International economic development: A 50-year retrospective

Over the past 50 years that the OPEC Fund has been in existence, international economic development has accelerated significantly, with progress marked by a range of key milestones and improvements. When it comes to politics, the last half century has seen the end of the last colonial empires and instead a shift of decolonialization and liberation struggles from the overthrow of regimes to fights for economic, cultural and digital sovereignty. 

Thinkers like Edward Said, Frantz Fanon and Samir Amin challenged Eurocentric development models by criticizing colonialism’s lasting impact on identity, power and culture, claiming that “development” often perpetuated colonial hierarchies. Their work critically shaped the development of Critical Theory, which aimed to combine theoretical analysis of power systems with practical steps toward liberation and change of power. 

However, the search for alternative political models was heavily impacted by the reality of Marxism in power in the Soviet Union, the regime’s long decay and its eventual demise. Regardless of the obvious huge differences between theory and practice, nothing discredited left-wing thinking more than governing in its name did. Ironically, the same fate today is befalling capitalism as a ruling ideology. 

When it comes to economics, probably the most important and welcome international development in the past 50 years has been the large decrease in the number of people living in extreme poverty – falling from nearly 2 billion in 1990 to approximately 831 million in 2025 according to the World Bank (although it has been rising again since the COVID-19 pandemic). 

This decline has primarily been driven by strong economic growth in East and South Asia, helped by significant health improvements thanks to vaccination programs and early childhood interventions. But while the global number has dropped, poverty remains a major issue – with a large portion now concentrated in Sub- Saharan Africa. Progress has also varied significantly by region and demographic group, including shifts in policy thinking, leadership and institutions, changing emphases, development challenges, funding trends and other issues. 

International development through the decades 

The 1970s - Structural change and Global North–South Dialogue 

In the early 1970s, the world of economic development still carried many of the legacies of the post-World War II era. Trade and reconstruction models were well established for Europe and Japan, but the developing world was increasingly voicing concern that the “old” international economic order was stacked against poorer countries. For example the Declaration on the Establishment of a New International Economic Order in 1974 sought a more equitable distribution of global income and resources. 

Simultaneously, trade liberalization was only just getting traction and many developing countries still adopted import-substitution industrialization or state-led strategies. Policy thinking was also shifting, with the rise of changing structural frameworks. The emphasis was on state intervention and structural transformation of industry, infrastructure and state-led investment. Government planners were focused on how to move economies from agriculture to industry, build infrastructure, mobilize domestic savings and restructure debt. 

Major institutions such as the United Nations Conference on Trade and Development (UNCTAD), established in 1964, were influential in shaping the agenda of the Global South. According to UNCTAD, the term refers to countries with developing economies, mostly in Africa, Asia, Latin America and the Caribbean. These countries are generally characterized by lower incomes, higher poverty rates and developing infrastructure compared to the North. 

A landmark was the Brandt Report (1980) written by a commission chaired by the former Chancellor of West Germany (1969-74), Willy Brandt, which advocated for large transfers from rich to poor countries to bridge the North- South divide. This era saw an increasing role for development assistance and concessional flows, as well as early debates regarding debt in developing countries. However, many developing countries still faced low productivity, weak institutions, limited infrastructure and large external debt burdens, all key challenges that the new thinking ultimately failed to turn around. 

The 1980s - Rise of structural adjustment and neoliberalism 

The 1980s marked a major shift in the dominant policy paradigm in international development from structural change emphasizing state and infrastructure to market-based liberalization and reform. Faced with debt crises in Latin America and Africa, and a global macroeconomic environment marked by higher interest rates and weaker growth, major institutions such as the International Monetary Fund (IMF) and the World Bank promoted Structural Adjustment Programs (SAPs). These emphasized fiscal discipline, liberalization of trade and finance, privatization, deregulation and an opening up to foreign investment much the same as the current policy prescriptions. 

In policy thinking the mantra of “get the market working” became dominant: import substitution gave way to export-oriented growth and state-led planning ceded ground to liberal frameworks. Alongside came the Washington Consensus (although the term was coined later) summarizing this approach: macro stability, market liberalization, trade openness, privatization and minimal state intervention. 

At the same time, new voices – such as Richard Jolly, a British development economist who served as UN Assistant Secretary-General – began to argue for “adjustment with a human face,” emphasizing social protection alongside macroeconomic reforms. Meanwhile, Rolph van der Hoeven, professor of employment and development economics at the International Institute of Social Studies in The Hague, emphasized employment and social concerns in adjustment programs. 

