Geske Dijkstra: Towards a more ambitious global agenda and less pretension in aid

Development Policy12 Feb 2010Geske Dijkstra

This is a thorough report with a lot of good analysis on a complex topic. As this website shows, the report has already stimulated much debate. I direct my comments to the two broad conclusions of the report: the fact that Dutch bilateral aid should be more focused (to make it narrower); and the plea for more attention for global interdependencies (to make it broader).

To start with the latter, I strongly agree that much more should be done in other policy areas (not just aid), in order to improve the chances of development in the South. However, I think the report’s analysis of global interdependencies is not complete. While the WRR mentions unfair trade and migration policies, as well as the disproportionately negative effects of climate change on developing countries, it does not mention the security problem in many developing countries. In many countries and regions of the world, the state is not able to protect its citizens. I think this increase in criminality is one of the most important problems currently hampering development. This crime and violence are maintained and exacerbated by the current policies of Northern countries, such as:

1. Policies to send people committing crimes in our countries back to their home countries, instead of punishing and re-socializing them.2. The lack of restrictions on weapons exports to developing countries.3. Policies that criminalize drugs production and trade; the North only penalizes cannabis, opium and heroin, while tobacco and alcohol are similarly addictive and bad for health. The ban on consumption in the rich countries is not effective; the war on drugs is immensely expensive (US$40 billion annually, just for the US – see The Economist, 7.3.2009), production is at best replaced, and the penalization stimulates crime and violence in the South. The illegality maintains the Taliban in Afghanistan, and even Mexico is rapidly becoming a failed state.

These aspects of policy incoherence do not get any attention in the report. With these three policies, the North is creating failed states on a large scale. To these three causes of violence in the South can be added the Washington Consensus policies, carried out since the early 1980s and imposed by the World Bank and IMF (in which we, the Netherlands’ government, had and have influence). These policies have opened up economies for foreign imports and foreign capital, and stabilized currencies, but they did not give attention to production and employment. This has created a large educated workforce all over the world, but no jobs. Young men without jobs fight.

The policy incoherence within the aid system is not dealt with in the report either. I am not at all convinced that the Washington Consensus is ‘declared dead by world leaders’ (p. 169) and ‘in fact buried’ (p. 140). In practice, neo-liberal policies are alive and kicking, as also remarked by David Sogge. Washington Consensus policies are, for example, still the basis for the selection mechanism of the World Bank allocations to low-income countries – see the very insightful article by Elisa Van Waeyenberghe in the European Journal of Development Research (2009:5). A large part of aid to the poorest countries, including Dutch aid, is linked to IMF and World Bank conditions that are still not promoting growth.

On the other WRR recommendation – that aid should become narrower – it is difficult to object to the idea that aid policies should be based more greatly on country-specific knowledge. But I think it is far too pretentious to even think that we (the Netherlands) ‘can make the difference’, provided we focus on just ten countries and use more knowledge in our aid policies. It doesn’t seem realistic that we will now suddenly be able to outperform all other donors and also do it so much better than in the past (see also Johan van de Gronden). The WRR writes that by focusing on a smaller number of countries, we can have more leverage. However, does this mean that we will impose our models again? Given the failure so far of all development models in bringing about lasting growth in developing countries, we should be far more modest. Furthermore, I do not think that providing smaller amounts of aid to more countries is bad. Aid fragmentation brings some costs, but on the other hand it allows for experiments and pilots, and it gives more leverage to recipient countries – in my view, ‘ownership’ should be more than donor rhetoric. It is also odd that the WRR asks for country-specific aid policies and, at the same time, rules out health and education. Isn’t this something that should be decided in a country-specific context?

At the same time, I think that many current ‘donor darlings’ already have an absorption capacity problem – at least, the governments of those countries. Collectively, donors should draw more conclusions from the fact that several econometric studies on aid effectiveness find decreasing returns to scale – something that is not mentioned in the WRR report either.

In sum, I agree with some others that the WRR should more consistently follow its own ‘go global’ recommendation, and I propose to broaden this agenda further. Addressing some of the global policy inconsistencies is by far the most effective way to obtain gains for developing countries. And, as long as we do not succeed in abolishing, for example, the cotton subsidies or the tariff escalation policies of rich countries, we should consider providing aid as compensation for this global policy incoherence: use aid to subsidize cotton producers or infant agro-processing industries in the developing world.