a variety of policy alternatives available to developing economies.

Development Holism

As this mosaic of scholarly work on development theory implies, the need for a more comprehensive or inclusive approach to the problem of development has begun to percolate the scholarly literature. Development holism calls for a broader notion of conceptual sharing among the disciplines. Indeed, despite the spectrum of opinion on the proper role of the state in development or even whether “development” is a desirable goal at all, the perception that no one field is sufficient to address the multifaceted and contingent nature of development in different national contexts seems almost unimpeachable.

By definition, a holistic approach in the social sciences is one that prefers the study of a system rather than an analysis of its parts (Tucker 2001). This requires “a multi-methodological and holistic approach [that] weav[es] together different narratives” (Kothari 2005:2). Underlying this view is the assertion that Western-style development is not merely socially constructed, but inherently problematic. To Jan Nederveen Pieterse (2001:139), “Modern development has suffered a severe case of psychological modernism, has erected monuments to modernism, placing technological progress over human development.” Advocates of this view demand that scholars focus more directly on extreme poverty as a moral imperative and that activists and nongovernmental organizations exert bottom-up pressure on policy makers who otherwise impose top-down development programs on their citizens.

While the specific programmatic elements of holism are still in a formative stage, some items include reworking of traditional economic modeling that focuses on production as well as consumption, contemplating the interlocking nature of economic activities in a globalized world, and mixing qualitative and quantitative analysis to include more variables than traditional statistical modeling typically permits (Reinert 2005:77–8). The goal is to “reimagine[s] growth and development as an inherently thick process, encompassing multiple social processes that can be illuminated differently by insights from different disciplinary fields” (De Paula and Dymski 2005:11).

As such, a holistic approach acknowledges the contribution of the paradigms summarized earlier while seeking to overcome their weaknesses. The succession of these paradigms, summarized above, reflects both critiques of previous theories and practices as well as new ideas about development. Whereas the modernization paradigm illustrated the successful trajectory of economic growth in a small number of settings, critical structuralism demanded that economic equality be considered as well as economic liberty. And whereas the neomercantilist paradigm demonstrated how state intervention and public–private cooperation improve living conditions in favorable circumstances, the neoliberal model revealed the limitations of ill-conceived state intervention. And whereas postdevelopmentalism placed economic growth in a cultural and discursive context and called for greater attention to such issues as gender and ecology, the holistic paradigm seeks to integrate these insights within a broader understanding of development.

Through theoretical inclusiveness, holism also aspires to affect concrete policy outcomes. One hopeful example has been the closer cooperation between UN development agencies and the Bretton Woods IFIs, which, until recently, have championed neoliberal positions. Whether this represents convergence between perspectives or merely “[t]he subordination of the third world and the UN to the prevailing economic orthodoxy” (Thërien 2007:75), development holism remains optimistic that the reconciliation of opposing perspectives will improve policy outcomes. Once again, a holistic approach views the end of extreme poverty as its central objective.

As we have seen, prevailing development paradigms have linked the theoretical innovations of policy scholars to real-world applications in development policy across the global South. This melding of intellectual orthodoxy and state practice, however, failed in each instance to lay the foundations for sustainable and broadly based economic growth that would provide the dominant paradigm with staying power. While this pattern reinforced notions of “disarray” in the field of international development, one outcome appears more promising: the abandonment of searches for “grand” theory applicable to all settings and an embrace of variegated development models best suited to particular cases. Middle-range theories responsive to such diversity, combined with the insights of constructivist and other ideational models, provide new opportunities for international development scholars to guide policy in constructive ways.

Theory in Practice: The Global Aid Regime

Foreign aid persists as a vital instrument of development policy amid sweeping changes in world politics during the past two decades, including the end of the Cold War, a global economic recession, and the onset of the war on terrorism. Every nation state, rich and poor, serves in some capacity as an aid donor or recipient. The worldwide transfer of official development assistance (ODA) in 2006, $104.4 billion, was nearly double the volume of ODA ($58.3 billion) transferred to developing countries just 4 years earlier (OECD 2008). This surge in ODA transfers suggests that foreign aid has gained new legitimacy in the global political economy.

