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Planning for development: Aligning Elites with Development
Editor: Róbinson Rojas Sandford

From WIDER Angle - United Nations University

Aligning Elites with Development

Alice Amsden, Alisa DiCaprio, and James Robinson

To understand what role elites play in the process of economic development, we need to establish first who they are. Though most definitions are welfare neutral, in popular discourse elites take on a negative connotation. This conceptual confusion has contributed towards international assistance practices that assume elites are not developmental. Here we turn to look at the missing concept of developmental elites, the ways in which they diverge from other elites, and whether it is possible to promote the conditions under which they thrive.
Who are the "elite"?
The origins of the term are firmly rooted in Pareto's work on the distribution of wealth and the ruling class. But today, the term goes beyond its roots in class and is used to describe actors at various levels of society. A working definition we adopt here is that elites are "a distinct group within a society which enjoys privileged status and exercises decisive control over the organization of society." This does not require that the actor be either wealthy or a member of the ruling class, but it does suggest that they have a measurable impact on development outcomes.
If we look to the existing development paradigm, we are presented with the idea this impact will be negative and that elites are a problem to be solved. Increasingly, poverty reduction approaches are bottom-up and seek to move decision-making power away from governments. But this belies the fact that elites are not, by virtue of their position alone, negative forces for development. Throughout history, there are examples of elites who contributed to the provision of national and global public goods — Lee Kwan Yew in Singapore, Nelson Mandela in South Africa, and Bill Gates in the United States are examples. They changed the direction of development in ways that were contingent on their position as elites, and in ways that favoured the advancement of their societies. Whether the welfare impact of elites is positive or negative is determined by how the actor or elite group executes its influence.
Channels of Elite Impact on Development
The impact that elites have on growth and development exceeds their actual representation within society. This disproportionate impact stems from their control over the productive assets and institutions, which enables them to influence both the allocation of resources and the allocation of authority.
The ownership of resources enables elites to impact growth in two ways. The most direct is through their decisions over resource allocation. They can choose to redistribute resources in ways that increase employment, economic efficiency, and reduce income inequality. Or alternatively, they can act as rent-seekers and direct resources towards their social groups.
In addition, their control over resources also gives elites the ability to make decisions over production and technology. The owners of the factors of production have influence over what is produced and how it is produced. They can act as entrepreneurs and innovators and increase factor productivity and diversification. Or they can overexploit existing resources without regard for sustainability into the future.
Elites also impact development outcomes through their control over decision-making processes that allocate political resources within a society. This introduces two additional channels through which their activities impact growth in the long run. The first is that elites have the resources to design and implement institutions that favour their interests. Such institutions may promote participation and information flow. Or they may simply cement the position of a particular group within the governance structure.
Another feature of elite control over institutions is that they are able to influence how both elites and non-elites within a society perceive different issues. Elites control how issues are framed through their ability to distribute or withhold information, and their influence over and within the media. Even where there is a free media, it depends on elites for information, and can choose to present issues that reflect a particular bias.
The extent to which these channels are used for social or personal welfare gain varies among societies. But the fact that these channels exist in every society highlights the fact that if elites can be induced to adopt developmental behaviour, it can have a disproportionately positive impact on growth and development.
Capturing Elites for Development
The benefits of bringing the objectives of elites in line with national objectives are obvious. But the extent to which this is possible and the levers to use to do so depend on what makes elites developmental. On the one hand, it might be that there is some inherent characteristic of some sectors of the elite that makes them different from predatory elites. On the other, it could be that elites who have been positive forces for development were responding to incentives that made them developmental. Understanding which of these is the correct perspective is important for understanding not only domestic elites in developing countries but also the international elites who are building institutions that embed their preferences into the workings of the international economy.
There is little evidence to support the contention that some elites are naturally more developmental than others. This is particularly important given the design of international governance structures which incorporate the assumption that there are fundamental differences between the elites of developed and developing countries. There is little to suggest, for example, that the objectives of elites in OECD countries are relatively more altruistic and that the institutions designed by such global elites focus on generating global public goods to a greater extent than would be true if the institutions were designed by alternate elites. For example, though institutions such as the WTO can play an important role in sustaining international trade, they can at the same time play the role of distributing the rents towards developed countries, and by taking too simplistic a view of the nature of comparative advantage can impede socially desirable policies in poor countries. Thus an important element in the design of international governance structures is the perpetuation of the preferences of rich country elites.
Given these observations, the answer to the question of how elites can play a positive role in development needs to focus on how to create the incentives that will lead elites to act in a developmental way. There are three considerations that can direct the process of building incentives without recommending specific institutional forms.
The first step to creating incentives for elites to incorporate social welfare into their activities is to understand the source of elite influence. Elites that draw their status from the ownership of resources will react differently than elites that draw their status from political influence. The proper incentives will be adjusted to the source of power.
The second step is to identify how elites interpret the need for development in society. For some elites, the volatility caused by poverty may create incentives for them to support development, for example by inducing them to disburse some of their influence to other groups in society. For others, development may be a threat which induces them to try to capture as much rent as possible before they lose power.
A third step is to look at how elites translate the interests of their constituency. Elites are a decisive group within their society, and there is evidence that leaders of political parties and unions are often more tolerant of reform and change than the masses they represent. Incentives need to reflect this.
Bringing Globalization into the Equation
The rise of globalization in the current period has had conflicting impacts on elites. On the one hand, it offers new sources of influence for existing elites. Development aid is channelled through elites before it reaches the poor. FDI allows commercial elites to spread their business model and their products beyond national markets. The need to address global public goods ties governing elites and empowers those technocrats with the ability to create solutions.
On the other hand, globalization constrains the domestic activities of elites. Rules set by the international institutions give non-elites enforcement power. The MDGs pressure elites to at least acknowledge that poverty in its many forms must be dealt with. Mobile phones enable coordination of protesters in authoritarian states to act against ruling elites.
The power of elites is that they will continue to exist in every country in every environment. This was one of the great insights of Pareto and Michels. Their persistence ensures that they will always play a key role in development and growth outcomes. The challenge that remains is whether their societies can identify the incentives that will align elite incentives with society’s goals.
WIDER Angle newsletter, August 2009
ISSN 1238-9544

