But if the rich countries in the North suddenly make huge cuts in their aid-budgets that can only lead into even worse situations. That is because the aid industry has created a system of dependency over the last years and aprubt cuts of these supplies – possibly combined with even more protectionism – can have serious impact for the poorest. Unfortunately, that is exactly what is happening right now.
Development aid – more politically correct called development cooperation – is criticized widely to be neo-colonialist and to create a situation of depency. But more than that, it does not even work, William Easterly argues in The White Man’s Burden: it “is the tragedy in which the West spent $2.3 trillion on foreign aid over the last five decades and still had not managed to get 12-cent medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still had not managed to get $4 bed nets to poor families. The West spent $2.3 trillion and still had not managed to get $3 to each new mother to prevent five million child deaths.” Easterly is by the way yet another former World Bank employee which has gone astray. In his book he explains that we need a new approach to development if we really want to make things better for the poor.
Another view on why aid doesn’t work – with a focus on Africa – comes from Dambisa Moyo, author of Deadaid – How Aid is not Working and How There is Another Way for Africa. “Moyo illuminates the way in which overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the ‘need’ for more aid.” She therefore calls out for a system which is not dependent on aid and offers Africa real and independent development. Dambisa Moyo’s newest book looks at the decline of the West: “How the West Was Lost not only exposes the policy myopia of the West that has led it onto a path of economic decline but also reveals the crucial—and radical—policy actions that must be taken to stem this tide.”
The decline Moyo describes is the reason why the OECD writes that “major donors’ aid to developing countries fell by nearly 3% in 2011, breaking a long trend of annual increases.” The OECD just published last year’s numbers of official development assistance (ODA). “In 2011, members of the Development Assistance Committee (DAC) of the OECD provided USD 133.5 billion of net official development assistance, representing 0.31 per cent of their combined gross national income (GNI).” 0.31 percent doesn’t seem like a lot but many countries have actually reduced their aid spending due to the crisis. You can see which countries are the most generous compared to their GNI:
According to the OECD development cooperation expenses increased only in Italy (who has long be criticized to give very little), New Zealand, Sweden (which gives 1% of GNI) and Switzerland (where a decision was made last year that 0.5% of the GNI will be spent on development cooperation) whereas it decreased in most other countries with the biggest cuts in Austria (-14%), Belgium (-13%), Greece (-40%), Japan and Spain (-32%). Interestingly, many non-OECD countries like Turkey, Estonia or Hungary significantly increased their spending. You can find the full OECD report here and read how they predict that the numbers will stagnate in the future. NGOs and aid organizations, however, are corncerned: “The sweeping cuts to European development aid are inexcusable. This means the world’s poorest people are being made to pay the price of austerity whilst the bank bailouts continue,” said Catherine Olier from Oxfam in the euobserver. An interesting story comes from the Netherlands, were right-wing politician Geert Wilders advocates strongly for further cuts in the aid budget. “Wilders and his Freedom Party (PVV), who have supported the minority coalition since 2010, have said they will only agree new tax and pension reforms if development aid is cut significantly – or abolished altogether”, the Irish Times write. Philanthropist Bill Gates wrote to Wilders and invited him to go with him to Africa to see what aid can do.
Now, the inability – or unwillingness – of the west to pay for development should open up a dialogue on how to move on to more effective ways of helping the poor. Development aid has failed, many belief, this could be the time to reinvent development – with Africa and the other developing regions as partners rather than dependents.