Defence, Diplomacy and Development Policy

Baroness Stroud Excerpts

Thursday 30th January 2020 Lords Chamber

[Baroness Stroud (Con)]

My Lords, I thank the noble Lord, Lord McConnell, for securing this debate and for his long-term commitment to these issues. I also congratulate my noble friend Lady Penn on her maiden speech. I look forward to seeing the amazing things that she will do during her time in this House and the collegiate way in which she will undertake her work.

In this debate, I will restrict my remarks to the way in which nations develop and how we have observed that safer and fairer nations are actually built. I hope that this might provide some interesting thinking to feed into the Prime Minister’s welcome review.

How a person, community or nation develops along the pathway from poverty to prosperity has long been a concern of mine. From my time spent living in the Walled City in Hong Kong to my current role at the Legatum Institute—I refer to the Members’ register of interests—the question of how a nation builds a safer, fairer and more prosperous society has challenged me greatly. At the Legatum Institute, we have undertaken a piece of work entitled How Nations Succeed. We have analysed which nations, over a 60-year arc, have built fairer and safer societies from a starting point of fragility, such as Colombia, and which, with exactly the same starting point, have struggled to do the same, such as Nicaragua.

From this work, we have observed a number of lessons, but noble Lords should not worry—I will reference only three. As we have heard this afternoon, the number one need for any country is self-evidently to deliver security, peace and stability for its people—hence the safer world element of this debate. However, there is also a need to strengthen the social contract between a Government and their citizens. What can they really expect of one another? Then there is the need to create a positive environment for investment and to improve conditions for enterprise and flexible labour markets, all of which ultimately lead to a fairer society.

Noble Lords will be grateful to know that I will not unpack these one by one. However, what is interesting to note here is that there is not a clear connection between the development of a nation and the distribution and focus of aid to it. To put it simply, what we have observed is that nations that receive aid but do not take responsibility for their own development do not thrive on a national scale, even if some of their people benefit in the short term. However, nations that take responsibility for their own destiny drastically outperform the development of those reliant on foreign assistance, regardless of their starting point.

Against this background, let us first look at the issue of security and the creation of a secure foundation for a nation. No nation will be able to make the transition into a safer and fairer world without first delivering safety and security for its people. Stable governance, free from violent conflict and upheaval, is an essential requirement for development, as we have seen over the years in, say, Botswana. Countries need safety and security, effective governance and a stable political environment to thrive. It is therefore no coincidence that poverty is concentrated in high-risk settings. Some 87% of people who currently live in extreme poverty are in countries where security in all its forms—political, social or environmental—is fragile.

Globally, we are seeing the first welcome signs of increased safety and security following a trend of declining safety and security. This is crucial to establishing greater fairness. The relationship between wealth generation and security is essential, as we have heard. A nation with a basic level of safety and security is much more likely to create the conditions necessary for producing wealth, or fairness, for its citizens.

As nations transition from violence to stability, the next important step is to strengthen the social contract between a Government and their citizens. Our research shows that the strength and health of institutions has a stronger relationship with social well-being than aid in the long term; this points to where the greatest development leverage is likely to be in future. Improving the quality of institutions can stimulate increased economic well-being and thereby increased fairness. In the long term, the quality of institutions therefore has a substantial impact on social well-being, while the integrity and accountability of government is strongly related to the sort of fairness outcomes we long to see in the developing nations, in people’s health, education and living conditions.

This is because with stable Governments and institutional trust comes the ability to foster a positive investment environment. In our research, we have observed that the opening up of the world’s economies has led to an extraordinary reduction in the number of people in poverty. Absolute poverty rates have fallen; the proportion of families living on less than $1.90 a day has more than halved since 2000, and it continues to fall. We must not forget that the greatest anti-poverty achievement in the history of mankind has actually happened in our lifetime. Mainstream economists on the left and right, and in the centre, agree on the central role that free trade, property rights, the rule of law and entrepreneurship have all played in creating a fairer world. In our focus on aid, we must not hinder or constrain this metanarrative that is changing the world faster than any aid programme could.

The final lesson we learned when analysing how nations succeed is that countries which have developed over the last 60 years, such as Indonesia, have done so across multiple fronts concurrently: strengthening their institutions, growing their economies and improving the well-being of their people. This has seen a decrease in mortality rates across all age groups and a growing life expectancy. Our research shows that in living conditions and education, 85% of countries across the world saw an improvement over the last 10 years. Education systems are affording more people the opportunity to learn, with higher enrolment rates at each learning stage. Women are spending more time in school on average, for example in a country such as Mauritius. These improvements to living conditions, health and education foster communities and nations that are resilient enough to weather the challenges that an unpredictable world can provide.

There is significant food for thought in this debate, as we consider the way forward and the role that Britain should play in international development. If we are really focused on supporting the development of nations, do we need a conversation around how nations really succeed and develop? To build a compassionate world, we should certainly focus on providing assistance at times of crisis, famine and flood. Stability is absolutely the basis on which all prosperity is predicated. But if we really want to learn from effective models and use our defence, diplomacy and development to support emerging nations, should we work with the instincts of a nation where it is committed to development? Across all fronts, the nations that have forged the pathway from poverty to prosperity have worked to attract the people, ideas and capital that they need to succeed.