About the authors

Alice Amsden is Professor of Political Economy at the Massachusetts Institute of Technology (MIT). She is a Co-Director of the WIDER Conference on The Role of Elites in Economic Development and a participant in the WIDER-MERIT Research Workshop on Entrepreneurship, Technological Innovation, and Development.

Alisa DiCaprio is Research Fellow and Conference Coordinator of the WIDER Conference on The Role of Elites in Economic Development.

James Robinson is Professor of Government at Harvard University Co-Director of the WIDER Conference on The Role of Elites in Economic Development. He also contributed to the WIDER Conference Country Role Models for Development Success.

Publications from WIDER Conference on the Role of Elites in Economic Development:
  • Sam Wong - July 2010
    Elite Capture or Capture Elites? Lessons from the 'Counter-elite' and 'Co-opt-elite' Approaches in Bangladesh and Ghana

    Community-based development has been criticized for its inadequate understanding of power relationships at the local level, which thus leaves room for elite capture. This paper compares and contrasts two case studies, both of which take power seriously in their institutional designs. The solar home system in Bangladesh, represents the ‘counter-elite’ approach and explicitly excludes local elites from the decision-making process. The trans-boundary water governance project in Ghana, in contrast, adopts the ‘co-opt-elite’ approach and deliberately absorbs local elites into the water committee. This paper suggests that, while the ‘counter-elite’ approach is not necessarily effective in challenging elite domination, because of the structural asset dependence of poor people on the elites, the ‘co-opt-elite’ approach risks legitimizing the authority of the elites and worsening poverty by implementing ‘anti-poor’ policies. This paper concludes that the success of dealing with elite capture lies in the flexible use of the ‘counter-elite’ and ‘co-opt-elite’ approaches together with the need to secure alternative livelihoods and to achieve empowerment with the poor.

  • James A. Robinson - July 2010
    Elites and Institutional Persistence

    Particular sets of institutions, once they become established in a society, have a strong tendency to persist. In this paper I argue that understanding how elites form and reproduce is key to understanding the persistence of institutions over time. I illustrate this idea with a simple political economy theory of institutions and through examples from Liberia, the US, South Africa and Germany I show how elites influence institutions. To change institutions requires having an understanding of how reforms influence the preferences, capabilities and strategies of elites.

