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Development aid or development cooperation (also development assistance, technical assistance, international aid, overseas aid or foreign aid) is aid given by governments and other agencies to support the economic, social and political development of developing countries. It is distinguished from humanitarian aid by focusing on alleviating poverty in the long term, rather than alleviating suffering in the short term. The term development cooperation, which is used, for example, by the World Health Organisation (WHO) [1] is used to express the idea that a partnership should exist between donor and recipient, rather than the traditional situation in which the relationship was dominated by the wealth and specialised knowledge of one side. Most development aid comes from the Western industrialised countries but some poorer countries also contribute aid. Aid may be bilateral: given from one country directly to another; or it may be multilateral: given by the donor country to an international organisation such as the World Bank or the United Nations Agencies (UNDP, UNICEF, UNAIDS, etc.) which then distributes it among the developing countries. The proportion is currently about 70% bilateral 30% multilateral.[2]

About 80 to 85 per cent of developmental aid comes from government sources. The remaining 15 to 20 per cent comes from private organisations such as "Non-governmental organisations" (NGOs) and other development charities (eg. Oxfam).[3] This is not counting remittances by individuals working in developed countries to family members in developing countries.

Some governments include military assistance in the notion "foreign aid", although many NGOs tend to disapprove of this.

Official Development Assistance is a measure of government-contributed aid, compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD) since 1969. The DAC consists of 22 of the largest aid-donating countries.

Contents

Background

The offer to give development aid has to be understood in the context of the Cold War. The European Recovery Program, or Marshall Plan, launched by the United States in 1948, was concerned with maintaining the existing Western European governments in power by stabilising their economies so that they could resist internal dissent and external pressure from the socialist East. United States president Harry Truman clearly stated the anti-communist rationale for U.S. development aid in his inaugural address of 1949, which also announced the founding of NATO. The aid proposal was point four of the programme: "In addition, we will provide military advice and equipment to free nations which will cooperate with us in the maintenance of peace and security. Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people.“[4]

Development aid was aimed at offering technical solutions to social problems without altering basic social structures. The United States was often fiercely opposed to even moderate changes in social structures, for example the land reform in Guatemala in the early 1950s.

Quantity

Most Official Development Assistance (ODA) came from the 23 members of the Development Assistance Committee (DAC), or about USD 103.49 billion in 2007. A further USD 11.8 billion came from the European Commission while all non-DAC countries gave USD 5.56 billion.[5]

The largest DAC donors were the United States (USD 21.8 billion), Germany (12.29 billion), France (9.88 billion), United Kingdom (9.85 billion) and Japan (7.68 billion). While the largest non-DAC donors where Saudi Arabia (USD 2 billion), Korea (0.69 billion) and Turkey (0.6 billion). However, none of those met the UN target of giving at least 0.7 percent of the Gross National Income (GNI) as aid. United States (0.16% of GNI) and Japan (0.17% of GNI) where in fact giving least among the members of DAC. The only countries meeting the targets in 2007 where Norway (0.96% of GNI), Sweden (0.93% of GNI), Luxembourg (0.91% of GNI), the Netherlands and Denmark (both 0.81% of GNI).[5]

Quality

Development aid is often provided by means of supporting local development aid projects. In these projects, it sometimes occurs that no strict code of conduct is in force. In some projects, the development aid workers do not respect the local code of conduct. For example, the local dress code as well as social interaction.[6] In developing countries, these matters are regarded highly important and not respecting it may cause severe offense, and thus significant problems and delay of the projects.

Effectiveness

Aid effectiveness is the degree to which development aid works, and is a subject of significant disagreement. Dissident economists such as Peter Bauer and Milton Friedman argued in the 1960s that aid is ineffective:[7]

... an excellent method for transferring money from poor people in rich countries to rich people in poor countries.
Peter Bauer

Many econometric studies in recent years have supported the view that development aid has no effect on the speed with which countries develop. Negative side effects of aid can include an unbalanced appreciation of the recipient's currency (known as Dutch Disease), increasing corruption, and adverse political effects such as postponements of necessary economic and democratic reforms.[8]

There is also much debate about which form development aid should take in order to be effective. It has been argued that much government-to-government aid was ineffective because it was merely a way to support strategically important leaders. A good example of this is the former dictator of Zaire, Mobuto Sese Seko, who lost support from the West after the Cold War had ended. Mobuto, at the time of his death, had a sufficient personal fortune (particularly in Swiss banks) to pay off the entire external debt of Zaire.[8]

