Morality in Development Aid
Author: Olga Izquierdo
Originally Published at Peace and Conflict Monitor on: 09/01/2013
“Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of fundamental Human Rights. Everyone everywhere has the right to live with dignity, free from fear and oppression, free from hunger and thirst, and free to express themselves and associate at will.” Nelson Mandela
Extreme poverty and hunger are among the most severe problems of the contemporary world, and eradicating them is the first of the Millennium Development Goals. Few seem to doubt that this is an imperative aim, or that developed countries have a moral responsibility to assist the developing and least developed states to achieve this goal. And yet, development aid hasn’t proved to be successful, and the question of its basic morality has recently become an issue of debate. U.S. president, Barrack Obama, stated in 2010 during a Millennium Development Goal’s Summit in New York that “Development aid to countries struggling to get out of poverty is not only a moral imperative, but a strategic and economic imperative”. Are these two concepts –morality and strategic economy- compatible? Must aid always carry an economic burden? Does development aid have a price? Shouldn’t development aid be altruistic? These are some of the questions analyzed in this essay to address the issue of “morality within development aid”.
The Concept of Development
Development is the 8th of the Millennium Development Goals: Goal 8: Develop a global partnership for development. It is the only MDG without established deadlines, which gives us an idea about the complexity of the concept.
According to the UN Declaration on the Right to Development (1986):
The right to development is an inalienable human right by virtue of which every human person and all peoples are entitled to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realized.
It is also important to take into account for the issue in question that although the recognition of development as a human right is undeniable, the legally binding obligations and responsibilities relating to that right are not so clear, and that is one of the main problems when addressing conflicts related to morality, economy and development aid.
Background of Development Aid
In order to analyze which role does morality play in development aid, it is important to look at history and understand the situation in which development aid was born. In the context of the Post-World War II political order and the beginning of the Cold War, a large-scale aid program called the European Recovery Program or Marshall Plan was launched to strengthen West European states and counter the influence of the USSR.
To avoid the insecure financial times that could lead to another World War, some of today’s main economic international organizations were created close to the idea of the New World Order, with liberal trade as one of the main pillars; these include the World Bank (WB), International Monetary Fund (IMF) and International Trade Organization (ITO) among others (although the last one never came into force because US senate refused to sign the document). In this context, many states developed protectionist measures and started making money by reducing the price of imports and raising the price of exports. Under this so called “beggar thy neighbor” policy, they started a new way of trading that had crucial influence in today’s world situation.
In addition, some important agreements like GATT (General Agreement on Tariff and Trade) or Aid for Trade initiative were created. The last one emerged from a period of crisis in multilateral negotiations and, as stated by Joseph Stiglitz at the Commonwealth Roundtable on Aid for Trade in London in 2006: although the Doha Round in 2001 was launched with a promise to put development at its center and redress some of the imbalances of the past, rich countries reneged on their promises, promoting developing countries to walk out of the negotiations, a move from which the round never fully recovered (2012, p.3). These decisions, taken during the Doha round, had worldwide defining results.
Does development aid work? Achievements and Failures
At least in theory, there is no doubt about the potential of economic assistance in helping many states in terms of development and we can’t deny that it has had some good achievement in the past, like the Marshall Plan or the success of IDA countries (International association graduates). These examples are often mentioned as a proof of the effectiveness of development aid, but these successes cannot be extrapolated to the actual situation, because those aid plans were limited in time and conditions, and they were given in specific circumstance in which the recipient countries were not dependent only on that aid. Today’s situation in most countries, and the relationship between donors and recipients is quite different.
According to the data, upwards of one trillion dollars has been transferred to Africa since the 1940s by bilateral and especially multilateral development aid through institutions like World Trade Organization (WTO), WB and IMF. But growth in Africa had stopped after decades of donor assistance, and social conditions in most of the countries have even worsened. The fact is that percentage of poor people has decreased in the last years, but in absolute terms the number of poor people is bigger than ever and the hiatus between poor and rich people is also growing, which means that rich people are becoming richer and poor people are becoming poorer.
Regarding hunger, the numbers seem to reflect a similar reality. The United Nations Food and Agriculture Organization, estimates that nearly 870 million people, or one in eight people in the world, were suffering from chronic undernourishment in 2010-2012. The number of hungry grew in Africa during that period, from 175 million to 239 million, which is nearly 20 million added (FAO, 2012).
These are only some examples of the ineffectiveness of development aid. So one of the main questions is: why isn’t development aid working? The following sections address some of the questionable arguments given by scholars and experts, along with counterarguments.
