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Aid Versus Development 1 AID VERSUS DEVELOPMENT 1 Aid Versus Development - A Band-Aid Fix or Long Term Solution? Alexandria Asselbergs Global Perspectives Mr. Toole May 10th 2013 AID VERSUS DEVELOPMENT 2 Preface The question of providing aid versus development is frequently found in today’s headlines: should we give financial aid, or help build up an economic system within other countries? Which provide the most benefits to the country in need? Financial assistance is a popular aid method. Aid programs are often developed by Westernized first world countries for non-failed state countries (i.e. Haiti), in an attempt to relieve economic, agricultural, or medical stress. Aid has been defined in the Oxford Dictionary as, “provid[ing] support for or relief”1 to countries or people. NGOs (non-governmental organizations) and IGOs (international government organizations) provide aid by giving generous amounts of money, food, and medical supplies to countries in need. They also provide projects to assist in the building of institutions such as schools and hospitals. Development, on the other hand, is defined in the Oxford Dictionary as, “developing; growth or evolution; stage of advancement, product…”2. Often the countries that choose to provide development do so to encourage third world countries to create a sustainable economic system, which includes the creation of a job market, trade partnerships, resource development, and education. This report will examine which countries offer development, which countries would prefer to receive development, and the results development has provided to countries such as Bangladesh and Haiti. 1Aid [Def. 1]. In Oxford Dictionaries, Retrieved March 13, 2013, from http://oxforddictionaries.com/definition/english/aid. 2Development [Def. 1]. In Oxford Dictionaries, Retrieved March 13, 2013, from http://oxforddictionaries.com/definition/english/development?q=development AID VERSUS DEVELOPMENT 3 The role of corruption is important to consider within the discussion of aid versus development. Many countries receiving aid or development have a corrupt government and infrastructure, leading to misappropriation of financial aid funds as well as funds derived from their developing economic systems. Countries providing aid and development are often aware of some level of corruption, yet very little decisive action is taken to ensure proper use of the assistance provided. The corruption that takes place not only ensures that the receiving country obtains a continuous supply of financial aid, but it also hinders any potential economic growth. This report will also examine how aid and development were conceived, who provides it and why, and who receives it. Aid is often touted as a band-aid solution, whereas development is promoted as a long-term investment. It is important to compare these two solutions to third world dilemmas because they impact not only the country receiving them, but also the country providing them. Often the benefit of delivering aid is only felt by the donor country instead of the country in need, which can influence the manner of assistance delivered. The following report will examine in detail the pros and cons of financial relief and development for both the donor and recipient countries. By discussing the foreign aid and progress being given to Haiti, Mali, and Bangladesh, it shall become apparent that indeed a long-term developmental solution provides more benefits to the receiving country, and long-term global economic benefits. Conversely, financial assistance only provides recognition and financial value to the country providing it. In the end, the continuing results from development outweigh the band- aid solution of financial assistance. AID VERSUS DEVELOPMENT 4 Summary This report will bring into light the major differences between monetary aid and development. It will also look at the role of control and corruption of the recipient countries, the failed states, and those making donations. Case studies in Haiti, Mali, and Bangladesh will be examined to determine the effects aid has had in either prolonging the poverty or assisting the country in escaping destitution. Information for these case studies was obtained from a variety of sources, such as: newspaper articles, internet articles, books specializing in aid and development, and interviews. Furthermore, this broad spectrum of sources was obtained to ensure consistency of information, validity, and provide a multitude of opinions on the subject matter. The involvement of Canada in the matter of international aid and development will also be addressed as a separate case study via examination of CIDA documents, reports, and articles. Opinions of three experts of this particular topic (Muhammad Yunus, Dambisa Moyo, and Jeffery Sachs) shall be utilized. Interviews with Aileen Carroll, Patrick Brown, and Bob Black shall be used to corroborate the information provided by the experts. The interview with Aileen Carroll was particularly important because, as the former Canadian Minister of