Two new worlds

'Aid fatigue' in the West is changing the perception of the development paradigm of the poorer countries

 
Published: Friday 15 September 1995

-- THERE are a variety of ways in which the North could support development in and by the South. I sometimes refer to them as the "AT&T- mechanisms": aid, trade and technology transfer. All of these have been on the Northern agenda for decades now. The United Nations Conference on Environment and Development asked at the Rio meet for a reconfirmation of North's commitments to aid, and an additional annual aid for Agenda 21; access to Northern technology; and an open climate for fair trade. Since then, the Uruguay Round has come to an end, and so has GATT, and we have had several new conferences, such as the one on population in Cairo, and on poverty in Copenhagen. Where are we now? Let's take a fresh look.

First, trade. The Uruguay Round should generate income gains from additional trade to the order of $500 billion annually, says the Organisation of Economic Cooperation and Development. Out of these, some $160 billion will trickle down to the South. Is that progress? Maybe it is, in terms of absolute levels of material income or consumption. But from other perspectives, it is not. For one thing, expanding the scale of economic activity and trade has its consequences in terms of environmental pressure. For another, this additional trade.doesn't really help in solving the poverty issue. In fact, the gains from additional trade are distributed in such a way that the ratio of per capita income in the North to that in the South remains almost exactly what it was: 233 to I (World Bank data). We need something more if we are to tackle poverty sustainably.

Second, the issue of aid. In Copenhagen, the World Summit on Social Development earlier this year was to have identified new sources of funding. UN Secretary General Boutros Boutros-Ghali even identified that as the prerequisite for the summit's success. And indeed, a few were mentioned, such as the "Tobin" tax on international money flow. But at the end of the day it was back to square one: a reconfirmation of the desirability to achieve the 7 per cent of Gross Domestic Product (GDP) target to Official Development Assistance that we have had since 1968, and a recommendation only to apply the 20-20 rule - that is, development funds to be spent on social deielopment for 20 per cent if this is matched by governments spending an equal percentage of their public funds on such activities. And on debt relief, there is nothing to report out of Copenhagen.

The Times ofIndia, on March 17, acknowledged that what is called "aid fatigue" in the North may have played a role in this, and goes on to point out that this rests on totally wrong perceptions in the USA on how much aid is given. I am afraid that even among the better informed people there, and in Europe, there are substantial doubts about the effectiveness of aid. It is better for the South to be fully aware of this, and of the fact that these debates are serious. Not only is aid being seen as ineffective by many, but these same people point out a lot of economic developments in a num4er of Southern countries, very often without aid having been the trigger. One of the more progressive and supportive newspapers in the Netheriands even spoke of "a success" when it reported that the 7 per cent target still stands after Copenhagen. The paper is-probably right: things could easily ha@ye ended up much worse.

So, ET&T doesn't stretch very far thesddays. This will have worsening consequences as the economic forces are allowed to dominate. In Copenhagen there was much debate about the market mechanism. There, I belonged to the minority which doubted whether in terms of ensuring social development governments would be capable of controlling the forces unleashed.

There's now a growing conviction in the West that the,old North-South demarcation is obsolete, and has effectively been replaced by the one between market economies and the (hopeless) rest. Serious analysts held that Copenhagen terminated the era of belief in the possibility of global social engineering. I hope that they are wrong. We must again become what Aristotle termed as political animals. We must become beings that create and change institutions in order to realise the common good: environmental and social security.

Hans Opschoor heads the Ecological Economics Group, Free University, Amsterdam

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