  • Alice H. Amsden - October 2010
    Elites and Property Rights

    An elite derives its status from its relationship to property, whether physical or human capital. While stable property rights are necessary for everyday business, unstable property rights that result in major institutional changes (such as land reform) may have a positive impact on economic development. When are the ‘wrong’ property rights right? Institutional changes have a positive impact on economic development when a country’s elite can manage them. To support this generalization we examine the managerial capacity associated with elite status, highlighting which capabilities enable them to control changes in property rights regimes to their individual and national advantage. We compare how nationalization of foreign firms, a radical change in property rights, was managed in Argentina, China, Korea and Taiwan after the Second World War.

  • Johan Fourie and Dieter von Fintel - October 2010
    The Fruit of the Vine? An Augmented Endowments-Inequality Hypothesis and the Rise of an Elite in the Cape Colony

    The arrival of European settlers at the Cape in 1652 marked the beginning of what would become an extremely unequal society. Comparative analysis reveals that certain endowments exist in societies that experience a ‘persistence of inequality’. This paper shows that the emphasis on endowments may be overstated. A more general explanation allows for ‘non-tropical products’ to contribute to the rise and persistence of an elite, and consequently inequality. The focus shifts to the production method used in the dominant industry – in this case, slave labour in viticulture – and the subsequent ability of the elite to extend these benefits to products that were typically not associated with elite formation in other societies (such as wheat). The Cape Colony is used as a case study to show how the arrival of French settlers (with a preference for wine-making) shifted production from cattle farming to viticulture. A large domestic and foreign market for wine necessitated an increase in production volume. Given differences in fixed and variable costs, this resulted in knecht (wage) labour being supplanted by slave labour, an event which institutionalized the elite and ensured that the Cape remained a highly unequal society, with ramifications for present-day South Africa.

  • William I. Robinson - January 2010
    Global Capitalism Theory and the Emergence of Transnational Elites

    The class and social structure of developing nations has undergone profound transformation in recent decades as each nation has incorporated into an increasingly integrated global production and financial system. National elites have experienced a new fractionation. Emergent transnationally-oriented elites grounded in globalized circuits of accumulation compete with older nationally-oriented elites grounded in more protected and often state-guided national and regional circuits. This essay focuses on structural analysis of the distinction between these two fractions of the elite and the implications for development. I suggest that nationally-oriented elites are often dependent on the social reproduction of at least a portion of the popular and working classes for the reproduction of their own status, and therefore on local development processes however so defined whereas transnationally-oriented elites are less dependent on such local social reproduction. The shift in dominant power relations from nationally- to transnationally-oriented elites is reflected in a concomitant shift to a discourse from one that defines development as national industrialization and expanded consumption to one that defines it in terms of global market integration.

  • Elise S. Brezis - January 2010
    Globalization and the Emergence of a Transnational Oligarchy

    The aim of this paper is to examine the evolution of recruitment of elites due to globalization. In the last century, the main change that occurred in the way the Western world trained its elites is that meritocracy became the basis for their recruitment. Although meritocratic selection should result in the best being chosen, we show that meritocratic recruitment may actually lead to class stratification and auto-recruitment. In this paper, I show that due to globalization, the stratification effect will be even stronger. Globalization will bring about the formation of an international technocratic elite with its own culture, norms, ethos, and identity, as well as its private clubs like the Davos World Economic Forum. We face the emergence of a transnational oligarchy.

  • Andrés Solimano and Diego Avanzini - October 2010
    The International Circulation of Elites

    International migration analysis often focuses on mass migration rather than on the international mobility of elites, which is the focus of this paper. The paper offers a three-fold classification of elites: (a) knowledge elites, (b) entrepreneurial elites and (c) political elites. We explore the concept of elites and their main motivation to move across nations and review indirect empirical evidence relevant to this type of mobility, highlighting some channels through which elites can affect international development.

  • Thomas Cantens - November 2010
    Is it Possible to Reform a Customs Administration?