1. The basic problem of development in less developed countries must be in the absence of democracy and the corruption of their governments.
This is a Nordic belief. As Amartya Sen states in Development as Freedom: it is true that “democratic governments pursue more equitable and transparent policies and policy makers are more responsible given that they need to win the elections, so the population’s trust” (2000, p.12). He also explains that “no famine has ever taken place in the history of the world in a functioning democracy, it tends to occur in colonial territories, one-party states or military dictatorships” (2000, p.12). But it has been proved that at early stages of development, democracy is not relevant, it doesn’t improve the situation of the country and it can even be counterproductive and harmful. Democracy and lack of corruption are not proved to motivate the movement of capital. Besides, we can’t deny that corruption is a usual practice in almost every country in the world so, is it moral of some states that don’t even protect Human Rights to demand these premises to other states? It also seems contradictory that some so called democratic states impose democratic policies to other countries, as imposing them becomes an authoritarian practice instead of a democratic one.
2. Development aid does not work because it is bad administrated in the recipient countries.
“A World Bank study shows that 85% of aid flows were used for purposes other than that for which they were initially intended” (Moyo, 2009, p.39). Many scholars, like Leena Rikkilä defend that these disturbing data are hidden behind the poor institutional and political conditions in many countries: “None of aid measures will go far, nor will much external aid be forthcoming, unless governance in Africa improves. Transactions must become more transparent and funds must be seen to be properly administrated” (Rikkilä. 2001, p.35).
From this statement we could deduce that development aid only works in those recipient states in which there is political and economic stability so that they are able to administrate aid properly to make it effective. But is that realistic? Why would a country in good political and administrative conditions need external aid? At this point we would have to talk also about the administration carried out by the donor countries. If a country is not using the money given by a state or an organization for the plan intended, and moreover, if there is not a tangible improvement in a recipient country that is receiving loans periodically, why do donor countries keep lending so much money to developing and least developed countries?
Morality in Development aid.
So what are the motivations of donor States and institutions to deny the failures of development aid and keep on pumping money to LDCs? And which role does morality play in this issue?
According to the OECD:
Economic growth is the most powerful tool to reduce poverty. However, many low-income countries are still confronted by major obstacles in expanding and diversifying their trade, and trade reform and liberalization have not always delivered the expected benefits in terms of trade expansion, growth and poverty reduction. (OECD 2009:1).
In the Berg Report created by the World Bank, the following statement was argued:
African governments were to make the necessary economic and policy adjustments. They had neglected the agricultural sector in preference to industries, and this must be rectified. They had excessively intervened in the economy; they must give more free space to market forces (World Bank, 1981).
These kind of affirmations are a clear call for the developing and least developed countries to join the economic and free trading tendencies of Northern rich developed countries. In the meantime, African people have lost even the little independence they had in food security, and environment. Basic services, including water, are being privatized and put in hands of multinational corporations who run these services for profit and not for human needs. Illnesses and lack of food, water and shelter are still (or even more) devastating in African countries. So we need to ask ourselves at this point: Which role do morality and ethics have in international development aid? Is not development aid in essence a question of morality? Along the sessions of the course of Globalization and Human Rights at University for Peace, we have seen how the language of morality is used very often to justify or deny economic arguments in diverse conflicts. This proves that the ineffectiveness of development aid has a lot to do with the practical application of morality to reality and the complexity of the concept within the economic and trade system globally established.
Donor Institutions and States are always looking for something back in return. The conditionalities of development aid and loans are always external and always thought to benefit the donor country. This means that the donor states decide to which sectors it goes based on their interests and the recipient countries have almost nothing to say about it in most cases. It is also well known that development aid is used by many donor developed countries and economic organizations as a profitable investment and many times to settle authoritarian regimes to serve their interest, especially in those countries that have natural resources like oil or minerals.
The consequences of these practices are severe. The conditionalities attached to money have disempowered many governments in Africa of most of their initiative. It has been argued by many scholars that development aid also kills social capital because the governments have no pressure to perform. So instead of being a useful resource for developing countries and especially least developed countries to stimulate their economy and human development, external aid creates a harmful dependency on foreign aid that kills recipient countries’ entrepreneurships. In this sense, development aid becomes taxpayers’ money in the developed countries at expense of developing countries’ natural resources and people.
What can be done?
Is there a place for morality in economy and international trade?
