Failed development in global networks, exemplified by extractive industries in Bolivia and Ghana

Abstract

ABSTRACT For the World Bank, integration into the global economy is the path towards development. Its experts argue that the Global South will benefit from easing barriers to investment and trade, thus facilitating interaction between transnational corporations and local enterprises. Yet, there is growing scepticism regarding the prospects to develop in global networks. This article delves into their dark side. Following critical scholarship, the author suggests that integration into global networks is a process that creates winners and losers. It leads to uneven development. To analyse concrete mechanisms that underlie the process of failed development, he drafts a heuristic on exclusion, downgrading, and non-participation from/in global networks. This approach is tested against the backdrop of the hydrocarbon sector in Bolivia and Ghana. In Bolivia, indigenous suppliers suffer from downgrading, exclusion, and non-participation because of a recent shift to a turn-key model and sector-specific entry barriers. Ghana is marked by non-participation of local firms, mostly due to endogenous problems: corruption and institutional deficiencies, little industrialization, a high interest rate, and rent-seeking. These findings confirm that caution with regard to the possibilities to develop in global networks is justified, but they also indicate that not every development problem results from global network participation.