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POOR-WORLD DEVELOPMENT:
Wringing Success from Failure in Late-Developing Countries - Lessons from the Field

Poor People in a Poor World

MY PURPOSE IN TEN CHAPTERS

Since World War II mankind has been determined to alleviate poverty. Remarkable efforts to do so have been made in the fifty years since the end of the war, yet half of mankind remains poor; a fifth is very poor. Poverty is not a state of nature, but it can be ascribed to man-made institutions that reflect self-serving and self-indulgent ideologies, poorly tested theories and policies, weak governments, and even poorly administered programs to alleviate poverty. Too often, institutions that were expressly established to aid the poor slip into policies and practices that are aimed at bureaucratic self-preservation. My thesis has two parts: First, that well-designed development strategies and foreign assistance programs that draw thoughtfully on the lessons of the past can stimulate growth and reduce poverty in poor, late-developing countries; and second, that poverty in the late-developing world cannot be successfully alleviated without understanding and challenging all of its causes. Poverty has no one cause, no one solution. Furthermore, western governments, international development banks, and donor agencies must reexamine how they design and administer foreign aid, and they must realistically examine the problems that are endemic to late-developing countries that imperil poor people, including poor-world governments that squander talent, good will, and resources. A quote from Abraham Lincoln's second inaugural address captures the essence of my overseas experience: "It may seem strange that any men should dare to ask a just God's assistance in wringing their bread from the sweat of other men's faces." I believe that poor men and women can profit from their own work, and that we can reverse the trend of the rich gaining at the expense of the poor, but only if we honestly address all the indigenous causes of poverty as well as the successes and failures of foreign aid programs. Foreign assistance has been so smothered in political interest, bureaucratic barnacles, and foreign policy controversy that its declared purpose and actual contributions can be hard to fathom. Multiple interests and motives must be untangled.

PRIMARY THEMES

I discuss development and foreign aid in general and specific terms, from their historic and theoretical roots to their present and practical application. Each chapter illustrates my development experience from a different perspective; each contributes to what I hope will be a compelling argument for development solutions and effective aid. Each chapter illustrates the vitality of ownership; many stress the importance of markets. One chapter is devoted to the challenge of democracy in Africa. Because AID resources have been central to the implementation of U.S. foreign policy in the developing world, chapter 2 begins with a discussion and critique of AID in Washington. This much-berated institution, seen from within the famed Beltway of Washington, D.C., presents a study in good intentions gone awry. Because AID has been controlled by vested and divisive interests since its inception, poor countries have often ended up serving the Washington imperial imperative. I also examine the relationship between Congress and the Department of State - a necessary precursor to meaningful prescriptions for aid's reform. Chapter 3 examines development theory and practice. In retrospect, many development theories have been shown to be more fad-like than usefully enduring; a few were based on neither evidence nor reason. Now that the cold war has receded in importance as a force that drives foreign policy, I identify post­cold war development principles that are best suited for guiding development in the next century. Africa's continuing plight and Asia's recent financial crisis underscore the imperative of adhering to economic and democratic principles. Food production successes show up in unlikely places. Powerful people in powerful capitals labeled Bangladesh a "basket case," for example, and called for "triage" at its independence in 1971. Golden Bengal now grows its own food, as described in a heartening chapter 4. The cultivators of Bangladesh have taken the world by surprise, from which we can draw reinforcement for important growth enhancing and poverty alleviating principles. In chapter 5, I direct the reader's attention fully to Africa. I review donor aid for its shortcomings and contributions from Dar es Salaam, the capital of Tanzania. I introduce the field perspective that is missing from most discussions of aid and I explore a variety of donor procedures that might contribute to Tanzania's ownership of its own development. Because aid in Africa will remain an important feature of its landscape, aid administration in Africa warrants close examination. In chapter 6, I examine Africa's agricultural potential for initiating and sustaining its own green revolution. The heretofore untold story of American generosity to Bangladesh can, in turn, contribute to a success story for Africa; the lessons of the 1970s can yield important lessons for a new agricultural vision in drought-prone, bureaucratically controlled Africa. Market-led principles of openness and hard-won food aid lessons, combined and tested in Bangladesh, can guide African agriculture. Macroeconomic reform in Africa is now in hand - or certainly at hand. Almost all of Africa is struggling to implement market reform, the principles of which are introduced in chapter 3 and are made relevant for Africa in chapter 7. Aid dependence, however, has engulfed African policy-makers. Few experts have examined World Bank and International Monetary Fund (IMF)­led causes of this dependency. Western bilateral donors and international investors appear to be turning their backs on this last, poor continent, just when Africa's policy-makers are recognizing the importance of trade and investment, of public debt forgiveness, and of controlling their own destinies. Chapter 8 explores basic issues of democracy. Democracy is not easily imported and implanted, but it has arrived in Africa. Most African leaders are disturbed by the challenge of democracy; the appropriate role for outside assistance is daunting. But as Albert Camus said, the day of the "voiceless masses of people . . . going through their lives leaving barely a trace of their existence," is over.1 Can democracy be transplanted to African cultures with few traditions supporting individual rights or institutional pluralism? I argue that development is neither owned nor sustainable without the participation and consent of the people involved. Education and training can create African ownership, as we explore in a penultimate chapter 9. Americans can be justly proud of their educational and training contributions in many parts of Asia and Latin America; not so for Africa, however, where many of the same contributions have yielded costly failure. With failure as the result of great effort, it is difficult to imagine African educational institutions serving a population that is expected to double between 1990 and 2025. Donors must begin again; candid assessment is the first step. My last chapter offers an opportunity to reflect. I have tried to be optimistic, yet candor dogs my heels. Helping a poor world overcome its continuing poverty as rapidly as have other, now rapidly developing countries, is a daunting task - daunting, but not impossible. The world has changed dramatically since the 1950s, and is continuing to change, probably faster than our aid-giving institutions can learn and adjust. Aid mistakes are being repeated. Hundreds of millions - even billions of dollars, are being spent for poorly understood and misguided purposes. Aid continues to be wasted; sadly, as much in the form of good will as in the dollars themselves. AID's many motives and innumerable interests make murky that which is best in American generosity. Still, I believe the United States must continue to be a firm and creative voice for effective foreign aid.

