international analysis and commentary

The debate on international development aid: a learning process

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The effort of the international community to eradicate poverty and help development in the so-called “third world” has been a constant since the outset of the United Nations in 1945. It has materialized in the form of decolonization, first-aid assistance and in the shape of private international cooperation, but it has also involved the financial sphere. International aid can be generically – and certainly not thoroughly – described as “a voluntary transfer of public resources, from a government to another independent government, to an NGO or to an international organization […] one goal of which is to better the human condition in the country receiving the aid” (Lancaster). However, this concept has evolved throughout time and space, and significant changes concerning its aims, targets and actions have taken place in the last 25-30 years.

While its origins go back to the late British Empire, the outbreak of international aid is due to the well-known US Marshall Plan. Quite predictably, after WWII several countries used international aid to favor exclusively their remaining and soon-to-be-former colonies: the positive impact on domestic industries in the richer countries is indeed a major Realpolitik argument for development aid. But the more international organizations gained weight, the more they managed to influence and direct development assistance. International organizations and specialized agencies have thus registered an increasingly homogenous flow of resources towards needing countries: this is principally because a large part of donations is “filtered” by multilateral institutions and mechanisms. UN agencies, for instance, use the budget approved by the General Assembly, which is supposed not to be driven by national or commercial interest.

A great deal of differences from the past concerns the more recent forms of aid: resources available to poor countries have more than doubled over the last decade and considerably changed in nature. Traditionally, about 80-85% of development aid tended to come from governmental sources and the remaining 15-20% from NGOs, foundations and other charities, so that it was often seen as a simple transfer of cash from a donor to a recipient country – i.e. an essentially government-to-government affaire. On the contrary, since the end of the last century, aid comes in a variety of forms: cash, loans, food and other goods, expert advisors, debt reduction, etc. Some of it is transferred to the recipient country in the form of cash, some as in-kind contributions (such as food aid, non-food commodities and technical cooperation) and some as mixed project aid. Of course, a dollar spent on food aid, on technical expertise or on debt relief will have a markedly different impact in recipient countries, depending largely on the specific context. Furthermore, a large part of aid never actually leaves donor countries: the money can be spent on activities within the donor country like supporting students from developing countries or cancelling debt.

Recent studies suggest that at least 20% of OECD aid never leaves the donor country ($22 billion of the $100 billion-plus aid recorded as “bilateral” in 2011) and is instead spent on domestic activities, or put towards the cancellation or rescheduling of debts. There are also major differences across donor countries: for instance, both Denmark and Italy reported giving over $2 billion in bilateral aid in 2011. To be more specific, more than two-thirds of Denmark’s aid was transferred to developing countries; by contrast, two-thirds of Italy’s aid was not transferred and mainly covered debt relief and housing refugees transiting through Mediterranean countries. Similarly, of the $7.5 billion reported as given the DRC in 2011, more than $5 billion never reached the target country and went towards the cancellation of debts (development initiatives).

Nowadays when we think of development, our minds wonder instantly towards the United Nations Millennium Development Goals (UNMDG). Whole libraries have been written on the subject and now on its evaluation, but has it accomplished what it promised? The debate on whether UNMDG actually worked has touched its climax in the course of 2015 – the original deadline. A widely shared evaluation is that progress towards reaching the goals has been uneven across countries. Brazil achieved many of the goals, while others, such as Benin, are not on track to realize any. The major successful countries include China (whose poverty population declined from 452 million to 278 million) and India. The World Bank estimates that MDG 1A (i.e. halving the proportion of people living on less than $1.25 a day) was achieved in 2008 mainly thanks to the disproportionate contribution from the largest emerging economies. Other indexes show even better how development is achieved unequally; for instance, Egypt increased its GDP before 2011 and has simultaneously more than halved the proportion of population without access to drinkable water in the first 10 years of the 21st century. From its corner, Mexico has reached substantial gender parity in primary school in the past years, going even beyond the goals (UNMDG Report 2015).

