a presentation about the history of development aid

1. INHALT!
1. Beginning!
2. Green Revolution !
3. Structural Adjustment !
4. Participation!
5. Main Voices!
6. New Approaches!
7. More New Approaches!

2. 1. Beginning !
1. Juli 1944, Bretton Woods, Mount Washington Hotel!
730 Participants from 44 WW2 victorious and other countries. ! 2

3. 1. Beginning !
Goals!
• fixed rates system with leading US$ (gold deposited)!
• rebuilding Europe and strengthen its economy!
Resulting Institutions!
• International Monetary Fund!
• World Bank!
3

4. 1. Beginning !
Model:
Marshall Plan, April ´48.!
13,1 Mrd. US$
(worth 75 Mrd. today)
in four years to
OECD-Countries.!
Berlin Airlift: Development Aid!?! 4

5. 1. Beginning !
Initiator: USA.!
Situation: Post colonial times, rise of cold war!
Motivation: Promote democracy & capitalism.!
Assumptions: !
USA: economic growth = development = democracy
USSR: economic growth = development = communism!
Examples: !
USA: Zaire´s Mobutu
USSR: Haile Mariam in Ethopia!
5

6. 1. Beginning !
Truman 1949:
"In addition, we will provide military advice and
equipment to free nations which will cooperate with us
in the maintenance of peace and security. Fourth, we
must embark on a bold new program for making the
benefits of our scientific advances and industrial
progress available for the improvement and growth
of underdeveloped areas. More than half the people of
the world are living in conditions approaching misery.
Their food is inadequate. They are victims of disease.
Their economic life is primitive and stagnant. Their
poverty is a handicap and a threat both to them and to
more prosperous areas. For the first time in history,
humanity possesses the knowledge and skill to relieve
the suffering of these people."!
6

7. 1. Beginning !
7

8. meanwhile!
Decolonisation!

9. 1. Beginning !
Institutions!
IMF (´44)!
World Bank (´45)!
UN (´45)!
OECD (´48 as OEED) with DAC!
WTO (´47 as GATT)!
development banks (African ´64, Asian ´66, European ´58,
Islamic ´75, and many more)!
development agencies (USAid, ministries for development, etc.) !
NGOs (boom in 70´s, about 15-20% of development aid)!
9

10. 2. Green Revolution!
• Between 40´s and 70´s!
• Rockefeller Foundation started to develop high yield crops for
Mexico.!
• ´40: Mexico imported more than half of it´s wheat!
• 63: new developed varieties on 95% of the fields in Mexico > self
supply.!
• Until 2000: 400 public research programmes lead to 8000 varieties
(wheat, rice, beans, etc.) which were introduced in more than 100
countries.!
10

11. 2. Green Revolution!
• By beginning of 60´s: 100 Million US$ development aid for Africa!
• ´65: 1 Billion for roads and railway tracks. But what about
maintainence?!
11

12. 2. Green Revolution!
Kariba Dam: 480 Million US$ for 57.000 resettled people and 1,3 GW! 12

13. 2. Green Revolution!
TODAY:!
Belo Monte, Amazonas, Brazil !
11 Billion US$ for 20-40.000 resettled people and 11 GW!
Energy just for the
mountan industries?!
500 Mio. US$ for Indios!
13

14. 2. Green Revolution!
• Theory: Big Loans for big Projects secure refunds. !
• But: Western Money pays mainly western companies and stays
mainly in the west. Dependence of poor countries rises.!
14

15. 2. Green Revolution!
Conclusion: !
• WB and others planned huge projects in the west and mostly ignored
conditions in the aid-receiving countries.!
• Despite dams and wheat many African countries did not grow. But
maybe it would be even worse today without development aid?
Stagnation as a success?!
15

16. 3. Structural Adjustment!
Oil Crisis, 1973. Price of oil quadrupled by 1974! 16

17. 3. Structural Adjustment!
• Developing countries (DC): caught between higher prices of oil and
lower prices for their own export commodities and raw materials
amid shrinking Western demand for their goods!
• Oil exporting countries: Put the additional cash into international
banks, which sought to lend this money to the developing countries.!
• DCs faced inflation and rising food prices (which did not mean
income because the green revolution did not lead to food exporting
development countries – trade barriers).!
• Low interest rates encouraged the DCs to borrow more and more.!
17

18. 3. Structural Adjustment!
• Robert McNamara as Boss of WB: Focus on Aid for
the poorest. After 73 WB became the largest donor
(before it was USAid)!
• Aid was redirected from large infrastructure
investments to rural and agricultural development
projects, social service, adult literacy, vaccinations.!
• By End of 70s: Propotion of Aid in social service rose
to 50% (from under 10% in the previous decade)!
• First Oil Spike: (73/74): poverty-related aid increased
threefold!
• Second Oil Spike (79/80): Aid doubled!

