Official Development Assistance Under Fire: Criticisms and Trends (PDF)

Of cial development assistance once more under re from critic International Development Policy 2010, 1, p. 137-142 https://doi.org/10.4000/poldev.141 Gilles Carbonnier (Translated by Katharine Mann Jackson Introductio 1. In the second part of this rst issue of the International Development Policy Se...

Of cial development assistance once more under re from critic International Development Policy 2010, 1, p. 137-142 https://doi.org/10.4000/poldev.141 Gilles Carbonnier (Translated by Katharine Mann Jackson Introductio 1. In the second part of this rst issue of the International Development Policy Series, the authors analyse the major challenges and trends in trade, nance, food security and international development cooperation policies, focusing on 2008 and 2009. They examine the impact of the nancial crisis and the commodity price boom and bust. The recent crises pose a particular set of challenges to international development cooperation, including the governance of the international nancial institutions, cooperation in the agricultural sector, aid for trade and climate change adaptation 2. Today international development cooperation is once again under re from critics. Of cial development assistance (ODA) is seen by some as inef cient and by others as a waste of tax payers’ money. Several authors have argued that aid can in fact have negative impacts and act as a brake on development (Monga 2009; Moyo 2009; Nwokeabia 2009; Tandon 2008). The fact that this radical criticism has once again reared its head obliges us to sit up and re ect, all the more since it is now being articulated by intellectuals from the continent that is supposedly in most dire need of assistance, i.e. Africa. Even if the tone and source of the criticism are changing, the critics are not saying anything fundamentally new. Since the 1960s the value of development assistance has been repeatedly questioned by proponents of different schools of thought. The terms of the debate have not changed much in the last half-century; yet, despite the criticism, development assistance remains a key policy instrument in North-South relations 3. This article starts by sketching a brief outline of the main criticisms levelled at ODA, much of it from authors who claim to come from opposing ends of the ideological spectrum. The analysis then focuses on what motivates rich countries to provide assistance to developing countries. To conclude, the article suggests going beyond ideological differences and examining the inherent tensions in the assistance system through the lens of political economy Major criticisms of ai 4. For the last 50 years criticisms of development assistance have been inspired by three basic ideological schools of thought: neo-Marxist, populist and neo-liberal. Today the most vociferous critiques of the aid system seem to involve an unexpected convergence of these three (on the face of it, antagonistic) schools 5. For neo-Marxist critics or the radical left, ODA is above all an instrument through which industrialised countries seek to dominate poor countries. Teresa Hayter (1971) claims in her book Aid as imperialism that aid provided by the World Bank and Organisation for Economic Co-operation and Development (OECD) countries serves rst and foremost the interests of Western nations and their multinational corporations. According to her, ODA is a mechanism through which leaders of Western nations lay their hands on and appropriate the resources of developing nations. According to other critics, aid has contributed to entrenching a relationship of dependence of poor countries on the West (Charnoz and Severino 2007, 38). In the decades which followed Teresa Hayter’s critique and those of dependence theorists similar critiques have been regularly reiterated, albeit in a more nuanced manner (Mosley, Harrigan and Toye 1991). The rise of China as a donor power has recently inspired similar critiques to those levelled at Western aid in earlier days.. fi s fi fi. fi fi. ) fi fi fl. fi d fi n fi 6. The populist critique made its appearance at the end of the colonial era. In 1956 one of the pioneers of this school of thought, Raymond Cartier, published three articles in the magazine Paris Match under the heading “Beware: France is squandering its money!” In these articles he criticised the sumptuous French investments in Africa and accused the colonies of being responsible for France’s economic backwardness (Meimon 2007, 12). After decolonisation he denounced what he saw as “the abusive and contestable use” of French aid (Foubert 1973, 717). According to the populist critique, it is better to devote tax payers’ money to national economic and social priorities rather than wasting money on trying to provide ineffective aid to corrupt leaders in distant lands. Today populist parties often invoke such arguments, particularly when called upon to vote on development cooperation budgets 7. The neo-liberal critique, for its part, emphasises the perverse impacts of aid. According to this school of thought, ODA contributes to swelling the staff of myriad and ineffective public administrations in recipient countries. Furthermore, it serves to support corrupt and non-democratic leaders. Finally, aid given in the form of donations distorts markets, sti es entrepreneurialism and creates dependence among the bene ciaries. Peter Bauer (1971) claimed that development aid provided disincentives for leaders of developing countries to adopt “good policies” 8. Today most authors who critique development aid take as their inspiration neo-liberal thinking (Easterly 2006; Moyo 2009) and frequently supplement this with arguments put forward by other schools of thought. For instance, Zambian author Dambisa Moyo denounces the relationship of dependence of the recipients on the donors and exhorts Africa to take its own destiny in hand and to adopt market-friendly policies inspired by neo-liberal thought 9. Recently several non-governmental organisations working in the eld of development cooperation have been very vocal in their critiques of aid, and this despite the fact that they are usually among the most ardent supporters of ODA. Ever since the 2002 Monterrey conference on development nancing there has been increasing opposition to the practice utilised by members of the OECD’s Development Assistance Committee (DAC) whereby they include in ODA statistics on expenditure that does nothing to contribute towards the ght against poverty or to improve the well-being of populations in the eld. According to Action Aid International (2005), two-thirds of ODA provided in 2003 was “phantom aid”. Indeed, 20% of aid funding was invested in ineffective technical cooperation whose in ated costs bene ted primarily consultants from donor countries, while 14% of ODA went to service foreign debt repayments. For the organisation, the latter was little more than a “journal entry” in an accounting exercise. Still according to the organisation, ODA is often in ated by excessive transaction costs and costs of administering aid coordination. Finally, a growing part of ODA is being used to fund the costs of hosting asylum-seekers in industrialised nations during the rst 12 months of their