International Cooperation, she provided a first-hand look into the role of a donor country versus the country receiving assistance. This report will also describe some possible solutions to the issue of aid versus development. The sub-topics of humanitarian aid and systemic aid will not be reviewed in this paper. AID VERSUS DEVELOPMENT 5 Background The United States of America and Canada were the first to introduce foreign aid to other countries in the aftermath of World War II. The first aid projects began because much of Europe was decimated and millions of families were displaced from their homes: “From 1945 through 1947, the United States was already assisting European economic recovery with direct financial aid.”3 This assistance was a large part of the Marshall Plan, which was geared towards helping the Allies rebuild Europe. The main goal of the Marshall Plan - named after George Marshall, appointed as the Secretary of State by President Truman - was to send (US) $13 billion (today’s equivalent of (US) $100 billion) to fourteen European countries in the effort to rebuild their nations. This money was used to send shipments of food staples, fuel, and machinery from the United States and Canada to Europe4. Eventually, “[s]ixteen nations, including Germany, became part of the program and shaped the assistance they required, state by state, with administrative and technical assistance provided through the Economic Cooperation Administration (ECA) of the United States”5. The nations were assisted greatly by forming trade relations, leading to the North Atlantic Treaty Alliance. Economic prosperity was led by coal and steel industries, which helped to shape the European Union. 3 George C. Marshall Foundation (2009). The Marshall Plan. George C. Marshall Foundation. Retrieved from http://www.marshallfoundation.org/TheMarshallPlan.htm). 4 Schwartz, T.A. (2013). The Marshall Plan. Encylcopedia.com, 1-2. Retrieved from http://www.encyclopedia.com/doc/1O126- TheMarshallPlan.html 5 Schwartz, T.A. (2013). The Marshall Plan. Encylcopedia.com, 2-3. Retrieved from http://www.encyclopedia.com/doc/1O126- TheMarshallPlan.html AID VERSUS DEVELOPMENT 6 The overall funding for the Marshall Plan ended in 1951. According to Dambisa Moyo “[t]he tale of aid begins in earnest in the first three weeks of July 1944, at a meeting held at the Mount Washington Hotel…”6. Moyo claims that 700 delegates from 44 different countries gathered, and established a global system of financial and monetary management. From this gathering, international aid as well as development would be born7. The 1960’s were considered the years of industrialization, during which time (US) $100 million was sent to Africa to boost its industrial economy. It was assumed that the private sector would never give the money required for aid to Africa, so there were fundraising events and charity work through the years to acquire the amount needed. By the 1970s, focus shifted from industrialization to poverty issues8. Financial aid continues to focus on a quick and easy fix as the solution to the issue of poverty. The roots of aid began in the 20th century, and since then there have been two events in the history of the United States overseas aid program that altered financial aid policy. In 1929, the Colonial Development Act allowed loans and grants to be use for infrastructure and was explicitly viewed as a means to obtain information and resources for British manufacturing. Later, in 1940, the Colonial Development and Welfare Act was expanded that allowed for the funding of social sector activities. This was despite the statement from the Minister of Food, “that by one means or another, by hook or by crook, the development of primary 6Moyo, D. (2009). A Brief History of Aid. Dead Aid, p. 10. 7 Moyo, D. (2009). A Brief History of Aid. Dead Aid, p. 11. 8 Moyo, D. (2009). A Brief History of Aid. Dead Aid, p. 15. AID VERSUS DEVELOPMENT 7 production of all sorts in the colonial area... is... a life and death matter for the economy of the country”9. A Labour MP even called for “the rapid development of the colonies” so that the US could be independent from the United Kingdom10. It is these moments in history that demonstrate the tension between relief and assistance programs, and thus development policies were born. The United States were the first to use financial aid and development assistance in Europe to help rebuild infrastructure and the economy after World War II (using both of these tactics is called a bilateral approach)11. Europe approved of the notion of development assistance and aid because of the positive effects development had on European countries. The economy in Britain rose, and the rebuilding of cities and infrastructure throughout Europe were completed within a few years12. There are some who believe the word development is simply another name for aid and another way to apply aid. Jonathan Glennie, a reporter for the Guardian UK, says there is no difference between aid and development as they are implemented by the same countries13.
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