Home .Development Development co-operation -- land of broken promises
Development co-operation -- land of broken promises
Wednesday, 10 September 2008 20:11

Poor countries and poor people have always received assistance.  Over the centuries, help has been given by governments, the church and community leaders. 

"Development co-operation" by developed country (mainly OECD) governments has a more recent history.  Following the Second World War, developed country governments launched programmes of development co-operation (giving "official development assistance") for three main reasons: (i) helping developing countries achieve meaningful independence after decolonisation; (ii) courting friends in the Cold War period -- both the USSR and Western countries led by the US provided assistance in part to encourage developing countries to be on their side; and (iii) promoting poverty reduction.  [An early initiative in the area of official development assistance was the Marshall Plan through which the US and Canada contributed to financing the reconstruction of Europe after the Second World War.]

Rich countries have always made bold promises for helping poor countries.  For example, members of the UN set a target for official development assistance (ODA) of 0.7% of GDP.  And yet, in 2007 ODA from OECD countries amounted to less than 0.3% of GDP or $104 billion.  The largest donors in 2007 were the United States, followed by Germany, France, the United Kingdom and Japan.  The only countries to exceed the UN target were Denmark, Luxembourg, the Netherlands, Norway and Sweden. 

An increasing number of emerging economies are now providing ODA, countries like China and wealthy OPEC members.  In addition to ODA, private aid is also very important, particularly from the US -- by foundations (like the Gates Foundation), charities, NGOs, religious groups and universities (many of which have big endowments).

At the Gleneagles G8 and UN Millennium +5 summits in 2005, donors committed to increase their aid.  The pledges made at these summits, combined  with other commitments, implied lifting aid by USD 50 billion in 2010 compared with 2004 (at constant 2004 prices).  While a few countries have slightly reduced their targets since 2005, the majority of these commitments remain in force.  Overall, most donors are not on track to meet their stated commitments to scale up aid; they will need to make unprecedented increases to meet their 2010 targets. 

Late last year, OECD donors joined in an Aid Pledge reaffirming their aid commitments made at Gleneagles and elsewhere.  Can you believe them?  Not in your life!

But, more fundamentally, should we be giving assistance to developing countries today?  There are many good reasons for wishing to help the almost one half of the world's population living on less than $2 a day.  First, there are humanistic reasons.  Second, many poor countries are being adversely affected by climate change (mainly caused by developed countries), and need help to adapt to that.  Third, economic development can help promote a more secure world for us all.  Fouth, as developing countries join the global economy, it benefits to everyone.  And we could on with fifth, sixth, etc.

So, if there are many good reasons for helping developing countries, what has been the historical experience with such assistance?  Has it really been effective?

In reality, there have been too many bad experiences with ODA.  It has encouraged corruption -- money can end up in politicians' bank accounts, not in the hands of the poor.  Many white elephants have been built -- hospitals without patients or doctors, roads without cars etc.  It can promote a dependency culture.  Projects are often imposed on developing countries -- neocolonial attitudes! 

Tied aid is also still common, whereby the recipient is forced to spend aid on products from donor country, or forced to accept advice from consultants from donor country.  Food aid often adversely affects agriculture in recipient country.  And recipients forced to spent much resources on paper work with donor.

But experience does show that ODA can work when it is given to countries which are well managed and have good governance.  Korea and Taiwan are countries that benefited from ODA in their early days of their development.  Also, ODA is more effective when developing countries are in charge of their own national development programmes. Developed countries should work in partnership with developing countries. 

There is also evidence that ODA has been very effective in improving health conditions.  Leprosy has been basically eradicated.  In fact, life expectancy has risen much more than GDP per capita in the developing world.  And the Green Revolution in the sub-continent also benefited from aid.

All things considered, however, even when ODA has played a positive role in a country's development, it has not played a decisive role.  The key to economic development is a society's capacity to organise itself under good leadership.  So, if the OECD donors do not keep their aid pledge, it will not be the end of the world.

Developing countries suffer more from the "incoherence" of OECD policies which block market access, particularly in the area of agriculture, even though they are providing ODA.  What about concluding the Doha trade talks ... now that would be very useful.  

Reference:

"Aid targets are slipping out of reach?" -- www.oecd.org/dac/stats


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