It is commonly believed that political institutions cannot be divorced from the ideas generated by their creators and primary stakeholders (Goldstein and Keohane 1993). In this respect one must recognize the functional link between evolving ideas regarding international development and the evolution of institutions, particularly the development aid regime since its creation nearly half a century ago (Pierson 2000). To some aid analysts (e.g., Lumsdaine 1993), this regime is sustained by shared normative values, including a concern and sense of responsibility for the welfare of individuals and societies in need. His analysis of aid policies during the Cold War found that, for most donors, neither geopolitical concerns nor direct economic self-interests were determinative in aid policies. Instead, variations in aid flows reflected varying societal commitments to humanitarian relief and the reduction of socioeconomic inequalities within developing countries.

Table 2 Components of the development aid regime





Global poverty and underdevelopment an essential and shared policy concern of industrialized states

Qualitative standards regarding ODA/GNI; aid to LLDCs; sources, types, and terms of aid

Extreme poverty as morally unacceptable; ethical obligation of affluent states; respect of state sovereignty

Reporting of ODA flows via OECD-DAC; peer reviews; annual meetings

For decades, scholars have explored the policy impact of such regimes, understood as “principles, rules, norms, and decision-making procedures around which the behavior of states converges” (Krasner 1983:1). Such a pattern of behavior is evident in the case of ODA, as recent trends in North–South aid transfers, most notably a surge in aid volumes during the present decade, cannot be adequately explained without reference to the convergence of state interests and normative principles that are indicative of regime influence (see Table 2).

Although they diverge on many questions related to international development, industrialized states accept the underlying principle that relief from extreme poverty is a common responsibility. In addition, aid donors generally observe rules regarding the essential role of ODA in global development and adhere to a wide range of normative standards regarding aid “quality” (see Wood 1986). And although donors retain sovereign control over their ODA allocations, their transfers are documented and reported within the regime’s institutional home, the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD). The DAC defines ODA as grants or loans to developing countries that are undertaken by the official sector, with economic development and welfare as the main objective, and on concessional financial terms (see Regular peer reviews of DAC members’ aid programs reinforce the standards of the aid regime.

The institutional framework of the ODA regime assumed its current form at a time when North–South relations and global economic inequalities became the object of deepening scholarly attention. The Organization for European Economic Cooperation (OEEC) was reorganized in 1961 as the Organization for Economic Cooperation and Development (OECD). The name change reflected the members’ shift in emphasis from European postwar reconstruction to Third World development. In 1963, OECD members formed the DAC, which soon became “the leading forum of the richer nations for discussing their mutual interests involved in the policies, administration, and effectiveness of aid” (Rubin 1966:4). Aid donors shifted their focus during this decade toward state building efforts across the developing world. Overall aid flows doubled during this period as the institutional basis of the contemporary aid regime was established.

Developing states, through the Group of 77 (G-77) and other coalitions, used the UN as a forum to articulate their collective needs. In December 1974, the General Assembly endorsed the G-77’s call for a Charter of Economic Rights and Duties of States. While its terms were advisory, the charter identified structural problems in the world economy as the basis of underdevelopment and demanded fundamental changes in North–South economic relations. Widening income disparities figured prominently in G-77 demands for a New International Economic Order, which embraced import substitution as a development model and a redistribution of wealth from North to South, primarily through ODA. The rejection of this model by most industrialized states and the persistence of extreme poverty led the aid regime in the late 1970s and 1980s to focus on basic human needs, an ambiguous term that did little to alter the policy preference and aid strategies of donors.

The recognition of transnational problems after the Cold War led to the adoption of sustainable development as the centerpiece of UN economic programs in the 1990s. Global aid levels dropped, however, primarily as a result of deep cutbacks in ODA from the US, where the end of the Cold War effectively ruptured the longstanding basis of its aid program. Most other donors scaled back their aid programs, largely in response to domestic political pressures. Several factors contributed to this drought in aid funding: the lack of Cold War spillover in bilateral aid relationships, including the primacy of “neo-liberal orthodoxy” (Hoebink and Stokke 2005:1) in development thought, criticism stemming from the failed UN peacekeeping efforts in Somalia, Haiti, and the former Yugoslavia, and the boom in North–South private investment. The outbreak of civil wars in many less developed countries (LDCs), due in part to the withdrawal of Cold War pressures for internal stability, prompted a new shift in the aid regime’s focus to human security, a term that captured the threat posed by domestic political repression to economic and social development.

An emphasis of today’s aid regime involves developing countries’ control, or “ownership,” of their development projects and outcomes. Increasingly, aid recipients must demonstrate a past record of economic reform and good governance as a prerequisite for future assistance. Donor states expect LDCs to be responsible for planning, implementing, and evaluating development projects. These measures, involving such reforms as the privatization of industries, monetary and fiscal discipline, open elections, and the rule of law, are monitored closely by DAC members. Recipient ownership and accountability are also central to prominent multilateral and private aid programs, including the Global Fund for AIDS, tuberculosis, and malaria.