 

DEFINING DEVELOPMENT AND AID

Development and foreign aid are often bandied about by aid recipients and donor institutions alike without a clear understanding of how the terms are used. Their use is confused further because established (if shop-worn) definitions give way to new ones faster than popular understandings become commonplace. Nor can we define these terms without defining foreign policy mandates and aid priorities. What is this development that is so commonly described and found wanting in so many countries? What is this foreign aid that is said to be useful, or useless, depending on one's orientation? Development is defined as material benefit and progress for individual families and for nation states. I have seen that development means food security, clothing, housing, schooling, and new opportunities to make life better than it was. For young countries, the visual impression counts for a lot: luxuriant rice fields spread to the horizon; solid communities; well- maintained roads and bridges; new hospitals, shiny new airports; and especially healthy, smiling children. The visual impression of material well-being has stood the test of time because it is basic and easily understood. It follows that economic growth results from the capacity to organize and use knowledge, resources, and institutions that promote material well-being. People are well-off because they work hard and work effectively, and because they enjoy the fruits of their labor. Growth, jobs, and higher incomes can lead to improvements in real wages; all of which can point to poverty's alleviation and improvements in the distribution of income. With development, countries and households are able to spend far less, proportionately, on food and other basic necessities than they do on things that make life more comfortable. New concepts are frequently superimposed on the basic definition of development: Specific mandates for economic reform, for children and women, for environmental preservation, for sustainability, and for democracy and human rights. Newer still are aspirations for freedom of communication, intellectual property rights, preservation of the world's ethnic riches, conflict resolution, and responses to crises. Because late-developing countries are so dependent on foreign aid, development is often defined by what aid donors seek to fund. Donor dollars and donor objectives often drive development in these countries. The matter of who owns development - donors or the countries themselves - therefore arises early in the analysis. Each new development priority, added to earlier ones, can trip on prior aid aspirations. Earlier aid priorities are inevitably reduced in importance and may even be set aside. More and more material objectives are supposed to be met by overburdened poor governments and stretched aid budgets. The longer the list of priorities, the more complex the actions required and the more likely that unintended consequences arise. Just as the basic definition of development can be reworked according to a particular donor's agenda, so can the term foreign aid. Aid, like development, can reflect aspirations of societal well-being generally, or it can focus on funding particular and special priorities without regard to ownership and sustainability by the recipient population as a whole. I define foreign aid as the purposeful effort to change a disappointing status quo into family dreams for sustained betterment within the nation state through the transfer of materials, advice, and training. Aid can be given by one government to another, by one nonprofit or business organization to others, or by combinations of these. Given by generosity but owned by the recipient. Aid, when provided on less than commercial terms, represents experience and resources packaged in good will.

