chronology of failure – onlab summerschool


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a presentation about the history of development aid

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chronology of failure – onlab summerschool

  1. 1. INHALT! 1. Beginning! 2. Green Revolution ! 3. Structural Adjustment ! 4. Participation! 5. Main Voices! 6. New Approaches! 7. More New Approaches!
  2. 2. 1. Beginning !1. Juli 1944, Bretton Woods, Mount Washington Hotel!730 Participants from 44 WW2 victorious and other countries. ! 2
  3. 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. 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. 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. 6. 1. Beginning !Truman 1949:
"In addition, we will provide military advice andequipment to free nations which will cooperate with usin the maintenance of peace and security. Fourth, wemust embark on a bold new program for making thebenefits of our scientific advances and industrialprogress available for the improvement and growthof underdeveloped areas. More than half the people ofthe world are living in conditions approaching misery.Their food is inadequate. They are victims of disease.Their economic life is primitive and stagnant. Theirpoverty is a handicap and a threat both to them and tomore prosperous areas. For the first time in history,humanity possesses the knowledge and skill to relievethe suffering of these people."! 6
  7. 7. 1. Beginning ! 7
  8. 8. meanwhile!Decolonisation!
  9. 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. 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. 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. 12. 2. Green Revolution!Kariba Dam: 480 Million US$ for 57.000 resettled people and 1,3 GW! 12
  13. 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. 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. 15. 2. Green Revolution!Conclusion: !• WB and others planned huge projects in the west and mostly ignoredconditions in the aid-receiving countries.!• Despite dams and wheat many African countries did not grow. Butmaybe it would be even worse today without development aid?Stagnation as a success?! 15
  16. 16. 3. Structural Adjustment!Oil Crisis, 1973. Price of oil quadrupled by 1974! 16
  17. 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. 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. 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. 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. 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 
 Reagan and Thatcher. !
  22. 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. 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. 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. 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. 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. 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 uToo 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. 28. 5. Main Voices!
  29. 29. 5. Main Voices! William Easterly:! • Aid failed, especially WB and IMF.! • More Searchers, less planners!! • Bottom-up instead of top-down !
  30. 30. 5. Main Voices!Jeffery Sachs:!• Aid didn´t workbecause we didn´tspent enoughmoney.!• More money!!• top-down instead ofBottom-up.!• Inventor ofMilleniumDevelopment Goals!
  31. 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. 32. 5. Main Voices!Linda Polman:!• Humanitarian Aid fuels conflicts andcivil wars.!• Because NGOs need to self-preserve.!
  33. 33. 5. Main Voices! Philip Gourevitch:! • Linda´s right!: Humanitarian Aid fuels conflicts and civil wars.! • It started with the Biafra-War 1967!
  34. 34. 6. New Approaches! Local Voices!
  35. 35. 6. New Approaches!
  36. 36. 6. New Approaches!
  37. 37. 6. New Approaches! Randomized Trials!
  38. 38. 6. New Approaches! Randomized Trials!
  39. 39. 6. New Approaches! Cash on Delivery!
  40. 40. 6. New Approaches! Cash on Delivery!
  41. 41. 7. More New Approaches! Impact Investment and Social Entrepreneuship!
  42. 42. 7. More New Approaches! P.S. Regarding Money Transfer, Western Union Fees and Yunus: 
 Check Song „15 Minutes away“ by K´naan!
  43. 43. 7. More New Approaches!Holy Shit!! !
  44. 44. 7. More New Approaches! Digital/social!
  45. 45. 7. More New 
Approaches! Digital/social!
  46. 46. 7. More New Approaches! Digital/social!
  47. 47. 7. More New Approaches! Admitting Failure!
  48. 48. 7. More New Approaches! Admitting Failure!
  49. 49. meanwhile!
  50. 50. meanwhile!
  51. 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!!