In recent years five countries have provided the lion’s share (about two thirds) of ODA: the US, Japan, France, the UK, and Germany. The US alone accounted for nearly one quarter of total ODA flows between 2000 and 2006. Despite its deep cuts in ODA, Japan still provided the second largest volume of annual transfers. The three European donors, all of which recorded growing rates of ODA/GNI, followed closely behind Japan during this period. These bilateral aid transfers were supplemented by contributions to the European Union, which accelerated its efforts to establish its own aid “identity.”

The continuing prominence of the US and Japan is noteworthy given the relatively poor performance of both donors with regard to the DAC’s qualitative measures. Of the 22 DAC donors in 2006, only Greece (.17) ranked below the US (.17) in the percentage of national output devoted to ODA. These figures fell far below the aid regime’s target of 0.7 percent and paled in comparison to the average DAC effort of .46 percent. These figures reflect a broader inverse relationship across the aid regime between the quantity and quality of ODA flows. This relationship is perhaps best illustrated by focusing on the five with the highest ODA/GNI ratios in 2004 – Norway, Denmark, Luxembourg, Sweden, and the Netherlands. All of these donor states routinely exceed the 0.7 threshold and in some cases have exceeded the original target of a full 1 percent of national output. These countries also rank among the top five in per capita aid and they are also among the leading aid donors to the most impoverished LDCs. On an absolute level, however, their collective ODA contributions in the past decade have amounted to just over half of the volume of aid provided by the US alone.

This inverse relationship between aid quantity and “quality,” which dates back to the origins of the aid regime, reflects not only relative economic capabilities, but also ideological differences regarding economic development and the role of the state in promoting socioeconomic equality. The same governments that record the highest levels of ODA/GNI also tend to devote greater shares of national output to domestic spending, particularly on social programs. The parallels between domestic welfare policies and foreign aid flows suggest that “principles institutionalized at the domestic level shape the participation of developed countries in the international aid regime” (Noel and Thérien 1995:552).

To Olav Stokke (2005), the behavior of large and smaller donors can be categorized theoretically as realism for the former and humane internationalism for the latter. In this respect the smaller donors, whose ODA transfers tend to correlate positively with levels of distress in recipient states, are more likely to adhere to the normative values and declared aspirations of the aid regime. Still, the general pattern of regime compliance demonstrated by larger donors is unmistakable.

The aid regime has weathered the intrusion of donor prerogatives and in recent years has witnessed unprecedented moves toward collective action. The UN-sponsored Millennium Summit in New York City identified the end of extreme poverty as both a moral imperative and a prerequisite to global security. Nearly every government attended the summit in September 2000 and approved eight Millennium Development Goals (MDGs), with accompanying measures of evaluation. The eight MDGs, respectively, seek to reduce extreme poverty by one half by 2015, achieve universal primary education and gender equity, reduce by two-thirds the rates of child and maternal mortality, reduce the spread of HIV/AIDS and other infectious diseases, ensure environmental sustainability, and form a “global partnership” for development (see World Bank 2005 for a progress report on achieving these goals). The UN’s Millennium Declaration (2000), while stressing the need for developing countries to assume responsibility for their development policies, called on affluent states to “grant more generous development assistance, especially to countries that are genuinely making an effort to apply their resources to poverty reduction.”

Despite the recent growth in aid flows and heightened activism within the aid regime, however, most development programs are unlikely to achieve their stated goals given the continuing lack of cohesion and solidarity within the aid regime. The national interests of aid donors commonly prevail over stated regime goals, a longstanding characteristic of North–South capital flows (see Hook 1995). Furthermore, public and private donors have yet to “harmonize” the hundreds of aid-based programs they oversee, let alone the multilateral efforts of the United Nations, World Bank, regional development banks, and other intergovernmental sources. Each of these programs includes distinctive goals, qualifications, and expectations, making it virtually impossible for recipients to adopt and implement strategies of political and economic development suited to their individual needs.