One could then argue that development and the bettering of human conditions are eventually boosted, first and foremost, by national economic growth rather than by international development, thus rendering the latter a rather superfluous tool in the wider scheme of things. This may be true for the BRICS (although so far the evidence is mixed on exactly what positive role development aid may have played, especially for Brazil and India in the 1980s), but other analyses disagree with this assumption, especially when it comes to poorer countries. In the early 1990s, Nepal was one of the world’s poorest countries: but doubling health spending and concentrating on its poorest areas halved maternal mortality between 1998 and 2006. Its Multidimensional Poverty Index (MPI) has seen the largest falls of any tracked country. Bangladesh provides another example, as it has made some of the greatest improvements in infant and maternal mortality ever seen, despite very modest income growth (The Economist). In Tanzania, while the economy faces a dramatic stagnation, the proportion of children under five who have access to malaria prevention programs increased by a rate of 36 in the last fifteen years (2 to 72%). In the Sub-Saharan region, the number of out-of-school children has been cut almost in half since 2000 (even though this trend does not apply to countries affected by conflicts, as in Libya, whose share increased from 28 to 49%) (UNMDG Report 2015).

Then why is development aid under fire from critics, more than in the past? To be fair, the debate has not changed much over the last 50 years. Some see aid as inefficient and others as a waste of public money (only marginally beneficial to the recipient populations); several observers have even argued that aid can in fact have negative impacts and act as a brake on development. But mostly, the fact that criticisms often come simultaneously from opposite sides of the ideological spectrum should make the international community reflect. In the academic world, neo-Marxists and radical-left intellectuals see international aid as – above all – an instrument through which industrialized countries seek to dominate poor countries. There is some truth in it, especially for governmental aid (France, for example, has been consistently focusing its aid flow on former colonies, and Japan is well known for carefully combining aid policy and diplomacy on countries that it deems of special importance), but this is also a rather biased view.

A sort of populist-nationalist critique made its appearance at the end of the colonial era. According to this view, it is better to devote taxpayers’ money to national economic and social priorities rather than wasting it on trying to provide ineffective aid to corrupt leaders in distant lands. Nonetheless, a very thin percentage of national GDPs is dedicated to aid, and certainly less than populist leaders declare or assume. In times of economic and ideological crisis, we are seeing a rise of such claims in many Western countries.

A neo-liberal vogue has also criticized the broader and indirect downsides of international aid programs, emphasizing their negative impacts. Following this school of thought, governmental assistance contributes to swelling the staff of countless and ineffective public administrations (the UN bureaucratic system is indeed very large). Also, aid flows often serve to support corrupt and non-democratic leaders. This is particularly true for African countries, where international aid is ultimately favoring dictatorships: a typical case in point is Zimbabwe’s almighty president Mugabe, or the late Qaddafi, who used international cooperation for migrants for its own purposes. Also, aid given in the form of donations distorts markets, stifles entrepreneurial initiatives and creates dependence among the beneficiaries. It is true that international aid has sometimes become a lucrative business for the local élites, but this observation may fail to consider the still positive repercussions on the population.

Finally, there is an African literature that is strongly critical of foreign aid, mostly related to the neo-liberal vague. Many authors denounce the relationship of dependence of the recipients on the donors and exhorts Africa to take its own destiny in its hand and to adopt market-friendly policies inspired by neo-liberal thought (for example, Dambisa Moyo).

However harsh the criticisms, the international community keeps insisting on the necessity of maintaining or increasing the volume of aid. In order to justify higher and higher budgets, development agencies try to highlight the international solidarity imperative and the fight against poverty. To this extent, they often rely on the ideological claim that international development assistance is above all a supreme moral imperative: aid is then selfless and motivated by humanitarian considerations and democratic values, and becomes almost a good it itself.

In sum, debate is certain to continue. But when assessing the effectiveness of international aid, one should consider first and foremost the results achieved, together with its side effects. During the past 30 years, international institutions have witnessed the growth of an industry in measuring the impact and benefits of aid. They have provided plenty of evidence on impact in terms of skills development, improvement in services, infrastructures, production, income and well-being as well as in specific areas such as education and health. In spite of the denigrations, development assistance remains a key policy instrument in international relations. There is certainly room for improvement if well-known deficiencies are corrected, but the way ahead is to reform aid policies rather than oppose or undermine them.