Knowledge is power

Neo-colonial development thinking could be useful

Knowledge is the best path out of poverty. A study by Leandro Prados de la Escosura shows that between 1913 and 1950 poor countries made much bigger gains in welfare than in GDP, mostly because colonial regimes spread medical know-how and education. Colonies are gone but knowledge transfer is still the best way to help the world's poor.

The study covers the years back to 1870 when Western countries began enjoying modern medical services and education. It postulates that GDP is not the best measure of human welfare, but should be combined with education and health/longevity to produce an overall index.

Using this methodology, the study determines that the rapid rise in incomes during the periods of globalisation before 1914 and since 1970 produced less growth in human welfare than the intervening period, when protectionism ruled in the economic sphere but health and education outcomes increased rapidly. That period also saw the greatest relative improvement in poor countries' welfare compared to the developed world, even through a period of almost stagnant incomes.

The most notable change in poor countries' position after 1950 was the end of colonialism. That did not turn out to be helpful for welfare. Early versions of colonialism were economically-oriented and exploitative but in the 20th century both British and French colonial regimes sought to "develop" the countries they ruled. They did a pretty good job, introducing efficient government infrastructure, bringing the benefits of current medical and sanitation techniques to poor countries, and providing some modest Western-style education. Colonial rule did not make the colonies rich, but it appears to have greatly improved inhabitants' lives.

The end of colonialism led to reduced contact with rich countries, lessened knowledge transfer and often political disorder. The result was slower welfare increases, especially in Africa.

However, today's mobile phone and internet technology has allowed a bottom-up knowledge transfer that is making Africa grow rapidly economically and improving life expectancies. Online education offers further opportunities for poor countries' inhabitants to gain knowledge.

Even without colonial paternalism and with slower global growth, the 21st century may be exceptionally fruitful for the world's poorer inhabitants.