DEVELOPMENT PRINCIPLES - ESPECIALLY OWNERSHIP, A SINE QUA NON FOR SUCCESS

Development and aid are complicated subjects. There are no shorthand ways to describe poverty or ensure its alleviation across countries and continents. Diversity and complexity are the rule. Both the reader and the development practitioner may wish for simple categories and simple answers. In development, not only is everything related to everything else, but matters of causality, such as "aid finances development," are filled with qualifications and exceptions. Experience notwithstanding, I shall try to simplify and clarify. This book is guided by a handful of development principles, with one-ownership-being the most important. I will show that each of the other principles described must be "owned" by the people in whose name development and aid are directed. Ownership, or responsibility, of national well-being by government, and of government by its people, is the proven route to sustained development and the alleviation of poverty. Foreign aid's effectiveness is tested by ownership. I analyze the importance of ownership in these chapters as well as other conditions that are necessary for economic growth: principles of markets, market-determined prices, investment, and the environment that fosters investment. People must be enabled to invest in themselves. Closely related to market principles are democratic principles that are derived from western experience, such as pluralistic sources of power and decision-making, governmental checks and balances, and transparency of governmental processes. Equally important are the rights of individuals in markets to own property and secure contracts. These rights in turn can only be exercised freely provided they are founded in law and monitored by institutions that guarantee broad human rights, which encompass security of person, family, and community, and freedom of expression and religion.

The Rationale for Foreign Aid

Foreign assistance, like development itself, must be reassessed and rejustified to shape its relevance for the poor world. Much of aid's original justification remains valid. Traditional, that is, post­World War II purposes, retain their importance. The world remains a dangerous place. American security interests, despite multiple changes since the end of the cold war, remain paramount. International risks of terrorism, weapons proliferation, and drug cartels create great demands on America's domestic programs and law enforcement services, as well as on its traditional security and intelligence capabilities overseas. American commercial interests follow in importance. Because foreign aid can and does contribute to the development of international markets, new markets for U.S. exports create U.S. jobs. Americans know this. In 1997 the U.S. economy was one-third trade related. In 1986, 74 percent of Americans agreed that economic growth in developing countries benefited the U.S. economy; in 1993, 83 percent agreed. A strong developing world greatly benefits the U.S. economy.2 The downside risks of a modern Asia, such as the recent "Asian contagion" series of stock market crashes, should serve to broaden appreciation for market and democratic principles that underwrite enduring global ties. American aid in the form of technical advice and training (as opposed to dollars) benefits the United States as well. American technical contributions to the developing world are often available, in turn, to the United States. New knowledge, for example, stimulates U.S. trade and investment. American training of foreign professionals leads to the demand for even more American training, and to joint ventures and exports to developing countries.3 Not only does food aid help create commercial export markets for American grain and other products, but technical assistance for the world's seed system rebounds to America's benefit as well. The $134 million the United States has invested in wheat and rice research centers, in Mexico and the Philippines respectively, has returned $14.7 billion from all public and private sources to the U.S. economy. One-fifth of our wheat acreage and more than 70 percent of our rice acreage are grown with seed varieties that were strengthened at these international research centers.4 Americans increasingly understand that the state of the world's health can affect their own personal health. Nowhere is the interrelationship more clear than with airborne diseases. A microbe that afflicts a community in the Congo, or chickens in Hong Kong, can reach Wyoming tomorrow and can lead to a global pandemic in a week. Even more frightening, we now know that viral strains can mutate and spread, faster, apparently, than they can be controlled. America can protect its interests by supporting the growth of late-developing countries. It is better to help nations grow than to rebuild, whether from natural or man-made disasters. It is less costly to prevent, preserve, and create than to rebuild from ruin. As is particularly relevant in El Salvador and South Africa today, it is more permanently constructive to defuse tensions and deep-seated suspicion than to allow hatred to burst into bloody conflict again and again, as has occurred repeatedly in Burundi, Rwanda, Sudan, and Somalia. No one claims that development forestalls all risks. As a simple matter of economics, it is far less expensive for the United States to strive to prevent crises than to share in the costs of military operations, peacekeeping, humanitarian relief, or even financial bailouts. When America is forced to contribute all these costs, the bills skyrocket. Rwanda is a case in point. Despite years of cold war aid, the present conflict and genocide have cost donors more than $2 billion.5 To the traditional arguments for foreign aid must be added new ones. America's borders once protected us; today, they are more open. The world of nearly 190 nation states is more integrated than anyone imagined in the 1940s and 1950s. Once foreign countries were dealt with distantly, formally, state to state. Today, individuals by the hundreds of millions travel the world and many risks follow them home. Disease, uncontrolled migration, global pollution, trade restrictions and trade wars, and urban and international terrorism fill the daily headlines. Even foreign stock market corrections follow us home. Each risk can reach into communities, factories, and individual lives across the United States. Problems not addressed overseas are increasingly making their way across America's borders. According to one study, nearly 60 percent of countries considered to be late-developing were gripped by conflict during 1990­95, compared with the 14 percent that were considered to be developing well.6 The Indonesian forest fires that brought a thick haze to much of Southeast Asia in 1997 and 1998 are a precursor of what the burning of China's soft coal reserves could do to the global atmosphere. It is in America's interest to see that the world is at peace and that countries prosper and trade; a promise that is kept through development. Most important to my mind, are two additional reasons for strengthening America's foreign assistance: First, America must sustain its continuing ability to define the international agenda of global issues. Agenda setting requires an active foreign policy, one that is broadened to encompass complex developmental issues that face the poor world. Second, development itself makes it possible, even necessary, for late-developing countries to embrace global issues as their own. With development, America's global interests become shared interests. As was often said of the Marshall Plan, so it is with America's interests today: An effective aid program is good for us, it is good for them, and it is true to our values. America must continue to share this promise with late-developing countries.