19. 3. Structural Adjustment!
• By the end of 70s: Africa received 36 Billion US$!
• Second Oil Crisis 79 (Iran-Iraq-War): Rising Interest Rates. Africas
debt service rose from 2 Billion US$ 1975 to 8 Billion 82.
Weak international Economy, less export.!
• 12.8. 82: Mexico is broke. 11 African countries followed. !

20. 3. Structural Adjustment!
• Danger!!! Possible Global Financial
meltdown!!!!
• IMF formed Structural Adjustment Facility to
lend money to defaulting nations to help
them pay back their credits.!
• poor countries aid-dependence increased.
From 1976 to 1980 developing world debt
rose at an average annual rate of 20%!

21. 3. Structural Adjustment!
• Before the 80s government were seen as safe debtors.!
• By the 80s governemnt involvement was seen as an obstacle for
economic growth. Now private sector was seen as the true motor
for growth.!
• With the 80s the
neoliberal thinking
became dominant.
Milton Friedman and
the Chicago School
of Econimics
influenced
Reagan and Thatcher. !

22. 3. Structural Adjustment!
• Asian Tigers had high growth rates and were
held proof for sucess of free markets.!
• New policy: Stabilisation and structural
adjustment. Money for Privatisation.
Civil Service Workforce decreased and
government stake of corporate equity fell
from 90 to 10 % in 6 years.!
• 1989: Washington Consensus!

23. 4. Participation!
• Unicef reported in the late 1980s that the structural adjustment
programs of the World Bank were responsible for the "reduced
health, nutritional and educational levels for tens of millions of
children in Asia, Latin America, and Africa“!
• By the end of 80s: Debt of emerging-markets countries was about
1Trillion US$. !
• net reserve flow from poor countries
to rich US$ 15 Billlion each year
between 87 and 89.!

24. 4. Participation!
• 89: End of Cold war, no need to
support dictators anymore.!
• good governance, democracy.
(USSR had spent on average
300 Mio. US$ per year on Africa
(58% on Ethiopia). !
• Aid flows declined first since 60´s!

25. 4. Participation!
• Glamour! 1985 World Aid , 1,5
billion watching.!
• more aid! More aid!
Popstars screamed and Pope
John Paul II, too. !
• Bono and Geldof visited George
Bush and the 2005 G8 meeting
(making development policy?!)!

26. 4. Participation!
• Problems with participation: Knowledge gap between developed and
developing countries!
• How to let people in the developing countries participate if the guys
from the developed always know better?

27. Dysfunctional institutional
incentives !
C
o
m
p
l
e
x
For everybody: Don´t forget about the i
t
meta reasons of failure as they apply y
to the whole system of development aid a
n
over the whole time.! d
B
u
Too narrow, technical perspective on development ! r
e
a
u
Lack c
of ac r
c ount a
abilit c
y and y!
Development is hard work ! com petit
ion !

28. 5. Main Voices!

29. 5. Main Voices!
William Easterly:!
• Aid failed, especially WB and
IMF.!
• More Searchers, less planners!!
• Bottom-up instead of top-down !

30. 5. Main Voices!
Jeffery Sachs:!
• Aid didn´t work
because we didn´t
spent enough
money.!
• More money!!
• top-down instead of
Bottom-up.!
• Inventor of
Millenium
Development Goals!

31. 5. Main Voices!
Dambisa Moyo:!
• Aid is not working at all, let´s quit aid!!
• Focus on WB and IMF >> Word Trade System must change.!
• Aid is demotivating.!
• See the Chinese investing?!!

32. 5. Main Voices!
Linda Polman:!
• Humanitarian Aid fuels conflicts and
civil wars.!
• Because NGOs need to self-preserve.!

33. 5. Main Voices!
Philip Gourevitch:!
• Linda´s right!: Humanitarian Aid fuels conflicts and civil wars.!
• It started with the Biafra-War 1967!

34. 6. New Approaches!
Local Voices!

35. 6. New Approaches!

36. 6. New Approaches!

37. 6. New Approaches!
Randomized Trials!

38. 6. New Approaches!
Randomized Trials!

39. 6. New Approaches!
Cash on Delivery!

40. 6. New Approaches!
Cash on Delivery!

41. 7. More New Approaches!
Impact Investment and Social Entrepreneuship!

42. 7. More New Approaches!
P.S. Regarding Money
Transfer, Western Union
Fees and Yunus:
Check Song „15 Minutes
away“ by K´naan!

43. 7. More New Approaches!
Holy Shit!!
http://www.youtube.com/watch?
v=_ruyJBGc70g&feature=player_embedded !

44. 7. More New Approaches!
Digital/social!

45. 7. More New
Approaches!
Digital/social!

46. 7. More New Approaches!
Digital/social!

47. 7. More New Approaches!
Admitting Failure!

48. 7. More New Approaches!
Admitting Failure!

49. meanwhile!

50. meanwhile!

51. Vielen Dank.!
betterplace lab!
Schlesische Strasse 26!
10997 Berlin!
Tel +49 30 76 76 44 88-0!
Fax +49 30 76 76 44 88-40!
lab@betterplace.org!