AID AND

DEVELOPMENT

Post decolonisation

The period of time which followed decolonisation. Newly formed nations were in need of financial

assistance. Multinational corporations/ companies saw this as an

opportunity to access cheap labour and an abundance of resources.

Newly countries saw this as a way to develop infrastructure and create employment.

Unfortunately, the wealth generated either left the country or remained in the hands of a small and wealthy elite. Very little development (human) took place.

NEO-COLONIALISM: the economic and political policies by which a great power indirectly maintains or extends its influence over other areas or people

Types of Aid

Bilateral: country to country: usually conditions relating to trade are included in the package. Most countries have agencies responsible (CIDA in Canada) During the Cold War period development assistance could be characterised as either capitalist or socialist industrialisation.

Multilateral: many countries involved. The countries channel their money through an agency which is thus responsible for distribution. (World Bank)

Non governmental organisations: organisations that are not affiliated to governments providing specific assistance.

The Millennium Development Goals (MDGs) are eight goals to be achieved by 2015 that respond to the world's main development challenges. The MDGs are drawn from the actions and targets contained in the Millennium Declaration that was adopted by 189 nations-and signed by 147 heads of state and governments during the UN Millennium Summit in September 2000.

http://www.unep.org/newscentre/animations/MDG_en.swf

Human Development Index

Historically, development was measured the gross domestic product (GDP) the main economic indicator used internationally to assess wealth It calculates the total final market value of all goods and services produced in a country over a set period.

The Human Development Index (HDI) is a summary composite index that measures a country's average achievements in three basic aspects of human development: health, knowledge, and a decent standard of living. A more effective way of measuring development of a nation and its people.

The HDI sets a minimum and a maximum for each dimension, called goalposts, and then shows where each country stands in relation to these goalposts, expressed as a value between 0 and 1.

http://hdr.undp.org/en/statistics/data/hd_map/

NGOs

Non-governmental organizations (NGOs) have become increasingly influential in world affairs.

They often impact the social, economic and political activities of communities and the country as a whole.

NGOs address a host of issues, including, but not limited to, women’s rights,  environmental protection, human rights, economic development, political rights, or health care.

NGOs have contributed to democratization, in battling diseases and illnesses, in promoting and enforcing human rights, and in increasing standards of living.

HIPC

Heavily Indebted Poor Countries Initiative (HIPC)First launched by the World Bank and the IMF in 1996

with the aim that no poor country faces a debt burden that it cannot manage.

In 2005 to assist with the achievement of the MDGs, the Multilateral Debt Relief Initiative was launched- which would allow 100% debt relief on eligible debt of 3 institutions (IMF, World Bank, African Development Fund)

To date 41 countries were found to be eligible for HIPCThere are three stages: decision point, interim relief

and completion point. At each stage, countries must demonstrate certain objectives.

Debt Relief, Debt Cancellation, Erasing the debt…

is a poverty reduction strategy there are several steps involved looks at the economic situation of a

country and determines how cancelling out the debt may facilitate development.

it involves the wealthy nations of the world, World Bank, IMF and highly impoverished nations

Is it effective? Will it work? Toxic debt:

http://www.youtube.com/watch?v=PodqrbAURkw

Hole in the bucket: http://www.youtube.com/watch?v=daOAeB-zIIA

Third World debt: http://www.youtube.com/watch?v=DwHW9RLuKIg

INTERNATIONAL MONETARY FUND AND THE WORLD

BANK

Similar but different…

History of International Monetary Fund & World BankBoth organisations were created at the end

of the second world war at the Bretton Woods Conference.

The bank and the IMF are twin intergovernmental pillars supporting the structure of the world’s economic and financial order.

One of their founding fathers was John Meynard Keynes (well-known economist of the 20th century).

Similarities

Both organisations are owned and directed by the governments of member-nations.

Almost all nations around the world are members.

Headquarters are located in Washington D.C.

The differences

The World Bank has one objective: economic and social progress in order to increase productivity in developing nations so citizens can live full and healthy lives.

It is divided into two components: The International Bank for Reconstruction and Development and the International Association for Development.

It is an investment bank, intermediating between investors and recipients, borrowing from one and lending to the other.

Neither wealthy countries nor private individuals borrow from the World bank.

It encourages private enterprises in developing countries through its affiliates.

It assists developing countries through long-term financing of development projects and programs.

The IMF was created as a result of what happened in the 1930s.

It operates as a financial resource for members to access in times of need.

It oversees its members monetary and exchange rate policies and is a guardian of the code of conduct.

Operation-wise it is small compared to the World Bank.

Its objective is to create an organised system which encourages trade, job creation, increased economic activity and increase quality of life around the world.

It provides technical assistance in organising central banks and establishing and reforming tax systems.

The Problems With Foreign Aid

o Cultural neocolonialismo Creates financial and cultural dependencyo Debto Tends to exclude other relationshipso Passes on eurocentric biaso Reduces diversity of ideaso Allows for donor to exercise controlo Can create resentment in the donor nationo Gives permanence to the idea of hierarchyo Often controlled by TNC’s or NGO’s o Free stuff undercuts local businesses

What’s Wrong with Aid

The marvel of foreign aid is that many of the same people who oppose government intervention in the United States somehow think we are doing foreigners a favor by paying for it abroad. Many of the people who recognize that Amtrak has been an expensive mistake have no objection to subsidizing state railroads in Africa. The same people who would fight any Department of Agriculture effort to impose ceilings on prices received by American farmers are silent about U.S. financing of African bureaucracies that burden African farmers with exploitative price controls. Some of the same congressmen who realize that federal irrigation policies squander billions of dollars worth of water are still enthusiastic about constructing government irrigation projects in Indonesia.

http://www.cato.org/pubs/pas/pa065.html