Opinion & Commentary
Third World aid: is it part of the solution or the problem?
Heads of government and ministers met at the United Nations headquarters in New York during the week to try to answer the question. Helen Hughes, a senior fellow at the Centre of Independent Studies, argues that aid is part of the problem. Lyn Arnold, chief executive of World Vision Australia, says aid has an important role to play.
Helen Hughes
The pitiful pictures on television are true. Great eyes in pinched faces accuse you and me and our healthy children and grandchildren. The plight of many children in most developing countries is truly terrible.
And yet the Special Session of the UN on children screams hypocrisy. Developing country leaders like Nelson Mandela cross the screen, followed by other leaders and high-level bureaucrats responsible for policies that impoverish children. Malnutrition, AIDS and the lack of education, particularly for girls, are deplored. Child slaves and child soldiers are mentioned. Meanwhile, the leaders' wives are shopping for jewellery on Fifth Avenue to wear to the reception that evening.
Most developing countries, including the 2 billion population giants of China and India, after 50 years of knowledge of what works in development are still choosing economic and social policies that mean poverty for significant proportions of their populations. Children suffer the most.
At the high-income and relatively democratic end of development, Argentina has consistently spent more than its revenues, mainly on subsidising inefficient industries and a swollen civil service, printing money and borrowing abroad to pay for these extravaganzas, with ensuing balance of payments, debt and currency crises underwritten (until this year) by the World Bank and the International Monetary Fund. More than 50 per cent of its population lives in poverty. In 1900, Argentina was, with Australia, the richest in the world. Its kids now beg in the streets.
At the lowest end of development, Iraq and North Korea starve children deliberately to make their parents submit. They spend money on nuclear, biological and chemical weapons, on their leaders' birthday celebrations and palaces. The hangers-on eat most of the food aid the West supplies. The children eat grass.
In Zimbabwe, children are not eating because of Robert Mugabe's wilful destruction of agriculture. When food is short, parents have to feed breadwinners first, though it breaks their hearts to see their children starve. More than 35 million people live in displaced persons' camps as a result of civil and international conflicts. In the Great Lakes region of Africa, child soldiers fight while their elders squabble over diamonds. The Western NGOs keep people alive, though they sometimes feed the combatants, as they did in the Hutu militia-dominated Rwandan refugee camps.
Study after study has shown how countries can grow equitably by opening up to trade. In Hong Kong, Singapore, South Korea and Taiwan poverty is negligible. But the elites of most developing countries refuse to follow such policies so they can enrich themselves. Thus poverty is prevalent and children starve.
Aid is a significant part of the problem, not a solution. Billions of multilateral and bilateral aid dollars, paying lip service to ``good policies", have kept in power governments that rob and pillage their citizens. Aid enables elites to live like princes, spend money on arms and travel to New York to bemoan poverty. More aid means keeping more corrupt governments in power, as well as supporting the 100,000-plus aid apparatchiks who clamor for it.
NGOs are the best vehicles for relief in desperate situations. But donors private and government must insist that the NGOs are accountable and that relief reaches the victims, not the perpetrators.
Australian aid should shift away from the multilateral organisations' appalling 50-year record of underwriting governments that fail their people.
Bilateral aid has parliamentary surveillance and can be better directed towards positive ends.
Lyn Arnold
In New York during the week, world leaders and child rights experts sought solutions to the problems of child poverty and abuse. They reviewed goals set at the 1990 World Summit on Children, which provide the framework for improving the lives of the world's children.
Millions of children suffer unimaginable oppression and abuse: more than 30,000 die every day from preventable diseases; 250 million are in exploitative labour; and more than 1 million are trapped in the Asian sex trade.
These immense problems can be solved. Fundamental to the solution is establishing an integrated approach to addressing poverty that encompasses aid, debt relief, trade reform and promotion of good governance. International aid is crucial. It empowers communities, providing infrastructure and resources to place recipients in control. In almost 100 countries, World Vision delivers aid that transforms lives through schools, sanitation, health care, water, agriculture and business development projects.
Aid is not welfare, which by its relatively indiscriminate nature does not provide a lasting answer to poverty. Rather, aid provides targeted support for sustainable development. Aid works best when linked with good recipient government and policy structures. But aid also works without good governance. The OECD has concluded that aid has contributed to a wide range of development successes in a great many countries facing radically different circumstances. Evaluations from the UN Development Program show a solid and rising score of successful contributions in the economic and social performance of many individual countries, and at the global level.
Between 1990 and 1997, global infant mortality dropped from 76 per 1,000 live births to 58; net secondary enrolment for girls rose from 26 to 61 per cent; global adult literacy rose from 64 to 76 per cent; and access to safe drinking water nearly doubled from 40 to 72 per cent.
One of the best ways to reduce poverty is by investing in people to achieve self sufficiency. Aid provides targeted funds for developing human capital, raising skill levels, providing technology and increasing production. Aid funds new crop varieties and irrigation, and provides education, research and immunisation.
Debt relief for the most indebted countries enables redirection of assistance to specific country development goals. While currently only 3 per cent of overall aid flows, debt relief is a crucial and growing element of an integrated poverty solution.
Aid opponents suggest that it discourages self help, distorts economic structures and deters foreign investment. Yet they fail to see the limitations of these policies on the world's poorest countries. As former World Bank chief economist Joseph Stiglitz says, opening up markets makes little difference to countries which lack the capability to produce for them. Aid breaks the cycle of poverty by providing the skills and infrastructure necessary for real development.
Few nations have aid levels that come near the internationally agreed benchmark of 0.7 per cent of GNP. The OECD average is just 0.22 per cent. Yet in 2000 world leaders agreed to goals aimed at halving world poverty by 2015. UN Secretary-General Kofi Annan has challenged nations to double levels of aid, which would make the 2015 target attainable.
Australia also subscribes to the 0.7 per cent target but will this year allocate only 0.27 per cent. World Vision calls on the Australian Government to support a comprehensive approach to tackling global poverty through increases in levels of aid, support for civil society's role in good governance, substantial debt relief, a new insolvency process and broad-based agricultural trade liberalisation.
Aid in its own right is not a panacea, but as part of an integrated approach to solving poverty it will continue to improve the lives of millions worldwide.
About the Author:
Helen Hughes is Professor Emeritus of economics at the Australian National University in Canberra and a Senior Fellow at The Centre for Independent Studies in Sydney.
