Main arguments for and against development assistance

Introduction

The primary reason to give aid is to spawn development, so that poverty may be alleviated. Development assistance is aid given by organisations and governments to support the environmental, social, economic and political advancement of developing countries. It is differentiated from humanitarian aid by concentrating on alleviating poverty in the long term, rather than a brief response.

Development cooperation is a term coined by the World Health Organisation (WHO) and is used to illustrate the idea that a relationship should be present between donor and ‘beneficiary’, opposed to the traditional situation in which the partnership was dominated by the wealth and educated knowledge of the biased donor countries. The idea of development aid dates back to the colonial era and the origin of modern development assistance begins in the background of Post World War II and the Cold War. The European Recovery Programme or Marshall Plan, commenced as a large scale aid agenda and was dedicated to strengthening the relationship to the Western European countries in order to maintain the influence of the USSR. The aim of development aid was to provide technical solutions to social problems without changing typical social structures.

In 1970, the developed countries of the world agreed upon a 0.7% donation of their Gross National Income (GNI) per annum as official development aid. 40 years later, 2010, despite billions donated each year, rich nations have rarely met their targets. [1] Also, aid has frequently come with a price of its own for the developing countries involved.

Many believe that one of the primary causes of poverty lies within the dominant countries that have devised most of the trade and aid policies today which are more to do with sustaining dependency on industrialised nations which provide sources of cheap labour and cheaper goods for populations back home. Therefore, increasing personal wealth and maintaining power over others in a variety of situations.

In this essay we shall address and discuss the main arguments for and against development assistance and present an outlook on the effectiveness of development assistance as a means of reducing and eradicating poverty.

Is Aid the problem or the solution?

First of all we shall ask, why do people give aid? Is it to make them feel better? Do they feel guilty when they see images flashing across their television screens of children starving to death? Or are they genuinely concerned and wanting to help those who are trapped in the “Bottom Billion”, Conflict Trap, NR Trap, those who are landlocked with bad neighbours and those countries with bad governance?

The idea of donating aid and helping those less fortunate than ourselves is extremely encouraging and appeals to many. However, when you investigate and digest where and how the food, clothing, money is distributed, one may be appalled. It is believed that any aid is better than no aid. This may be refuted by many who believe that aid is causing the problems in developing countries today. This can be supported by Dambisa Moyo (2009) who stated that,

“The notion that aid can alleviate systematic poverty, and has done so, is a myth. Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased”.

Paul Collier (2007) also backs up Moyo’s beliefs by estimating that over the past thirty years aid has added approximately one percentage point to the growth rate of the bottom billion per annum. Donating aid should be conducted by need and not by what people have lying around that they can donate. Food aid can actually be very devastating on the economy of the beneficiary country. Delivering food to the developing countries such as free, subsidized and cheap food affects local farmers, who cannot compete and are forced out of jobs and into poverty, increasing the market share of the more powerful manufacturers such as those from the United States and Europe. [2] Humanitarian aid shouldn’t be harmful, yet quite a lot of harm is done when unwanted and un-needed fresh food goods rot in masses at the sea ports and airports, thus preventing medicines and blankets from getting through. So quite often, more harm than good is witnessed as a direct result from aid. Unwanted and useless donations can cause chaos, waste and confusion, with added risks of reducing costs or actual threats to its people, environment and industry. The Red Cross have appealed against people donating aid and have produced an example following the Haitian earthquake. Local shop owners, who may have lost family members and also their home due to the earthquake, then saw their businesses deteriorating as food and clothing is imported [3] . This creates a huge problem as no income will be generated for these people so they will have no choice but to rely on the aid. The needs of the people need to be assessed before aid is delivered. Culture should also be taken into account as many food items are left to waste because of the lack of cooking knowledge, skills and utensils in many developing countries.

Health is a key issue regarding aid, and leadership is extremely important in improving healthcare. The South African government was in denial, refusing to recognise the fact that HIV / Aids was incurable if infected – but preventable to contract, leading the epidemic to explode. Now South Africa has the highest percentage of HIV infected people in the world [4] . So in order to deliver clear, significant and useful health aid, governments need to be educated on the importance of health and epidemiology. This can be supported by the United States Secretary of State who declared that it has been too often that health has be reduced to the sidelines and treated as only a minor concern in terms of how much money is allocated and how much attention is devoted. She also claims that the United States and other donors come with money and the developing countries actually then take the money away from the health care programmes [5] . On the other hand, development assistance has played a huge role in preventing and reducing Aids in Africa. It is now estimated that up to 4 million Africans are currently receiving life saving HIV/Aids treatment (increased from 50,000 in 2002) and 122 bed nets to protect people from malaria have been distributed by the Global Fund alone [6] . These conclusions are evidence that development assistance can have a positive impact on the developing countries of the world, especially if it is shared with devoted and evident leadership and policies intended for economic growth.

