The hidden trade-offs of development
From an article by Better Govs
Michael Woolcock is Lead Social Scientist in the World Bank's Development Research Group, where he has worked since 1998. He is also a Lecturer in Public Policy at Harvard University's Kennedy School of Government. His research focuses on strategies for enhancing state capability for implementation of policy.
In a June 2026 talk at the World Bank, Michael focused on economic growth as “creative destruction”: a process in which new technologies and entrepreneurial practices displace incumbent firms and established business procedures.
“Creative destruction” was popularised in the 1940s by Joseph Schumpeter and in recent years, this framing has been refined into a formal model for understanding and promoting growth, culminating in a Nobel Prize for Philippe Aghion and Peter Howitt.
Viewed through a wider development lens, "creative destruction" is not limited to firms or technologies. It unfolds across nearly every sector as a complex and often wrenching social process that reshapes issues ranging from identities and community cohesion to life aspirations and state-society relations.
Historically, nearly every country that has undergone such a widespread social transformation has also endured severe political conflict. If development is understood at the outset as both creative and potentially destructive, then policy and practice must anticipate how its destructive aspects can best be addressed, especially for the poorest and politically weakest citizens.
Grounding development strategy in locally legitimate change processes is thus both an ethical imperative and a pragmatic necessity. Michael discussed how evidence on state capability, community-driven development, and contentious change processes can inform sound, supportable, and implementable strategies. As development faces growing funding and delivery challenges, successfully navigating “creative destruction” only becomes more, not less, important.
“Creative destruction” applies to the way economic and social progress creates new opportunities while also dismantling existing forms of work, identity, authority and community.
Development professionals often emphasise the benefits of change - new technologies, education, infrastructure and institutions - while underestimating the disruption, grief and loss that accompany it.
Michael makes the following key points:
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Development has both creative and destructive effects. Innovations such as sanitation, renewable energy, digital technologies and modern transport can greatly improve welfare, but they can also make older livelihoods, skills and social arrangements obsolete.
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Conventional metrics miss important human costs. Cost-benefit analysis and standard development indicators often fail to capture displacement, alienation, cultural loss and the emotional consequences of rapid change. Think results of closures of large plants, coal mines, etc.
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Creative destruction is shaped by power. Power regarding policy and its implementation means that development is not neutral: it can benefit some groups while dispossessing others. Think colonial power, land rights, etc.
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Education illustrates the central paradox. In developing countries for example, a village elder welcomes his daughter’s schooling but fears it is weakening local authority, language and community continuity. The example shows how even valuable interventions can erode established ways of belonging.
There are four forms of Creative Destruction:
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Destructive creation: The deliberate destruction of existing institutions, practices or people in order to build something new. Michael links this to colonialism and modernization theory.
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Disruptive destruction: The “move fast and break things” approach, which treats disruption as inherently positive. Michael warns that breaking things without creating durable alternatives is simply destruction.
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Deconstructive creation: The dismantling of existing systems in pursuit of future improvement, such as infrastructure projects, slum upgrading, dams, or campaigns against slavery and sexism. These changes may be necessary but remain painful and contested.
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Innovation-led replacement: The familiar process in which new technologies, systems or paradigms replace older ones, sometimes gradually and sometimes through fundamental shifts in worldview.
Why does grounding development strategy in locally legitimate change processes matter?
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Development can create conflict between different ways of knowing. Economists, anthropologists, scientists, faith healers, Indigenous communities and bureaucrats may not simply disagree; they may define evidence, value and authority differently.
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Land, water and property rights expose these tensions. Development institutions may translate land or water into assets, prices and administrative categories, while communities may understand them as ancestral, sacred or relational.
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Major development transitions are socially wrenching. Rising agricultural productivity, migration, urbanisation, longer lives, expanded schooling, lower fertility and formal legal systems can create opportunity while also disrupting families, livelihoods and local identities.
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Success can coexist with instability. Middle-income countries may experience fragility when economic growth raises expectations faster than institutions can respond, especially where identities and sources of legitimacy have already been weakened.
What are the implications for development practice?
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Development professionals should recognise that their work changes not only economies, but also relationships, identities and social order.
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Programmes should show greater empathy for people who must retrain, migrate, adapt or lose familiar ways of life, particularly where safety nets are weak.
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Institutions need stronger capacity for difficult, legitimacy-building conversations with affected communities.
The overall lesson is that creative destruction cannot be avoided, but it can be managed more honestly, carefully and humanely.
Read the article here.
Watch the 102 mins talk here:
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From an article by Better Govs, 29/09/2026