Making matters worse, the US-led war on terrorism has elevated security concerns on many government agendas. The diversion of funds for security, often defined and operationalized in military terms, not only reduces the pool of other resources but often conflicts with ongoing development efforts. This militarization of development aid, a defining pattern of the Cold War, makes it less likely that long-term sources of poverty and state failure – squalid living conditions, illiteracy, a lack of foreign investment – will be adequately addressed. “Shifting ODA to counter-terrorism simply perpetuates the vicious cycle of war and poverty,” observed Koshida Kiyokazu (2004:113) of the Pacific Asia Resource Center. To Ngaire Woods (2005:407), foreign aid that “prioritizes the achievement of human development is at risk.” Thus, while the aid regime has proven to be a catalyst for collective action in this vital area of international development, the prevalence of donors’ political, economic, and security interests precludes the realization of even the most modest regime goals.

The global aid regime faces five central challenges in the years to come. The first stems from the decentralized structure that is one of the regime’s essential characteristics. The lack of coordination across aid programs increases transaction costs and precludes the effective leveraging of aid funds. These problems in the 1990s extended beyond bilateral development projects to functional responses to crises in such areas as Rwanda and the former Yugoslavia, where “UN action had been undermined by a lack of coherence between the political, peacekeeping, and humanitarian aspects of the response” (Harmer and Macrae 2004:20). The Rome Declaration on Harmonization, approved in February 2003, called for donors to align their aid missions, conditions, reporting requirements, and criteria for evaluation. Yet, like the MDGs, the Rome Declaration is more a statement of principles than a binding obligation, something aid donors have resisted.

Second, the aid regime faces heightened challenges in the face of “new bilateralism,” or overwhelming pressure from donors to maintain exclusive control of their aid transfers (Rogerson et al. 2004). Contrary to the regime’s call for the prevalence of multilateral programs, bilateral flows now represent nearly three-fourths of all ODA transfers. In the US, the Millennium Challenge Corporation (MCC) represents the most significant institutional change within the country’s aid system since the creation of the US Agency for International Development (USAID) more than four decades ago. Among the MCC’s founding principles are the unilateral selection of recipients and approval and evaluation of funded programs. Despite stated pledges to conform more closely to regime norms, Japanese aid remains tightly controlled by its government ministries, whose choices of recipients and terms of aid are aligned with the country’s regional economic interests.

The third problem facing the ODA regime, noted above, relates to the heightened presence of security concerns stemming in large measure from the September 2001 terrorist attacks on the US. Such concerns distract attention and divert resources from core development priorities, including good governance and the promotion of civil societies. Ruling elites in developing countries attract attention, and possibly foreign assistance, by identifying their foreign and domestic enemies as “terrorists,” much as elites during the Cold War gained financial assistance from Western industrial powers by branding their adversaries as communists. The intrusion of security concerns raises anew the dilemma of aid fungibility: development assistance, including debt relief, may simply free up the budgets of recipient governments for increased military spending that is often designed primarily to consolidate the power of ruling elites.

Fourth, the aid regime must continue to fend off academic attacks on development aid, most prominently by economist William Easterly (2006) in recent years. His book The White Man’s Burden questioned the empirical record of ODA in stemming extreme poverty and the logic of the MDGs and other large-scale multilateral efforts. Easterly’s neoliberal solution challenged that of his primary target, economist Jeffrey Sachs (2005), who assumed a lead role in mobilizing the aid regime. The differences between the two scholars – relating to the sources of extreme poverty, the proper role of states in global development, and the relative costs and benefits of globalization – epitomized the paradigmatic ferment in development studies associated with the demise of neoliberalism.

Finally, the aid regime must overcome the contraction in North–South financial flows (public and private) as a result of the global economic crisis that began in 2007 and 2008. Most developing countries suffered greater damage than the US, whose permissive controls on mortgages and bank lending precipitated the upheaval. The damage to European and East Asian economies undercut domestic political support for ODA, producing instead an outburst of economic nationalism and retrenchment. With the neoliberal development model already under assault, and amid scholarly debates among statists of the left and right, the prospects for a breakthrough in North–South economic relations steadily diminished and are highly uncertain today. Beyond its troubling human consequences, the crisis presents a stark challenge to the aid regime and, more generally, to regime theory in international studies.


The field of development studies remains in a condition of theoretical ferment. The problem of underdevelopment is linked to a multiplicity of issues, ranging from poverty (Graaff 2003) to interdependence, trade, business, and globalization (Cohn 2000), from the environment (Woodhouse and Chimhowu 2005) to gender considerations (Pearson 2005), and from law (Gordon 2006) to human rights (Sen 2000) and social justice (Sengupta et al. 2005). More recent case studies on NGOs in Brazil (Koslinski and Reis 2009) and state–society relations in Indonesia (Aswicahyono et al. 2009) further reinforce the value of “using alternative regimes and models that are more congruent with local conditions, histories, and institutional frameworks” (McKay 2008:72).