Hansen and Tarp (2000) believe that aid increases investment and state that not one single study can contradict their belief. However, Mosley (1987) refutes this by stating that there is one study which shows a negative impact on growth due to development assistance. Goal eight of the Millennium Developments Goals (MDGs) is dedicated to creating an international partnership for development. The developed countries recognise that development assistance is essential to strengthen the investments made by developing countries themselves to reach the goals. High income countries have made determined commitments to increase development aid in the past few years and since the MDGs were ratified, new investments to assist poverty alleviation have produced major results and have improved the lives of millions of people in the developing world. For example, progress has been made in getting children to attend school, with 42 million African children attending school for the first time between 1999-2007, due to savings from debt relief and development assistance for education [7] .

The third generation of aid is also known as the Burnside – Dollar model which is in fact, the belief that aid does work – but only in good policy countries. This brings us onto how important aid is and can be; however, this is subject to the effectiveness of the aid delivered. Aid effectiveness is the level to which development aid works, and is a subject of considerable discrepancy. A 2009 study conducted by the European Union on aid effectiveness suggested that efficiency increases of up to €3 – 6 billion per annum could be made as the EU implements the Accra Agenda. The Accra Agenda for Action (AAA) was developed to intensify the implementation of the Paris Declaration and respond to rising aid effectiveness concerns. Making it cheaper to supply aid could circulate more assistance

As a clause for aid money, many donors employ limitations that tie the beneficiary to purchase and obtain products only from that donor. Inter Press Service (IPS) stated that aid tied with terms, reduce the significance of aid to recipient countries by approximately 25 – 40 percent because it compels them to acquire uncompetitive priced trade from the richer states [8] .

Aid effectiveness is also related to politics and government. Boone. P (1996) supports this statement in his findings that aid does not drastically increase investment, or assists the poor as calculated by improvements in the human development indicators, but it does amplify the size of governments. Peter Bauer, a developmental economist argued that aid increases the power of government, leads to corruption, misallocates resources, and erodes civil society. Even though multilateral financial establishments continue to support governments where there is a high level of visible corruption and tend to keep quiet about powerful governance catastrophes such as Zimbabwe, at least they abstained from funding Mugabe’s government during the worst extremes [9] 

There have been major international endeavours to enhance the effectiveness of aid. The European Union is one of the primary contributors. Official international action has been carried out through the OECD DAC working party on aid effectiveness, an international collaboration of policy makers and aid specialists from donor and developing countries. This association conducts regular high level forums on the success of aid [10] :

2003 – Rome High – Level Forum – official commitment on aid effectiveness by contributor and recipient countries

2005 -Paris High – Level Forum – 91 countries, 26 donor organisations and many civil-society and private-sector bodies shaped the Paris declaration on aid effectiveness

2008 – Accra High – Level Forum – fashioned the Accra agenda for action

2011 – Seoul high-level forum

Development assistance does play a critical role in the war against extreme poverty and disease, it just needs to be monitored and evaluated to an intense degree.

Conclusion

Overall, I feel that it is difficult to measure the impact of aid and how effective that it actually is and can be. The more that I read, studied and digested the various literature, journals, website articles and books, the more I began to believe that aid has been in fact producing more harm than good. The negative affects outweigh the positive effects heavily. Although the positive effects of development assistance are extremely positive with regards to health and education in certain cases, this is only achieved through a partnership with the government and in ‘good policy countries’ as illustrated by Burnside and Dollar. Aid donated in the form of money seems to become ‘phantom’ aid and get ‘mislaid’ from the governments hands. I believe that aid is more effective if it is delivered hands on through the means of facilitators, teachers, and nurses. The impact of aid also depends on donor behaviour. According to Wathne and Hedger (2009), recipient government officials have voiced that donors should, as encouraged by the Paris and Accra agendas, inform them of why they don’t use their country systems and / or why they apply additional conditions, creating tied aid and often leaving them in a greater state of distress.

Of course Development assistance is needed in order to encourage poverty alleviation. It needs to be done through closer partnerships with government officials to prevent misuse of funds and to enable a greater insight to the developing countries political situations.

When the Millennium Development Goals are reviewed in 2015, we shall gain a clearer picture into the effectiveness of development assistance between the years 2000 and 2015.