Pandemic to bring about a change of development model in Central America?

By Martin Mowforth

Key words: neoliberal economic development; system shock; export model of growth; de-growth.

In a 2nd May article published in El Salvador’s daily newpaper La Prensa Gráfica, Ernesto Mejía reported on a speech made by Seynabou Sakho, Director for Central America within the World Bank in which he asserted that the region would have to change its model of development when the crisis of the coronavirus pandemic has subsided.

As examples of the kind of changes that would be needed, Mr Sakho cited the need to close the technology gap between Central America and the developed world, the need to give access to education and health services at a distance, and to give higher priority to spending on health and social protections for the most vulnerable sectors. He also cited the need for business to develop an economy based on much lower carbon emissions.

“This crisis has the potential to affect access to education, nutrition and health for many people. We shall have to invest more in human capital and ensure that people are protected,” stated Sakho. He also spoke of the need to postpone for at least six months the debt repayments to the World Bank and International Monetary Fund of the two most indebted countries, Honduras and Nicaragua.

Whilst recommendations to focus more on health, education and social protections are laudable as aims, his speech did not sound like the fundamental switch of direction that is required if development policy is to genuinely benefit the vast majority of people in the region. Instead of bolstering big business and continuing with the export model of development, the World Bank and IMF should be refusing to invest in fossil fuel exploration and exploitation, and refusing to support an industrial model of agriculture which uses the best land in the region to grow crops destined for Europe and North America. They should stop their promotion of privatisation of public services and natural resources and should urge the governments of the region to legislate for stringent regulation to ensure that the production of all goods does not harm humans or their environments or communities.

A crisis such as the COVID-19 pandemic should serve as a wake-up call for the bosses of capital. The neoliberal model of economic development – capitalism on steroids – is failing all around us, and its failings have been shown most clearly by the capitalist system’s inability to cope with such a shock. The frailty of a system which divorces people’s means of consumption from their means of production has become exposed. If capitalism recovers from this shock, it will only be until the next shock exposes again its unsustainability. It cannot continue to recover indefinitely. A new model based on de-growth, the marriage of local production and consumption, and the valuation of human and environmental wellbeing rather than financial accumulation, is urgently needed if humanity is going to advance into the 22nd century with a planet in reasonably productive and healthy shape.