Transcript Regional Trends for South, East, Southeast Asia & Oceania

Can Foreign Aid reduce poverty?
By Jeffrey Sachs, from the Earth Institute of Columbia
University (YES)
& Georges Ayittey, from the American University (NO)
Congressional Quaterly, 2009
Presentation by Stéphanie Carret
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08.12.09
The planning for today
1. Review of the paper: main ideas
1. Jeffrey Sachs answers YES
2. Georges B.N Ayittey answers NO
2. Analysis of illustrative graph
3. What questions can we raise?
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The Debate
• Can foreign aid reduce poverty?
 3 billion people live with less than $2/day
 Millions of children lack of lifesaving immunizations
 1 billion people lack access to adequate water
supplies
 Important improvements in East Asia…
• …but extreme poverty increased in Sub-Saharian Africa
 The main question always asked:
• How can extreme deprivation be seen next to material
excess?
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The Debate
• Principal multilateral institutions: UNDP, the
World Bank, IMF & OECD’s DAC aid
• US aid started with the Marshall Plan in 1947 & in the
1960’s, USAID was created
 Lately, this aid has been mainly used as an impediment to
terrorism (Afghanistan & Iraq)
• UN Dev.Millenium Goals set up in the 2000 Summit:
goals have to be reached by 2015
 One important commitment: wealthy nations have to
contribute with an aid = 0.7% of their GNI: not reached
• 0.7%= for the UN MG + emergency relief & post-reconstruction
• Often, aid motivated by internal politics
 Disagreements on aid: just an instrument of foreign policy?
What type of aid are efficient? What are the other forms of
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economic activities providing development?
The UN Millenium Goals
1. Eradicate extreme poverty and hunger
2. Achieve universal primery education
3. Promote gender equality and empower
women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria and diseases
7. Ensure environmental sustainability
8. Develop a global partneship for development
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Jeffrey D. Sachs: YES (1)
• His answer is based mainly on the role of US Aid
• For the past 50 years, reducing poverty with aid has been
successful, except in sub-Saharan Africa
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Green Revolution in the 1960’s
Decrease in diseases burdens
Family planning support: population decrease
Manufacturing successes (Thailand, Korea, Malaysia…)
• Development Assistance: a tool for the promotion of economic
development
 Formed of public and private contributions
 Aid from public sector: Official Development Assistance (ODA)
 Best successes came from Public-Private Parterships (PPP’s)
• Ex: Green Revolution in India
 Aid as a complement and often as a precondition for market forces:
International Trade and FDI inflows: « Aid for Trade »
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Jeffrey D. Sachs: YES (2)
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What works and doesn’t work with ODA
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Usual debate: where is the correlation between aid & growth
6 interventions points yield development successes
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Based in powerful & low-cost technologies
Easy to deliver
Rightly adapted to the scale
Reliably funded
Multilateral
Specific inputs, goals and strategies (+LT indirect goals)
21st Century: modernizing US D.A
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Goals: MDGs + focusing on the poorest regions
Techologies: set of efficient core interventions
Delivery systems: auditing against corruption
Financing: donor aid should be half-half for bilateral and
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multilateral initiatives: critical need in infrastructures
Jeffrey D. Sachs: YES (3)
• Structure of US D.A
 Today, USAID part of Department of State
• Too focused on SR foreign policy emergencies
 More efficient: creation of DfISD
• Regrouping USAID, PEPFAR and other initiatives…
• Regrouping goals and talents
• Financing of US D.A in next administration
 Worldwide official D.A = $100billion (1/4 for
Africa)
• Not enough to achieve the MDGs: pledges not fulfilled
• CSQS: difficult for developing countries to count on LT
reliable aid in order to start investments
 Fragmented aid
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Jeffrey D. Sachs: YES (2)
• US recognized that aid must be organized as a
multilateral effort with common goals
• In the US: 3 pillars of national security are
Development ($22.7billion), Defense ($611billion) and
Diplomacy ($9billion): 1st pb of disproportionnality
• US Aid allocated to bilateral and multilateral aid
• 2d pb: 3/4 of the aid is devoted to emergencies and
US political aims
• 3d pb: US has the lowest ODA contribution, as a % of
GNI
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Graph Analysis (1)
% of total population living on less than $1.08/day,
1981-2001
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Graph Analysis (2)
Net official Development assistance given by OECD Development
Assistance Commitee (DAC), 1960-2000
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Graph Analysis (3)
Net ODA in 2007 - amonts
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Graph Analysis (4)
Net ODA in 2007 - in % of GNI
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Gerges B.Ayittey: NO (1)
• The authors focuses on the case of Africa
• Africa remains a big paradox: huge potential but
weak economic progress
 Seems to be a 10-year-attention-deficit-cycle
 Pledges of erase part of the $350 billion debt
 $25 billion aid per year ($450 billion since 1960)
• The shape of aid for Africa has lost rationality in favor
of post-colonial guilt
• Africa does not need aid: it already has the
ressources and needs political and economic reforms
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Gerges B.Ayittey: NO (2)
• Africa’s leaky begging bowl
 « Aid in Africa is like pouring more water in a bucket that leaks
horribly »: FDI inflows and exports revenue effects are
canceled by imports, corruption and civil wars
 Need for Africa to look in its territory to build capital formation with
a strong continental union
• Need for $50billion annually for capacity building
 Africa mustn’t rely on the outside
 Capital flight to foreign banks (usually illegal revenus &
corruptions & suspicious businessmen): $20billion/year
• African leaders may have stolen $140billion during last decades
• African Report: $148billion lost annually because of corruption
 $15billion/year spent for arms purchase and army maintenance
• Losses with civil wars
 Difficulties for Africa to feed itself: huge imports
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Gerges B.Ayittey: NO (3)
• Monumental leadership failure
 Aid business as a massive fraud, known even by Western
governments: strong example of Nigeria
 Post-colonialism leaderships: dirigism and dictatorships
enhanced corruption and one-party states: governments were no
more institutions, risk of « coconut republic »
• The richest: most powerful and corrupted, rarely judged
• Acrobatics on reform
 In African countries, reforming has a different meaning
 Out of 54 countries: 16 democratic, 8 economic successes
• Better ways of helping Africa
 Smart aid: empowering of civil society (aid monitoring i.e)
 Needed institutionnal tools: independent media, judiciary, electoral
commission, central bank; efficient civil service, neutral armed force
: NEED FOR POLITICAL SPACE. Ex: Egyptian judge
 NGO’s cannot always interfere: role of emigrated people (paper)
 Distinction between goverments and people: a new Solidarnosc?16
Table Analysis (1)
Causes of Africa’s Loss of Money
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Debate
• Is the development improvement in Asia
really due to aid
 Isn’t it more the cultural & geographical
particularities of the region that promoted
economic & social development?
• To what extent can colonialism be blamed for
Africa’s woes? (civil wars, corrupted elites,
dictatorships, import dependency for food…)
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Questions?
Thank you.
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