Besides some instances that only the president (and/or his close entourage) receives the money resulting from development aid, the money obtained is often badly spent as well. For example, in Chad, the Chad Export Project, a oil production project supported by the World Bank, was set up. The earnings of this project (6,5 million dollars per year and rising) were used to obtain arms. The government defended this purchase by stating that "development was not possible without safety". However, the Military of Chad is notorious for severe misconduct against the population (abuse, rape, claiming of supplies and cars) and did not even defend the population in distress (eg in the Darfur conflict). In 2008, the Worldbank retreated from the project that thus increased environmental pollution and human suffering.[9 ]

Another criticism has been that Western countries often project their own needs and solutions onto other societies and cultures. In response, western help in some cases has become more 'endogenous', which means that needs as well as solutions are being devised in accordance with local cultures.[10] For example, sometimes projects are set-up which wish to make several ethnic groups cooperate together. While this is a noble goal, most of these projects fail because of this intent.[9 ]

It has also been argued that help based on direct donation creates dependency and corruption, and has an adverse effect on local production. As a result, a shift has taken place towards aid based on activation of local assets and stimulation measures such as microcredit.

Aid has also been ineffective in young recipient countries in which ethnic tensions are strong: sometimes ethnic conflicts have prevented efficient delivery of aid.

In some cases, western surpluses that resulted from faulty agriculture- or other policies have been dumped in poor countries, thus wiping out local production and increasing dependency.

In several instances, loans that were considered irretrievable (for instance because funds had been embezzled by a dictator who has already died or disappeared), have been written off by donor countries, who subsequently booked this as development aid.

In many cases, Western governments placed orders with Western companies as a form of subsidizing them, and later shipped these goods to poor countries who often had no use for them. These projects are sometimes called 'white elephants'.

According to Martijn Nitzsche, another problem is the way on how development projects are sometimes constructed and how they are maintained by the local population. Often, projects are made with technology that is hard to understand and too difficult to repair, resulting in unavoidable failure over time. Also, in some cases the local population is not very interested in seeing the project to succeed and may revert to disassembling it in order to retain valuable source materials. Finally, villagers do not always maintain a project as they believe the original development workers or others in the surroundings will repair it when it fails (which is not always so).[11]

A common criticism in recent years is that rich countries have put so many conditions on aid that it has reduced aid effectiveness. In the example of tied aid, donor countries often require the recipient to purchase goods and services from the donor, even if these are cheaper elsewhere. Other conditions include opening up the country to foreign investment, even if it might not be ready to do so.[12]

All of these problems have made that a very large part of the spend money on development aid is simply wasted uselessly. According to Gerbert van der Aa, for the Netherlands, only 33% of the development aid is successful, another 33% fails and of the remaining 33% the effect is unclear. This means that for example for the Netherlands, 1.33 to 2.66 billion is lost as it spends 4 billion in total of development aid (or 0,8% of the gros national product).[11]

For the Italian development aid for instance, we find that one of their succeful projects (the Keita project) was constructed at the cost of 2/3 of 1 F-22 fighter jet (100 million $), and was able to reforest 1,876 square miles of broken, barren earth, hereby increasing the socio-economic wellbeing of the area.[13] However -like the Dutch development aid- again we find that, the Italian development aid too is still not performing up to standards.[14] This makes clear that there are great differences between the success of the projects and that budgettary follow-up may not be so strictly checked by independent third parties.

An excerpt from Dr. Thomas Dichter's recently published book Despite Good Intentions: Why Development Assistance to the Third World Has Failed reads: "This industry has become one in which the benefits of what is spent are increasingly in inverse proportion to the amount spent - a case of more gets you less. As donors are attracted on the basis of appeals emphasizing "product", results, and accountability…the tendency to engage in project-based, direct-action development becomes inevitable. Because funding for development is increasingly finite, this situation is very much a zero-sum game. What gets lost in the shuffle is the far more challenging long-term process of development."

The Massachusetts Institute of Technology's Abhijit Banerjee and Ruimin He have undertaken a rigorous study[15] of the relatively few independent evaluations of aid program successes and failures. They suggest the following interventions are usually highly effective forms of aid in normal circumstances:

  • subsidies given directly to families in order to be spent on children's education and health
  • education vouchers for school uniforms & textbooks
  • teaching selected illiterate adults to read and write
  • deworming drugs and vitamin/nutritional supplements
  • vaccination and HIV/AIDS prevention programs
  • indoor sprays against malaria, anti-mosquito bed netting
  • suitable fertilizers
  • clean water supplies

An inquiry into aid effectiveness by a researcher from the Institute of Development Studies was undertaken at the request of the UK All-Party Parliamentary Group (APPG) for Debt, Aid and Trade. The inquiry's overarching message is that effective aid requires as much investing in relationships as in managing money. It suggests Development organisations need to change the way they work to manage better the multiple partnerships that the Accra Agenda for Action recognises is at the core of the aid business. In relation to this specific inquiry, the following implications were drawn out:[16]

  • There is no evidence that spending more money with less staff will deliver better results.
  • In multiple sets of relationships there will be different ideas about what is success and how to achieve it and this should be reflected in methodologies for defining and assessing the impact of aid.
  • Helpful procedural harmonisation should not mean assuming there is only a single diagnosis and solution to any complex problem.
  • In addition to measuring results, donors need to assess the quality of relations at project/programme, country and international levels against indicators agreed with partners.
  • Decisions on aid need to be made on a case by case basis on the advice of well-informed country offices.
  • When selecting the aid instruments they use and what they fund donors should always be mindful of the implications for strengthening active citizenship.
  • Development organisations also need to be more accountable to UK citizens through encouraging conversations as to the real challenges and limitations of aid.