    An ethnographic approach is applied to Cameroon customs in order to explore the role and the capacity of the bureaucratic elites to reform their institution. Fighting against corruption has led to the extraction and circulation of legal ‘collective money’ that fuels internal funds. This collective money is the core of the senior officers’ power and authority, and materially grounds their elite status. Nevertheless, when reforming, wilful senior officers face a major problem. On the one hand, the onus is on them to improve governance and transparency, which can challenge the way they exert their authority. On the other hand, goodwill is not sufficient. ‘Reformers’ depend on a violent and unpredictable appointment process, driven by the political will to fight against corruption and the fact that the political authority has to keep a close eye on the customs apparatus that tends towards autonomy, thanks to its internal funds. Violence and collective representations weaken the legitimacy of the senior officers, even the reformers, by pushing individual skills into the background. This paper questions whether Cameroon’s use of official customs data to evaluate individual performance can open up fissures among customs elites such that reformers are distinguished from others.

  • Joseph Hanlon and Marcelo Mosse - September 2010
    Mozambique’s Elite – Finding its Way in a Globalized World and Returning to Old Development Models

    What makes elites developmental instead of predatory? We argue that Mozambique’s elite was developmental at independence 35 years ago. With pressure and encouragement from international forces, it became predatory. It has now partly returned to its developmental roots and is trying to use the state to promote the creation of business groups that could be large enough and dynamic enough to follow a development model with some similarities to the Asian Tigers, industrial development in Latin America, or Volkskapitalisme in apartheid South Africa. But Mozambique’s elite has also returned to two other traditions – that development is done by the elite and by foreigners. There is little support for development of local SMEs and agricultural development has been left to foreign-owned plantations.

  • Chipiliro Kalebe-Nyamongo - November 2010
    Mutual Interdependence between Elites and the Poor

    There has been a growing recognition among scholars that politics matters in the distribution of resources in society. However, attempts to use a political economy ‘lens’ with which to explore causes of poverty and strategies for poverty alleviation have largely ignored elites. By failing to embrace the crucial role elites play in the implementation of pro-poor policy, existing research has not produced a holistic understanding of the underlying factors which inhibit or promote action towards propoor policy. Historical accounts of the evolution of welfare states in the UK and USA inform us that elites prioritization of poverty reduction is driven by the extent to which elites and the poor are interdependent, such that the presence of the poor has a positive or negative impact on elite welfare. Drawing on research into elite views of poverty and the poor in Malawi, this paper argues that in formulating effective, responsive, and comprehensive strategies for poverty reduction, the role of elites must be considered in addition to the adoption of democratic, economic, and social institutions.

  • Bjorn Gustafsson and Ding Sai - October 2010
    New Light on China’s Rural Elites

    This paper analyses political elites, economic elites, hybrid elite households and non-elite households in rural China using household data for 1995 and 2002. We seek to understand the determinants of belonging to each of the three elite categories. We find that education and military experience positively affect the probability of being a political elite. The probability of becoming an economic elite is linked to the age of the head of household and to the income level of the county, indicating that opportunities to become an economic elite have increased over time, but in a spatially uneven way.
    We also investigate disparities in household per capita income as well as in household per capita wealth. Asia Market Transition Theory, we find that the relationship between education and the household’s economic status became stronger from 1995 to 2002. This theory also predicts that payoffs from belonging to the political elite decrease during transition towards market economy. Our results show that in the richest counties in 2002, the economic gain from being a political elite household was higher than elsewhere and higher than in high-income counties observed in 1995. We also found that although elite households on average have a better economic situation than non-elite households, income inequality and household wealth inequality in rural China would decrease only marginally if such disparities were to vanish. In contrast the spatial dimension is much more important for income inequality and for wealth inequality in rural China.

  • Elisa P. Reis - September 2010
    Poverty in the Eyes of Brazilian Elites

    This paper discusses data from a survey and in-depth interviews on elite perceptions of poverty in Brazil. De Swaan tried to identify the circumstances under which elites are willing to mobilize resources in order to promote poverty reduction. This paper questions if de Swaan’s analysis applies to Brazil. The main finding is that two parts of de Swaan’s thesis do apply: that poverty is a problem for the rich in the sense that it generates negative externalities that they would like to reduce; and that the elite believe that there are effective remedies. What is missing for Brazilian elites is the third element, namely that the elite see poverty as their responsibility to do something about it.

  • Rekindling Governments from Within

  • The Simple Analytics of Elite Behaviour Under Limited State Capacity

  • Two for the Price of One? The Contribution to Development of the New Female Elites

  • Why Are the Elite in China Motivated to Promote Growth?

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Aligning Elites with Development

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