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Developing World (Fach) / Aid (Lektion)

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• When we are thinking about development, what else than aid is important to think about? debt, trade, power relationships, climate, colonialism...
• norwegian school of economics aid reverse: how poor countries develop rich countries economic flows (aid, trade, capital flight/ foreign direct investment) new research shows that eveloping countries send trillions of dollars more to the west than the other way around 1.3 trillion us dollars TO developing countries 3.3 trillion float out of them back to the west = deficit of 2 trillion dollars
• why do countries/donors provide aid? political tool (domestically/internationally) obligation
• Aid is given for... towards economic growth reduce poverty (SDGs) increase better governance security debt relief humanitarian and disaster relief climate change mitigation change social norms of groups of people
• does aid lead to development? wh is defining development? what changes through the giving of aid? who benefits (the role of agency and empowerment)/conditionalitites of aid? what status quo is maintained?
• Origins of aid not a long history marshal plan: US provided 13 billion as aid for the reconstruction of post WW2 Europe 1960s (african nations gaining independence) aid target of 1% gnp (global norths gdp) first suggested by the world council of churches 1970 pearson commission (canadian pm) on international development report partners in development - proposed a target of 0.7% of donor GNP to be reached by 1975 and in no case later than 1980 recommendation of 0.7% confirmed in UN general assembly resolution No2626 in october 1970
• types of aid (3) ODA volantary sector non-dac donors
• ODA official development assistance: development assistance committee (DAC) 30 global northMember countries contributions to multilateral agencies (WB,IMF,UN, regional banks) and bilateral agencies (OECD) Official development assistance is defined as those flows to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions which are:i. provided by official agencies, including state and local governments, or by their executive agencies; andii. each transaction of which:a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; andb) is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent).
• ODA includes grants, projects, contributions to multilateral organisations budget support concessional loans food aid technical assistance debt relief humanitarian aid tied aid scholarships
• ODA doesnt include military aid/ peacekeeping preferential tariffs export credits NGO aid sourced through private donations foreign direct investment
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• voluntay sector intl/dom NGOs and philantropy private donations (corporate or individual) grants from bilateral and multilateral agencies
• Non DAC donors non development assistance donors saudi arabia (1.2% of GNP), china, india, turkey
• sources of aid money donated from ODA countries to DAC countries increases BUT in relation to their own economical growth it decreases (cash increases, proportion decreases)
• private capital flows remittances and foreign direct investment- increase dramatically and much more than ODA (in perspective against other flows of capital)
• who are the big donors? US biggest sole country EU is a big donor Japan arab states
• where is aid going to? nebt debt forgiveness grants (going up 2005 because of g8 summit) humanitarian aid, multilateral ODA bilateral development projects a lot of the money goes to governments own programmes
• Australian aid (3) 2010/11 4.3 billion (0.33% of GNI) aid review commitment to reach .5% of GNI by 2015/16 projected an increase in the aid budget around 8 billion (almost double) BUT 2015 budget - 0.23% of GNI (over a 30% cut in 4 years)
• why cuts in 2015 in australia? toby abbot got elected, one of the biggest aid cuts in straya
• australian aid cuts aid has been reduced in real terms every year since 2012 2015 cuts were the biggest (almost 1 billion/20%) 2016 220 million cut(7.5%) it was the first time that the aid budget has been cut 4 times in a row the cumulative cut (30%) is the biggest cut in australian history Australia’s generosity index (aid/GNI) has hit a new record low in 2016-17 of 0.23% (global average 0.3%)
• ODA as percentage of GNI for DAC members sweden 1.4 % norway 1.5 % denmark .75% germany .52% australia .27% US .17%
• Australian Aid focus shift closure of ausaid department when abbott came in -> merged into dfat (department of foreign affairs and trade, doig economic relationship) capping the aid budget in the future decrease in contributions to multilaterals (UN IMF WB etc) increased funding to S E asia and the pacific decreased funding to africa and latin america focus on private investment and economic development (over human development and distribution)
• explanation for the shift economic focus, believed to also influence other parts of development (education, health, etc)
• stakeholder survey of australian aid authors wood, burkot, howes 2015
• stakeholder survey of australian aid ergebnis 2013 vs 2015: mehr national interest als focus on poverty reduction
• sectoral allocations generally less investment in health and education, resilience (climate change, humanitarian relief) somewhat stable in governance, agriculture, infrastructure
• recipients of ODA, where does the money go? 2003: 11% south america, 46% africa, 35% asia, 7% eastern europe top 1 oda recipients: afghanistan (3%) vietnam (3%) Syria (3%) pakistan (2%) ethiopia (2%) egypt (2%) turkey (2%, large economy) india (2%, also giver of aid) Jordan (2%, syrian refugees) kenya (2%) not all of the countries are the poorest (economical wise)