BILATERAL AND MULTILATERAL DONOR INSTITUTIONS

The immediate postwar world of the late 1940s was one of devastation, poverty, and poor, distant colonies. Though victorious as allies, war-torn Europe and Russia reflected little of their inherent institutional strength. Victory gave new life to old ideals. The allied leaders seized upon a second opportunity to create a new world order, unified by like-minded commitments. Mindful of the failure of the League of Nations, and concerned with worldwide depression, rearmament, and debt, western leaders sought a framework for avoiding the errors of the past. From their vision, a United Nations was born. Its remarkable charter embraced universal values of worldwide development and human rights, and the role of government on a global scale. What was then seen as a largely poor world - blank spaces on the map - became highly differentiated. The then red-colored portions of world maps, depicting England's colonial empire, gave way in the 1960s to dozens of independent countries in Asia and Africa. The Caribbean and South Pacific also broke into numerous independent states. New countries sprang up everywhere, at first a dozen, then 50, then 150. Most new states are tiny and are developing well; most late-developing countries are very poor and large. Aid-giving institutions were founded and multiplied as well; a few at first, and then one for almost every cause and crisis in the 1980s and 1990s.

The Beginnings of American Aid

Secretary of State General George C. Marshall, in a May 1947 speech, planted the idea for what became known as the Marshall Plan for the reconstruction of Western Europe and Japan. The Economic Cooperation Act (ECA) of 1948 established an Economic Cooperation Administration to implement the Marshall Plan; the Act was later expanded beyond Western Europe to include Turkey and Greece, which were threatened by Soviet expansion. In his inaugural speech in 1948, President Harry S Truman announced what was soon known as his Point IV Program, which broadened U.S. material and technical assistance to the developing world at large. Point IV led to the Mutual Security Act of 1951, which was notable for combining U.S. technical assistance with U.S. military interests for the first time. President John F. Kennedy, together with the founding of the Peace Corps, established the Agency for International Development, in 1961. AID subsumed the functions of previous aid administrations into one.7 The U.S. government was not the only source of American largesse. In Asia the Ford and Rockefeller Foundations played early and notable roles in agriculture and family planning. John D. Rockefeller III toured Asia in the early 1950s to determine the best use of the family's fortune; personal impressions gained during these travels led to the founding of the Population Council and the Agricultural Development Council. The U.S. government matched its resolve and idealism with significant resource commitments immediately following World War II, and throughout the postwar era. Between 1946 and 1961 America distributed $85 billion overall in economic and military loans and grants: $13 billion for immediate postwar humanitarian relief (1946­48), $28.7 billion for the Marshall Plan itself (1949­52), and $43.4 billion for the successor Mutual Security Plan (1953­61). Following AID's creation in 1961, $400 billion was authorized for economic and military assistance around the world for the thirty-five-year period up until 1997. Overall, between 1946 and 1996, U.S. assistance totaled $480 billion, of which $314 billion was for economic assistance, and $165 billion was for security and military-related priorities.8 Fear of war's resurgence, and then of communism, as well as European reconstruction and United Nations idealism, drove the popularity of the Marshall Plan and its successor programs. With a Democratic majority, Congress used fear as much as obligation and generosity to build domestic support for European reconstruction and what proved to be a protracted allied stand against communism. Increasingly, generosity and idealism were tempered by cold war hostilities. Many countries rebounded economically after World War II sooner than they might have because of American aid, and many newly independent countries received an important and necessary boost. America can take pride in having contributed to the development and the graduation from aid of nearly fifty countries in the 1950s and 1960s, including those of Western Europe, Japan, South Korea, Taiwan, Turkey, Tunisia, and Venezuela. Experts recall criticisms of old that Portugal, Greece, Spain, Argentina, and Chile held little possibility for prosperity. Today Botswana, Costa Rica, India, Thailand, and Tunisia are considered successfully developing countries. Foreign aid is no longer a significant feature of their landscape. Whatever pride the United States may have in its foreign aid accomplishments, however, must be tempered by subsequent developments. We now know that American aid may have contributed to development but it did not cause development. We now know that country reversals can occur and, indeed, are commonplace. Argentina probably heads the list as an example of a country once considered developed that then slipped backward. The failed-state list has mushroomed; in 1984 AID directors met to hear of a "successful" AID program in Rwanda. No one can speak unguardedly of Africa's prospects, given the uncertainty surrounding four of the continent's largest countries: Kenya, Nigeria, Sudan, and a new Congo. Nor can anyone speak unguardedly, as we did until recently, of Asia's prospects. The steadfast feature of AID over many decades has been its reliance on overseas staff resident in the developing world to conduct most of its field work, from design to agreement to implementation to evaluation. Today this tradition of resident, decentralized authority, rooted first in President Franklin D. Roosevelt's Lend-Lease support of a war-besieged Europe and later in the Marshall Plan's administration, continues to give AID an edge over other donors in the form of influence, creativity, and accountability. These attributes remain at the heart of an American partnership with the poor world and of their ownership of mutual aspirations.

America's Food For Peace Program

In 1954 Congress created "Food For Peace," or "P.L. 480," as the public law is commonly known, to supply American food for humanitarian and relief aid overseas, to reduce food stock surpluses, and to promote other U.S. foreign policy interests. Historically, Title I of P.L. 480 has been administered by the Department of Agriculture. American food is exported under this title on concessional terms; that is, on less than commercial terms, to recipient countries. Title I provides American corn, rice, wheat, and edible oils at a price discount, in exchange for modest "self-help" measures to ensure that recipient governments agree to strengthen their own agricultural systems. Like dollar aid, food shipments have been justified as much to promote U.S. security and commercial interests as to address hunger. Title II of P.L. 480, which is administered by AID, provides humanitarian relief and food on grant terms for food crises worldwide, and to help alleviate chronic food deficits in poor countries. A Title III was added to P.L. 480 in the late 1970s, which offered recipient countries the opportunity to negotiate with AID for American food on grant terms, in exchange for more rigorous self-help measures. American food aid overall provided $57 billion in food, food shipping, and related handling costs between 1946 and 1996.9 As with dollar assistance, food aid has its share of controversy.