As the 1980s progressed, the limitations of SAPs became more and more apparent: in many countries, growth remained weak, debt burdens persisted, inequality rose and some critics argued that the neoliberal emphasis – the Washington Consensus – neglected state capacity and structural constraints, leading to weak institutions, poor infrastructure and low human capital – all barriers to sustainable growth. 

The 1990s - Millennium Development Goals, globalization and the “Asian Tigers” 

With the end of the Cold War and the rapid advance of globalization and banking sector deregulation, the 1990s brought a new wave of optimism about global development. Trade liberalization, regional integration, foreign direct investment and cross-border supply chains expanded markedly. 

Policy thinking shifted again. Growth was now seen to be driven by openness, integration, investment in human capital (education and health) and the quality of institutions (governance and rule of law). The rise of the East Asian miracle economies reinforced this view, with countries such as Singapore, South Korea and others demonstrating how investment, trade and human capital could drive rapid growth. 

Around the same time the Millennium Development Goals (MDGs) were adopted in 2000 at the UN, setting specific targets for poverty reduction, health, education, gender equality and other social indicators. This approach introduced stronger measurable outcomes into the development agenda. Institutions responded: the World Bank, IMF and UN agencies now emphasized poverty reduction, governance and social inclusion, alongside growth, in their work. Development financing began to diversify, including private sector development, microfinance and public–private partnerships. 

However, the 1990s also exposed new challenges. Countries that had liberalized did not always move smoothly to high-income status. Instead they plunged into the so-called middle–income trap, a situation where a country gets stuck in its transition, because the strategies that fueled initial growth have been exhausted or become obsolete. In regions such as Sub-Saharan Africa growth remained weak, infrastructure gaps persisted and institutions remained fragile. 

The 2000s - Aid surge, the MDG framework and the rise of emerging donors 

Moving into the 2000s the development agenda was shaped by several key features. The MDG framework gained traction while donors and multilateral agencies mobilized more resources toward poverty reduction, health (particularly HIV/AIDS and malaria), education and infrastructure. The concept of aid “effectiveness” and results also grew in prominence, underpinned by the Paris Declaration on Aid Effectiveness (2005) that stressed ownership, alignment, harmonization, results and mutual accountability. 

During this period, the level of development funding surged: Official Development Assistance (ODA) increased from about US$54 billion in 2000 to nearly US$130 billion in 2010 for Organisation for Economic Co-operation and Development – Development Assistance Committee (OECD-DAC) donors. This was accompanied by the rise of donors such as China, India and other emerging economies, along with alternative development models, creating a more complex aid architecture. 

Policy thinking was turning toward inclusive growth, sustainable development, governance, private sector development and innovation. This highlighted the greater emphasis placed on the private sector and market–based solutions. Infrastructure investments in transport, energy and telecommunications also became more important. Greater attention was also being paid to fragile states, countries with weak state capacity or legitimacy, conflict and humanitarian emergencies, as well as the interplay between development, security and governance. 

However, alongside the rise of ODA came a challenge – an increase in debt stocks in many developing countries. The vulnerability of these countries was highlighted by global shocks, particularly the 2007-8 financial crisis, which underscored how interconnected the economy was and how developing countries were not insulated from international downturns. 

The 2010s - Sustainable Development Goals, specialization, climate change and financing gaps 

In the 2010s, the international development paradigm shifted again in several important ways. The UN Sustainable Development Goals (SDGs) were adopted in 2015, replacing the MDGs and broadening the agenda from eight to 17 goals covering poverty, inequality, environment, climate change, peace, institutions and partnerships. Meanwhile, the role of climate change, environmental sustainability, resilience, adaptation and mitigation became central to development thinking. In addition, the concept of development finance widened with an increased emphasis on private finance, blended finance, impact investing and – in developing countries – the role of domestic resource mobilization. 

However, the global macroeconomic environment remained challenging. This was reflected in low growth in advanced economies, rising inequality and increased recognition of middle–income traps. The decade was also bookended by two major shocks: the ongoing effects of the 2007–8 global financial crisis that carried over into the early part of the decade and the onset of the COVID-19 pandemic (which spilled over into the next decade). 

In terms of development challenges, while extreme poverty declined globally, it remained concentrated in fragile states, particularly in parts of Sub- Saharan Africa. Inequality – between and within countries – increased and governance issues remained pervasive. The structural transformation of many economies stalled, highlighting the difficulties of “escaping” the middle-income trap. Meanwhile, greater emphasis was placed on results, evaluations, targeted interventions and impact measurement. 

