Bill Easterly on Foreign Aid and Development
humanosphere.kplu.orgQ You’re largely known as a critic of aid and development, pointing out what doesn’t work. What do you think does work? Many young people do want to make the world a better place. What should they do?
BE: Again, I don’t say aid never works or that outside interventions always fail. I would say that many aid projects in health have been quite successful, such as the expansion of vaccinations, oral re-hydration therapy and such. What I’m saying is you’re asking the wrong question. It’s the wrong mindset, asking ‘What can we do?’ because you’ve already taken a top-down, paternalistic stance.
I would tell people to first learn how poverty reduction and development actually work. If activists want an outlet for their energies, they should be advocating for individual rights for the poor. Poor people need idealistic and intellectual allies, like the northern white liberals who worked with poor blacks on civil rights in the South.
This is true not only in 3rd world countries, but in rich western ones, as well. The top-down, government-administered approach to homelessness and poverty is both well-intentioned and doomed to failure.
Slashing aid may seem like a no-brainer for congressional budget-cutters, but aid isn't charity; it's business. Ask China
It’s not every day that foreign aid is front page news in the United States, but it is because slashing foreign aid has become one of the few areas of bipartisanship in the US Congress. Such an act of retreat is short-sighted. Given that China and other emerging markets are ramping up their overseas development assistance, the US should be revamping and increasing aid, not cutting.
When Obama took office, he put together two major reviews of US foreign assistance programs, resulting in the release of two bold reports (pdf) just last year. These reports led the administration to propose a 10% increase in foreign aid for this budget cycle, up to $59bn – but still less than 2% of the total federal budget. A key part of these reports was a focus on pursuing a long-term strategy rather than going with the latest development fad and constantly switching gears.
Well, the immediate recipients of that aid don’t vote for US congressional representatives. Last week, the US House of Representatives proposed a 20% reduction, while the Senate suggested a 10% cut from last year’s total, not an increase at all. While Congress hardly proposes to dent the components of US aid that are tied to military programs, hardest hit are food aid, global health programs, the United States Agency for International Development and official development assistance (water filtration plants, etc).
While the United States is in the midst of reducing its foreign aid, China has been increasing its contributions. China has lent at least $110bn between 2009 and 2010 – more aid than all World Bank loans combined during that period. Furthermore, China is implementing that longer-term strategy that Obama said the US needs.
The US aid machine has been prey to the latest fads in development thinking. In the 1970s, we built dams and displaced people; in the 1980s, we made nations “restructure” their economies by getting the government out of the economy; in the 1990s, we told them to “trade not aid”; and lately, we’ve been setting up little microfinance projects around the world. All that can be fine at a micro-level, but such efforts have made a small impact at best and have been disastrous at their worst.
Meanwhile, China has been building export-processing zones, ports, railways and other more growth- and job-friendly projects. What is more, China’s aid has far fewer strings attached than the US’s does, and is increasingly favored abroad as a result. That is, in part, a pity, because according to a new report by US-China Economic and Security Review Commission, China’s aid to the developing world does not adhere to international standards such as governmental reform and human rights protection; this undermines efforts by the United States to initiate such reforms in Burma, Venezuela and Sudan.
In short, Obama’s new vision for aid started the right conversation; but the budget cutters have muted it. Foreign aid is seldom charity; it is an investment. The US needs to invest in growth and development abroad for our own sake, as well. If US aid is working, then as other countries of the world grow, they will be more apt to purchase our products, will be less apt to be struck with civil unrest that can jeopardise our geopolitical strategies, and improve our standing in the world in a manner that pays dividends.
Slashing foreign aid is an easy target, given that foreigners can’t vote in the US. Congress would show more strength if they trimmed the defense budget and passed the millionaire tax proposal. Given that the 0.3% of the people in the US who make over $1m a year had a great ride during the boom years, they owe it to the 99.7% who are being asked to pay more still now and cut back.
Obama supports Clinton's desire to leave White House for World Bank
From Reuters:
U.S. Secretary of State Hillary Clinton has been in discussions with the White House about leaving her job next year to become head of the World Bank, sources familiar with the discussions said on Thursday.
She has said publicly she did not plan to stay on at the State Department for more than four years. Associates say Clinton has expressed interest in having the World Bank job should the Bank’s current president, Robert Zoellick, leave at the end of his term, in the middle of 2012.A…source said Obama has already expressed support for the change in her role. It is unclear whether Obama has formally agreed to nominate her for the post, which would require approval by the 187 member countries of the World Bank.
The Washington Post says Clinton’s staff is denying the Reuters report.
Sub-Saharan Africa’s best countries for doing business
howwemadeitinafrica.comAccording to the World Bank and IFC’s Doing Business 2012 report.