stay Analysis of donor motivation and justi cation for aid 10. From the outset ODA has incited animated debates about the underlying reasons which lead rich countries to provide assistance to poor countries. Is it an altruistic and sel ess gesture aimed at improving the well-being of recipient populations? Are donors rather seeking to take advantage of privileged historical links and promote their commercial or geostrategic interests? Are they choosing to nance international cooperation to promote the production of global public goods and to manage risks which require global responses? Are the stakes primarily economic or security-related or is there a moral and humanitarian imperative? The answer depends on how one interprets development assistance as an instrument of donor foreign policy fl fi fi fi fi fl fl fi. fl. fl. fi fi. fi fl fl fi.. fi fi 11. Realists consider that all States seek rst and foremost to enhance their wealth and power. According to them, aid as a foreign policy instrument is guided by self-interest whereby donors consent to providing aid to enhance their sphere of in uence, to broaden their access to markets and to promote the interests of their ruling class (Jacquet 2006, 142). According to the neo-realist school of thought, all States seek rather to guarantee their security and survival (Waltz 1979). Given that the international arena is perceived as an anarchic place, States’ rst priority is security. ODA is therefore a tool to promote the political and economic interests of donor countries by enabling them to “in uence, reward or punish other countries” (Charnoz and Severino 2007, 37). For idealists, ODA is above all an ideal and a moral imperative. For them, aid is sel ess and motivated by humanitarian considerations and democratic values. Aid is to be used as a tool against poverty and to protect human rights. For others, it is further motivated by feelings of guilt and is understood as a compensation for past wrong-doings (e.g. colonial exploitation). The idealist view of ODA is often dismissed as naïve; its weakness lies in the fact that it dissociates aid from its historical and political context (Charnoz and Severino 2007, 40-41) 12. From the 1950s to the present day the link between security and development offers a common thread through which to gain a better understanding of the diverse motivations for aid. The Marshall Plan launched in 1948 was aimed not only at rebuilding Europe but also at preventing the spread of communism on the continent (Berger and Beeson 1998, 488). In 1951 the United States (US) adopted the Mutual Security Act which made explicit the link between military and economic assistance programmes and the technical assistance given to “under-developed” countries. ODA indeed developed in the context of the Cold War. Defence considerations and expanding spheres of in uence dominated the discourse about the delivery of ODA right up until the end of the Cold War (Alesina and Dollar 1998). Subsequently, although security has remained the dominant concern, security risks have evolved. Fears about communism have been replaced by other risks brought about by global public bads such as epidemics, environmental degradation, criminality and insecurity. The 9/11 attacks spurred renewed interest on the part of the US for ODA, which experienced a net growth from USD 11.4 billion in 2001 to USD 27.9 billion in 2005. Of this, nearly half has been allocated to Iraq and Afghanistan as part of the “global war against terror”.Brainard (2006) points out that, in order to secure aid funding, it is clearly more effective to present ODA to the US Congress as a “strategic defence system” than as a mechanism for poverty alleviation in far-off countries 13. Despite all the criticisms levelled at ODA, the international community (donor and recipient governments, international organisations) keeps insisting on the necessity of maintaining or increasing the volume of development aid. They recognise that results fall short of expectations and that there is a very real need to improve the yield and effectiveness of aid. In order to justify ODA budgets, development agencies highlight the international solidarity imperative and the ght against poverty. Since the end of the Cold War they also emphasise the necessity of intervening in a concerted manner to deal with global challenges including climate change, terrorism, migration and epidemics. They also invoke economic and commercial interests to promote ODA.1 The discourse of aid agencies is inspired as much by the idealist approach as by the neo-realist approach of aid as a foreign policy instrument Conclusio 14. In a context which is not overly favourable to increased ODA budgets, new nancing mechanisms need to be developed and implemented to respond to the nancial needs of developing countries and help them to deal with the impacts of climate change. At the same time the economic crisis has exacerbated budgetary constraints facing donor countries. Some commentators view market mechanisms as a way to palliate for the shortage of funds. Others, invoking the solidarity imperative, call for an increase in development assistance. It is now a foregone conclusion that the climate challenge will have a major impact on the future of the development assistance system. Development assistance may get a new lease on life thanks to global warming. Aid occupies a major place in multilateral negotiations and sometimes, by default, becomes the main outcome of negotiations, which stumble at real fundamental issues 15. Against this backdrop, it is vital to go beyond ideological debates about international cooperation if we are to better deal with its weaknesses and improve its performance. Martens (2005) proposes taking a “political economy” view of the aid system, focusing on the diversity of interests of pressure groups and stakeholders in donor and recipient countries. This allows a re ned analysis of the different motivations underlying the policies and practices of cooperation agencies. It highlights the fact that the ineffectiveness of aid is a result, among others, of the broken feedback loop between donors and bene ciaries. Browne (2006), Easterly (2006) and Martens (2005) suggest organising the aid system into a competitive market through which developing countries could acquire essential goods and services from a variety of donors. The poor would be able to voice their preferences and select the projects and programmes best suited to their priorities at the most favourable conditions fi fi.. fi. fi fl fi. n 16. Ever since the Cold War recipient countries have been able to capitalise on the rivalries between the “great powers” in an attempt to secure the best deals, a situation facilitated by the fact that the aid market was strongly oligopolistic. Today the emergence of China and other emerging economies as large donors has increased competition in the aid market. However, agreements signed between donors and recipients still lack transparency and are dogged by inherent principal-agent problems. A new initiative which guarantees greater transparency in public development aid would allow policy-makers, civil society and researchers to make a contribution towards reducing current dysfunctions in the “aid market”.