Private aid

Development charities make up a vast web of non-governmental organizations, religious ministries, foundations, business donations and college scholarships devoted to development aid. Estimates vary, but private aid is at least as large as ODA within the United States, at $16 billion in 2003. World figures for private aid are not well tracked, so cross-country comparisons are not easily possible, though it does seem that per person, some other countries may give more, or have similar incentives that the US has for its citizens to encourage giving.[17]

Remittances

It is doubtful whether remittances, money sent home by foreign workers, ought to be considered a form of development aid. However, they appear to constitute a large proportion of the flows of money between developed and developing countries, although the exact amounts are uncertain because remittances are poorly tracked. World Bank estimates for remittance flows to developing countries in 2004 totaled $122 billion; however, this number is expected to change upwards in the next few years as the formulas used to calculate remittance flows are modified. The exact nature and effects of remittance money remain contested,[18] however in at least 36 of the 153 countries tracked remittance sums were second only to FDI and outnumbered both public and private aid donations.[19]

The IMF has reported that private remittances may have a negative impact on economic growth, as they are often used for private consumption of individuals and families, not for economic development of the region or country.[20]

See also

References

  1. ^ W.H.O. glossary of terms, "Development Cooperation" Accessed 25 January 2008 (and still there in 2009!)
  2. ^ OECD Stats. Portal >> Extracts >> Development >> Other >> DAC1 Official and Private Flows. Retrieved April 2009.
  3. ^ OECD, DAC1 Official and Private Flows (op. cit.). The calculation is Net Private Grants / ODA.
  4. ^ Transcript of the speech
  5. ^ a b OECD: Final Official Development Assistance (ODA) data for 2007 (PDF) 2008-11-24
  6. ^ Development aid workers wearing casual outfits and open-toed sandals
  7. ^ "The sad loss of Lord Bauer". http://www.la-articles.org.uk/bauer.htm.  
  8. ^ a b Aid Effectiveness and Governance: The Good, the Bad and the Ugly
  9. ^ a b Tsjaad by Dorrit van Dalen
  10. ^ The Future of The Anti-Corruption Movement, Nathaniel Heller, Global Integrity
  11. ^ a b Kijk magazine; oktober 2008, Gestrand Ontwikkelingswerk
  12. ^ "US and Foreign Aid Assistance". Global Issues. 2007. http://www.globalissues.org/TradeRelated/Debt/USAid.asp. Retrieved 2008-02-21.  
  13. ^ Keita project increasing socio-economic wellbeing
  14. ^ Italian aid not up to standard overall
  15. ^ "Making aid work" (PDF). 2003. http://www.econ.nyu.edu/cvstarr/conferences/ForeignAid/papers/Banerjee.pdf. Retrieved 2008-02-21.  
  16. ^ 'Putting Relationships First for Aid Effectiveness' Evidence Submission to the APPG Inquiry on Aid Effectiveness, Institute of Development Studies (IDS)
  17. ^ "Ranking The Rich Based On Commitment To Development". globalissues.org. http://www.globalissues.org/TradeRelated/Debt/USAid.asp#Sidenoteonprivatecontributions. Retrieved 2008-03-06.  
  18. ^ Are Immigrant Remittance Flows a Source of Capital for Development? - WP/03/189
  19. ^ Approaches to a Regulatory Framework for Formal and Informal Remittance Systems: Experiences and Lessons, February 17, 2005
  20. ^ Are Immigrant Remittance Flows a Source of Capital for Development

Further reading

  • Gilbert Rist, The History of Development: From Western Origins to Global Faith, Zed Books, New Exp. Edition, 2002, ISBN 1842771817
  • Perspectives on European Development Co-operation by O.Stokke
  • European development cooperation and the poor by A.Cox, J.Healy and T.Voipio ISBN 0 333 74476 4
  • Rethinking Poverty: Comparative perspectives from below. by W.Pansters, G.Dijkstra, E.Snel ISBN 90 232 3598 3
  • European aid for poverty reduction in Tanzania by T.Voipio London, Overseas Development Institute, ISBN 0 85003 415 9
  • The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It by Paul Collier

External links

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