Other Bilateral and Multilateral Donor Institutions

As European countries began to recover in the 1950s, they founded aid programs of their own. Many of these aid programs drew upon American aid practices and so appeared, at first, to have few distinguishing characteristics. Upon closer examination, however, Europe's aid programs evolved with distinguishing features that reflect their own unique economic and political philosophies. Great Britain is the lead donor for its former colonies, expressing a certain degree of protective possessiveness toward them. France uses its aid almost exclusively to protect commercial, military, and cultural interests, particularly in West and central Africa. With fewer colonial interests as natural partners, Germany emphasizes technologies and exports worldwide. Denmark leads the European donors in aid as a percentage of gross national product (GNP) by achieving an aid level equal to 1 percent of its GNP. The Scandinavian donors often act in concert and are usually led by the Swedish International Development Agency, SIDA. The Scandinavians tend to be strong proponents of governmental approaches to development; most target a limited list of countries and focus on poverty alleviation. The Netherlands and the Scandinavian countries are strong supporters of the U.N. family of specialized aid-giving agencies. Finland's aid program, FINNIDA, despite its small size, shows a new toughness in requiring effectiveness, not simply largesse. As with all donor programs, Scandinavian programs mirror the prevailing philosophies of the party in power. Canada's aid plays a unique role in fostering its disinterested support for universal human values. Canada was the first donor to stress partnerships with the poorest countries in the administration of its aid. The largest donor today is Japan. Despite the large scale of its aid, Japan still looks to other donors for guidance on development priorities and administrative methods. The Europeans themselves established the Organization for Economic Cooperation and Development (OECD), in Paris in 1948, to administer its side of the Marshall Plan. In 1960, at the conclusion of the Plan, the OECD invited the United States and Canada to join it as it evolved to coordinate trade and development policy among the western industrialized nations. Within the OECD, a Development Assistance Committee (DAC), which is chaired by the United States, focuses attention on the latest development priorities, such as transparency and corruption, on keeping aid resource flows high, and on consistency of donor terms toward the poor world. Where AID and its predecessor agencies once dominated the foreign assistance landscape, America now contributes less than 6 percent of the worldwide total of foreign aid spending. AID country programs today are usually ranked sixth or seventh in dollar size among the bilateral donors, using Kenya and Zambia as examples. All donor countries are gradually moving toward a focus on Africa; the need is great, as are the risks to the world of its continuing food crises and political instability. Donor countries often voice a moral obligation toward Africa; several see a developing Africa as a promising market.

United Nations Agencies

The United Nations system of cooperating member nations and specialized development agencies was founded immediately after World War II, as were the International Bank for Reconstruction and Development (IBRD, or more simply, the World Bank) and the International Monetary Fund. Each of these three global institutions, the U.N., the World Bank, and the IMF, plays an important role in fostering stability and development in developing countries. The United Nations development agencies were founded to assist war-ravaged countries in the mid-1940s, beginning with the United Nations Relief and Rehabilitation Administration (UNRRA), which drew my father to China in 1946. Today, a panoply of specialized agencies, headquartered around the world, is coordinated by the New York-based United Nations Development Programme (UNDP) and its representative UNDP offices in poor-country capitals. The major United Nations