Moral political economy is an emerging sub-discipline within the political economy that seeks to examine how moral norms relating to the rules of economic life often contrast with actual economic outcomes in relation to human well-being. In this sense, a moral economy perspective offers a critical approach within the study of economic life that seeks not merely to criticize injustices, but to understand how they arise and are thereafter perpetuated within operating economic structures (Langan, 2012. pp. 2-24).
In order for development aid to be effective, it is essential to think about good strategies. Like in many other issues related to Human Rights and global goals, the strategies and policies adopted in development aid can be very tricky and even harmful for the recipient of the aid and it is necessary to look carefully and in detail at each case to determine what should or should not be done. But there are some premises that should be generally applied:
Conditionalities of loans need to be limited or changed, especially for the least developed countries, for which the terms should be more flexible, not to cause dependency, but long enough to permit success.
Conditionalities cannot benefit only the donors. A collaborative approach between donors, recipient states and people is essential. For this purpose, it is necessary that the donor countries and institutions apply some economic morality to their policies and respect Human Rights. Focusing on globally accepted development priorities such as the MDGs as well as on basic human security issues such as education, health and extreme poverty can be very helpful in resolving who and under which criteria should decide the priorities of development aid. External aid and development as a human right shouldn’t be incompatible.
In order to make sure that the aid is being used the way is intended for, designing development aid policies, as well as implementing, monitoring and evaluating them effectively is essential. The UNDP has developed important tools – like the Three-Step Problem Analysis tool- for that purpose.
In this sense, the international community and institutions have also the responsibility of keep working in favor of peoples’ dignity, equity, participation and basic needs like food, health, shelter and education.
Development aid is a potential resource to address the huge problems of hunger and poverty –among other Human Rights- of today’s contemporary world but it is necessary the effort of all institutions and states at a global scale to make it effective. All developed countries should accept their accountability in fighting to eradicate poverty and hunger, improve health conditions, and foster primary education and equity.
Even the leaders of organisms clearly linked to the neoliberal globalization of today’s world are recognizing the scale of these issues. During his mandate as president of the World Bank, James D. Wolfensohn stated: “We have made progress in the reduction of poverty in some areas like in Eastern Asia or some part of Latin America but a staggering 1.2 billion people still subsist on less than a dollar a day and two fifths of the humanity have no access to a decent health system (water and sewage)” (2002).
If we seek for a better and more equal and balanced world, it is necessary to look at development from the human perspective, because “human development as an approach, deals with the basic development idea: namely, increasing the richness of human life rather than the wealth of the economy in which human beings live, which is only a part of life itself.” (Amartya Sen, Nobel Prize for economics in 1998).
A change of perspective is necessary, and morality is a key concept that needs to be included in the development process around the world. For this purpose, a Human Rights based approach is essential in development aid, to learn from the mistakes made in the past in order to make it work in the future.
The African Executive. (2010). Retrieved 2013, from the World Bank and the Global Coalition for Africa: http://www.africanexecutive.com/modules/magazine/article_print.php?article=664
Amnesty International. (2003). Human Rights on the Line the Baku-Tbilisi-Ceyhan Pipeline Project.
Center, S. (2005). Aid for Trade. Geneva.
Easterly, W. (n.d.). The White Man’s Burden. Penguin Books.
Langan, M. (2011). The false promise of Aid for Trade. 2-24.
Milberg, W. (2007). Trade Theory Dissidents.
Moyo, D. (2009). Dead Aid: Why aid is not working and how there is a better way for Africa. Penguin Books.
Prokopijevic, M. (2007). Why foreign aid fails. PANOECONOMICUS, 29-51.
Rikkilä, L. (2001). Democracy and Globalization: Promoting a North-South Dialogue. Helsinki: Hakapaino Oy.
Sen, A. (2000). Development as Freedom. Nueva York.
Sengupta, A. (2006). Human Rights and extreme poverty. (Economic and social Council UN).
UN, General Assembly. (1986). Declaration on the Right to Development.
UN, General Assembly. (2005). Millenium Development Goals and Indicators.
Bio: I’m a constantly moving translator, born in Madrid (Spain) in 1982. I’m passionate about the human faculty of communication and about languages as the purest expression of culture. That interest for the complexity and fascinating human interaction led me to finish my studies in Translation and Interpreting and start my MA in Sustainable Peace in the Contemporary World at the University for Peace. I have studied a wide range of topics, worked in different places and travelled as much as possible, always living (and working) around the concepts of multiculturalism, diversity and human rights. I’m concerned about the severe problems of todays’ society and determined to do my best in contributing to solve them. I believe in people and I think that together we can make big and important changes. There is a lot to be done but I think there is nothing that cannot be reached.