These studies are not merely academic, of course. In the practice of international development, innovative funding strategies have been devised to stimulate economic activity and long-term growth in carefully targeted markets. For example, the provision of micro-credit – small-scale business loans to entrepreneurs in impoverished areas – has often been more effective than traditional transfers of development assistance or foreign direct investment. This achievement in Bangladesh earned Muhammad Yunus and his Grameen Bank a Nobel Prize in 2006. Similar micro-credit programs in Africa and Latin America, highly customized to reflect local and regional conditions, have also produced immediate and significant results.

Meanwhile, the broader “great debate” continues regarding the most fruitful paths to development for the world’s impoverished states. In answering these questions, scholars display greater concern for contextual diversity, which allows for variation in population, resource assets, governing institutions, state–society relationships, and cultural traditions. Finally, a period of methodological pluralism has emerged in which the well-grounded insights of rationalist scholarship are taken seriously as well as those of constructivists and area specialists, the latter being vital to the accumulation of “thick description” in political and social analysis.

Still, divergence rather than convergence has been the hallmark of the literature despite the sustained attention from economists (Jomo and Fine 2006; Mavrotas and Shorrocks 2007), economic historians, ethicists (Gehring 2007), geographers (Peet and Hartwick 1999), lawyers (Gordon 2006; Ngugi 2006) participants (Kothari 2005), political scientists, and sociologists (Pieterse 2001; Graaf 2003). The major journals in these fields remain highly restrictive, and most academic conferences remain discipline specific. As Uma Kothari observed, “[i]nter-disciplinary partnerships have proved difficult to achieve […] and [as a result] development studies can be more accurately described as multi-disciplinary” (Kothari 2005:4).

In this context, “discipline-centrism” (Tucker 2001:138) has spawned numerous competing development lexicons with discrete and insular preferences for labeling both the different epochs in development history and the competing approaches to understanding and implementing developmental policies. Indeed, even the scholarly pedigrees of the different fields barely seem to coincide save for the most foundational scholars. In its most ambitious forms, those that seek a grand convergence of scholarship, “holism” in international development remains more of an aspiration than a depiction of current reality. Yet, in its more modest forms that embrace multiple perspectives, respect contingency, and tolerate a variety of methodological orientations, development holism represents a healthy and robust phase in the field’s history.

As we have seen, this epistemological ferment relates directly to the practices of states in economic development. These practices, functional applications of successive development paradigms that originated in academic scholarship, consistently fail to satisfy the high expectations generated by paradigm shifts and subsequent policy reforms. The failure of modernization theory to propel “liftoff” across the developing world, for example, provoked normative as well as functional critiques that Western-style development is not so easily replicated by economically distressed states and is thus unable to reduce economic inequalities or rescue the vast share of the world’s population from poverty.

Similarly, the failure of economic policies drawing on critical structural theories and associated with the New International Economic Order of the 1970s drew attention to the East Asian economic “miracle” of the 1980s. This neomercantile moment, however, was undone by irresponsible financial management, state corruption, and trade protectionism that spawned retaliatory measures from the US and other major markets. The failed experience of the neomercantile paradigm opened the door for the “magic of the market” embodied in neoliberal economic theory and practice, and once again hope succumbed to dismay as neoliberal reforms failed to improve living standards on a broad scale. This experience led to the development of the fifth school of thought, postdevelopmentalism, which views the mainstream literature as “the hegemonic economic discourse of the North” (Müller 2006:310; see also Escobar 1995), highlights norms and obligations (Schwenke 2009), problematizes state identity (Schuurman 2001; Parfitt 2002), and emphasizes contextual and methodological diversity,

It remains to be seen whether development holism represents a sustained paradigm shift in the Kuhnian tradition, or whether it will soon yield to a new, universal model of development that informs state policies on a large scale. Past experience suggests the latter, although there are reasons to believe that the unique features of development holism, particularly its pragmatic and eclectic nature, will facilitate a more malleable and ultimately enduring research program. Given the wide range of scholarship now available to policy makers in all states, rich and poor, the potential for learning is considerable. Perhaps the most important of these lessons may be the most modest: while universal solutions to the plague of extreme poverty may be seductive, greater truths are to be found in scholarship and policy that reflect the setting in which such suffering occurs.


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