The 2020s (so far) and looking ahead - Crisis, multipolarity and financing innovation 

Moving to the 2020s, the global development landscape is facing new and intensified challenges, while continuing to tackle existing difficulties. The COVID-19 pandemic (March 2020 – May 2023) led to widespread loss of life and produced the worst global recession since the 1930s, causing major setbacks in many developing countries in health, education, poverty and growth. Development finance has also come under pressure even though ODA hit records in 2023 (US$223.7 billion), according to OECD-DAC data. Multilateral development banks (MDBs) have been tasked to do more following ongoing G7 discussions on MDBs’ capital adequacy – despite limited or no funding increases from shareholders amid competing domestic priorities. 

The emergence of new development models and actors with countries such as China, India and Brazil asserting themselves on the global scene has provided a shake-up given subdued multi- and bilateral funding rounds from developed economies. Private capital, philanthropic finance, blended finance and South–South cooperation are growing in importance. Alongside these are new instruments such as debt swaps for nature and climate, highlighting that the link with the environment and climate change is now far stronger. 

More recently, geopolitics, trade tensions, supply-chain disruptions, debt distress and the fragmentation of the global order have all undermined many of the certainties that helped propel the global economy forward after the end of the Second World War. Overlaying all of this has been the rapid spread of digital innovations and artificial intelligence, which offers the prospect of renewed poverty reduction and economic structural transformation. 

Cross-cutting themes in international development 

Changes in policy thinking 

• 1970s: State-led investment and import substitution. 
• 1980s: Washington Consensus-led structural adjustment and market liberalization. 
• 1990s: Trade and investment–oriented growth. 
• 2000s/2010s: Inclusive, sustainable, results–based development, along with institution-building and governance and global public goods. 
• 2010s/2020s: Resilience, climate change, private finance and strategic investment helping to open and enable market-led solutions. 
• 2020s: Recognition of the complexity of development, which is not just achieving GDP growth but also structural transformation, human capital, good governance, connectivity, climate resilience and inequality. 

Changes in focus and approach 

• 1970s/80s: Emphasis on Africa and Latin America. 
• 1990s/2000s: Shift towards East and Southeast Asia, shaped by achievements under the “Asian miracle”. 
• 2000s/2010s: Focus on fragile states and specific middle-income countries “left behind”. Innovations in blended finance, private sector mobilization, South–South cooperation and multistakeholder partnerships. 
• 2010s/2020s: Debt stress led to approach shifting from loans to greater provision of grants. Linked to this the emphasis moved from quantity of aid to development effectiveness, results, governance and transparency, with a recent additional shift to sustainability, climate and digital infrastructure. Inequality, inclusion, environmental limits and shock resilience are also major parts of the development agenda. 

Development challenges 

• Persistent inequality (between and within countries) even as global poverty in extreme terms has dropped. 
• Debt burdens and fragile states remain major problems that are proving difficult to resolve. • Middle-income trap: Many countries have moved from low- to middle-income but cannot reach high–income status. 
• Climate change, environmental degradation, demographic pressures, digital divides add new layers to the development challenge. 
• Financing gap: Even with increased aid and private flows, the scale of investment required to achieve the SDGs is enormous (estimated at US$1.4 trillion annually for low and lower-middle income countries by the UN). 
• The global economic environment is volatile: Trade tensions, pandemics, supply-chain disruptions and geopolitical fragmentation increase the risk for developing economies amid reduced aid budgets from developed economies. 

Looking ahead 

Over the past 50 years, international economic development has undergone a profound evolution. What started in the 1970s as structural change debates about dependency, transfers and state-led investment moved through the eras of neoliberal liberalization into growth-and- trade–based models, into inclusive human capital plus governance frameworks and now into a highly unstable polycrisis world. 

Institutions have adapted over the decades. Funding has grown, but so has the scale of needs. This increased complexity means more actors (private sector, foundations and emerging donors), more instruments (blended finance and South-South cooperation), more objectives (sustainability, resilience, inequality and digital access) and more volatility (pandemics, climate shocks and geopolitical risk). 

The development agenda today is less about a one–size model and more about tailored strategies for fragile states, for middle-income countries, for climate resilience, for digital infrastructure and for inclusive growth beyond mere GDP. 

Looking ahead, there are many issues to address that will prove challenging: how to mobilize finance at scale and effectively; how to ensure developing countries build institutions, human capital and infrastructure; how to manage debt while meeting increasing spending needs; how to address climate change and sustainability in an overheating world; how to provide meaningful support to fragile states; and how to integrate private investment, domestic resource mobilization and international cooperation in a shifting global order. 

In a nutshell: The world needs new thinking. Because, as Albert Einstein put it: “We cannot solve our problems with the same thinking we used when we created them.”