Reminder that Chavez' greatest legacy will be the Bank of the South
en.wikipedia.orgWhich is far more important than any of his anti-poverty programs. It’s largely funded by Venezuelan oil money, and will provide the loans and capital that the global South needs on a humane basis, hopefully replacing the IMF-World Bank as the poor’s lender-of-last-resort. The bank features a one-state one-vote system, unlike the World Bank’s, where America and the West have the most voting power. Already, Latin America’s dependence on the IMF has fallen from 80% of its loans in 2005 to 1% in 2008, and soon, the Bank will begin full operations, lending to Africa as well: http://www.greenleft.org.au/node/53510 If it all goes according to plan, it will be the greatest anti-poverty effort the world has ever seen.
Adaptation Progress in Africa
LIsten to Obiageli Ezekwesili, World Bank Vice President for the Africa Region discuss climate challenges as well as opportunities for the continent of Africa.
World Bank: Guide to Climate Change Adaptation in Cities (PDF)
siteresources.worldbank.orgThe World Bank published an easy to read guide to climate adaptation. The primary focus is to explain what adaptation is, and how city managers can adapt and lower risks to people, their homes, and businesses.
“Building resilience and adapting to climate change is increasingly a high priority for cities. Besides mitigation, on which efforts have largely focused in the past, cities should today play a larger role in adaptation. The World Bank and various other development institutions are working with cities to strengthen their capacity to assess vulnerability to climate change impacts and to identify corresponding plans and investments to increase their resilience.
This guide on climate change adaptation in cities is intended to offer mayors and other city officials, in developing countries, practical guidance on how to respond to the challenges of climate change adaptation in their cities. It provides a comprehensive overview of key climate adaptation issues that are relevant to cities, offers examples of good practices and successful experiences, and is a useful guide to other available resources and policy tools on the topic.
The guide focuses on disaster risk management, the urban poor and other vulnerable groups, and access to climate finance.”
World Bank: Guide to Climate Change Adaptation in Cities
“New data from the World Bank has revealed African migrants pay more to send money home to their families than any other migrant group in the world. While South Asians pay an average of $6 for every $100 they send home, Africans often pay more than twice of that – and in South Africa, which has the highest remittance costs on the continent, nearly 21% of money set aside for family members back home is spent on getting it there. With an estimated 120-million Africans depending on remittances from family members abroad for their survival, health and education, the World Bank argues that high transaction costs are cutting into the impact remittances can have on poverty levels. ”
—Read more: African migrants pay high prices to send money home
Turbulent Year Ahead for Global Economy
econ.worldbank.orgWashington, DC, January 18, 2012—The world economy in 2012 is set to grow by just 2.5 percent, weighed down by ripple effects from the 2008 financial crisis, says the World Bank’s latest Global Economic Prospects (GEP) 2012, published today.
The sovereign debt crisis in Europe, which took a turn for the worse in August 2011, coincides with slowing growth in several major developing countries (Brazil, India and, to a lesser extent, Russia, South Africa and Turkey), mainly reflecting policy tightening begun in late 2010 and early 2011 to combat rising inflationary pressures from overly-fast growth.
As a result, developing country growth for 2012 is now forecast at 5.4 percent, the second lowest over the past 10 years. The Bank has also lowered its growth forecast for high-income countries in 2012 to 1.4 percent and -0.3 percent for the high-income Euro Area.
Read on here….
In the East Asia and Pacific region, affected by flooding in Thailand and the turmoil in Europe, regional GDP growth is estimated to have slowed to 8.2 percent in 2011, and is projected to ease further to 7.8 percent for both 2012 and 2013. Growth in China was an estimated 9.1 percent in 2011 and is expected to dip to 8.4 percent in 2012.
Europe and Central Asia grew by an estimated 5.3 percent in 2011. However, the expected slowdown in high-income Europe, still troublesome inflationary pressures in the region, and reduced capital flows due to the Euro Area crisis may slow regional growth to 3.2 percent in 2012, before firming to 4.0 percent by 2013.
Latin America and the Caribbean grew by an estimated 4.2 percent in 2011, but this is expected to ease to 3.6 percent growth in 2012, before picking up to 4.2 percent in 2013. Weaker global growth, uncertainty arising from the Euro Area debt crisis, slower growth in China, and a policy-induced deceleration in domestic demand are weighing on the region’s growth prospects.
Dramatic political changes in the Middle East and North Africa have disrupted economic activity substantially, but selectively, across the region, while a deteriorating external environment slowed growth to an estimated 1.7 percent in 2011. Growth is expected to remain subdued in 2012, at 2.3 percent, rising to an expected 3.2 percent in 2013.
Growth in South Asia slowed to an estimated 6.6 percent in calendar year 2011, reflecting a sharp slowdown in the second half of the year in India as well as external headwinds. The region’s GDP growth is projected to ease further to 5.8 percent in 2012, before strengthening to 7.1 percent in 2013.
Growth in Sub-Saharan Africa remained robust in 2011 at 4.9 percent. Excluding South Africa, growth in the rest of the region was even stronger at 5.9 percent in 2011, making it one of the fastest growing developing regions. Growth for the region is projected to accelerate to 5.3 percent in 2012 and 5.6 percent in 2013.