agencies include the Food and Agricultural Organization (FAO), based in Rome; the United Nations Fund for Population Activities (UNFPA), in New York; the United Nations Children's Fund (UNICEF), in New York; the United Nations Educational, Scientific and Cultural Organization (UNESCO), in Paris; the International Labor Organization (ILO) and the World Health Organization (WHO), in Geneva; the United Nations Environmental Programme (UNEP), in Nairobi; and the United Nations Industrial Development Organization (UNIDO), in Vienna. Coordinated by the resident UNDP representative, each agency provides advisory services to developing countries on grant terms (that is, as gifts). The World Bank consists of three institutions that span the needs of the developing world for concessional (soft loan) and commercial (market rate) investments. The IBRD provides loans on slightly less than commercial terms, the International Development Association (IDA) provides highly concessional loans, and the International Finance Corporation (IFC) finances commercial investments through non concessional lending or equity financing (that is, the IFC may take a percentage of stock in a poor country investment). The World Bank is governed by its 180 member nations and is housed in seventeen polished block buildings clustered around Pennsylvania Avenue, immediately West of the White House. The IMF is located next door. The World Bank has forty-four resident missions based primarily in the poorest countries; authority for approving loan agreements, however, resides in Washington. Almost all of the World Bank's lending operations are as loans, and all loans must be repaid. The IBRD lends roughly $15 billion annually to nearly 140 countries, and borrows from the world's capital markets to finance its lending. IDA lends $6 billion a year to fifty of the world's poorest countries. Its lending ability depends upon capital grants of roughly $3 billion a year from thirty-two wealthy nation donors. Between 1946 and 1996 the IBRD lent a total of $280 billion, IDA lent $97 billion, and the IFC financed $42 billion of private capital.10 The World Bank's original purpose, as its full name implies, centered on reconstruction and development following World War II. Its loans for European recovery complemented and enhanced resources that were available under the Marshall Plan. Since the 1960s, and primarily through IDA, the World Bank has greatly expanded its soft loans to the developing world for dams, roads, schools, and more recently, for broader (and more costly) programs for economic stability and reform. As the World Bank has moved away from investment-grade projects, its portfolio has been subject to greater and greater criticism. Like other donors, the World Bank has become enculturated by the need to spend money. "Money spent" has become a proxy for development success, thereby fostering bureaucratic pressures to keep financial flows moving. Robert McNamara, one-time World Bank president, initiated this unintended culture. Like AID, the World Bank is subject to many of the same congressional and parliamentary pressures that shape all donor priorities. The IMF has a different purpose. It was established to advise and prescribe good financial management guidelines for all countries, as well as to facilitate financial stability, which is a precondition for development. Hence the IMF's short-term, commercial-rate loans are conditioned upon agreement to balance budgets, expand revenue, control expenditures, liberalize foreign exchange controls, and management debt prudently. Like those of the World Bank, IMF loans must be repaid on schedule. Although the IMF is not, strictly speaking, a donor or aid-giving institution, its operations are integral to any comprehensive analysis of development and foreign aid. Big governmental and government-like institutions have been joined in the development business by hundreds of foundations, private voluntary organizations (PVOs), and other nongovernmental organizations (NGOs) with broad and narrow mandates. Mostly government-funded, NGOs often play significant roles in supporting social sectoral priorities.11