• US development assistance by destination biggest proportions go to iraq, afghanistan, sudan, egypt most of them for strategic purposes
• who does oz give aid to? most of it goes to direct neighbors, east africa (but decreasing), papa new guinea/indonesia
• Uses od ODA by sector more than half related t debt programm assistance health infrastructure (economic)
• milestones 1987, 1992: DAC recommendations on untied aid to LDCs, there shouldnt be a strong ecnomic/strategic agenda (in fact trade is promoted, and national interest) 2003: first high level forum on aid effectiveness in rome 2005: g8 gleneagles summit announced increase from 80 billion in 2004 to 130 billion by 2010, committed to doubling aid to africa 2005: second high level forum on aid effectiveness resulted in paris declaration
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• paris declaration (5) ownership alignment harmonisation results mutual accountability
• three main parts of paris declaration ownership alignment harmonisation
• milestones (past 2008) 2008: third high level forum on aid effectiveness - accra aganeda for action, renewed focus on areas for improvement (ownership, inclusive partnerships, delivering results) 2011: 4th level forum on aid efectiveness in korea
• issues with aid (donor/global north perspective) dependence: needs critical thinking, countries economies are always dependent on each other incentive for conflict? good governance pre-requisite, corruption programme/project aid or budget support? efficiency (cost) and effectiveness (outcomes) reduced willingness or ability to use aid in its current form at both ends of the client spectrum over reliance on private and voluntary organisations
• issues with aid (recipient/ global south perspective) aid is not development volume and absorption capacity, maybe dont have the ressources to use the money right ownership/accountability: northern ngos used to bypass governments/ democratic processes, but sometimes necessary (e.g. mali's government collapse) aid conditionality: implying mistrust of recipient governments, can create inefficiency and be undermined, conditionality that isnt in the interest of the poor underlying geo-strategic motivations for aid donor harmonisation: one government dealing with many different donors (reportng, stakeholder management etc) incoherence of international aid architecture no voice for developing countries within this international aid architecture decreasing relevance of ad, relative to other sources of finance
• sources of finance for developing countries remittances are the second largest surce of finance for developing countries (foreign direct investment highest)
• conditionality the setting of policy goals in exchange for access to aid reduces the poors autonomy to define their own development also a way to ensure the poorest get funds aid as a way to construct subjectivities aligned with western norms different levels of conditionality (government/ program level)
• universal basic income? rethinking aid and conditionality every resident of a country is given regular unconditional income to cover basic needs regular payment made to every man woman and child unconditional meaning given to everyone regardless of if theyre working to be used however people want
• trials in india (SEWA & UNICEF) many refugee camps given unconditional cash transfers utrecht south africa, brazil, germany australia?
• results of universal basic income  better energy inputs, schooling increased, money was used for productive activity, debt decreased
• conclusion: aid for development? growth?: contributed 1% to the annual growth rate of the bottom billion poverty reduction?: through growth (2 prior assumptions - aid will impact growth and growth will impact poverty), pro-poor distribution of income (welfare etc), policy quality important for effectiveness of aid in reducing poverty debt reduction?: debt buy-backs and debt swaps
• the case for doubling aid author howard white (2005)
• developmental reasons against doubling aid (3) (case for doubling aid, howard white) negative returns to aid lack of absorptive capacity adverse incentives
• negative returns to aid argument (case for doubling aid, howard white) "the more input you apply the less productive it becomes" say economists since the 1990s others researchers suggest this threshold is at 50% of GDP rather than 4% of GDP in aid (white) fear of adverse macroeconomic repercussions from large aid inflows: if economy is supply constrained aid just increased demand which cant be met. but it depends on how the aid is used.
• absorptive capacity constraints (case for doubling aid, howard white) limited ability to use aid effectively on the side of the recipient OR the donor: incapability of the donor to supervise a larger aid volume. implies that developing countries cant be trusted with money. excessive supevision is a problem for the recipient (reports, management donor harmonisation etc) ositive example of aid to programmes: bangladesh, zambia...
• adverse incentives v(case for doubling aid, howard white) aid on a need basis will encourage countries to stay needy. does aid discourage policy change? its domestic politics and not aid that drive change
• ex ante conditionality giving money conditional on countries adopting right policies
• ex post selectivity (case for doubling aid, howard white) money given to countries who have adopted right policies
• changes required from donors (case for doubling aid, howard white) more humility in policy dialogue, help support debate instead of dictate outcome reserve variations in aid for obvious departures into bad practice
• aid estimates (case for doubling aid, howard white) less than 1/5th of aid benefits the poor

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