 

POOR COUNTRIES ARE MOSTLY IN AFRICA

The poor world today is not the poor world of the 1950s. After World War II the world's population was less than half of what it is today, and there were fewer than fifty independent countries. In the 1950s many of the world's poor people lived in colonized and poverty stricken countries. With the subsequent independence of dozens of former European colonies, and with their development beginning in the 1960s and 1970s, a smaller proportion of the world's population today is poor, as compared with the 1950s. Today there are nearly 190 independent nation states, but fewer than a third of them are ranked by the World Bank as being poor or low-income (see Tables 1.1 and 1.2). These states are home for nearly 1.3 billion poor people. The poorest countries today are defined by the World Bank as those with $730 or less in annual per capita income (that is, countries where people live on roughly $2 per day). Many people in these countries are very poor; they live on half this poor-world income standard, of only a dollar a day. The world's low-income countries are concentrated primarily in Africa - some thirty-four of an estimated forty-eight. There are ten low- income countries in Asia, five in Central Asia and the Middle East, and only four in Latin America and the Caribbean. Today we see developed and developing countries almost everywhere. Postwar Europe surpasses the United States in many social indices, such as literacy and longevity; the newly rich countries of East Asia have become heated trade competitors. Each year another country that used to be poor adds its name to the list of those that are developing rapidly. Classifying developing countries into two groups, those that are developing rapidly and those that are developing late or low-income, is not easy. There are no standards or even firm definitions. Each country and its problems are special. Some countries' successes were hard to imagine only a few years ago. South Korea, for example, in the 1960s ranked as very poor, along with Bangladesh. Bangladesh today is faring better than most experts had predicted in the 1970s. If the development history of the 1960s and 1970s is a guide, we will witness significant improvements in coming decades among the low-income countries listed in Tables 1.1 and 1.2. It is striking that so much has been accomplished; the then-poor world of the immediate postwar era is, in short, history. The hundreds of millions of poor people today - 1.3 billion out of 6 billion people as estimated by the World Bank - serve to dramatize the reality of successful development for many countries and development's continuing importance for late-developing countries. Poor countries and poor people are just as poor as they were in the 1950s, if not more so, but there are fewer of them and their poverty is differently understood.

Table 1.1 - Africa's Poor Countries

Source: World Bank, 1998 World Bank Atlas, pp. 16-17, 24-25.

One reason there are fewer low-income countries is that the world's population is not growing as rapidly as was once projected. "Standing room only" is no longer the inevitable grim prospect that it was thought to be in the 1950s. Population projections into the next century now indicate that with shared development and family planning, the world's population will stabilize at around eight billion people, two billion more than today's six billion.12 Fertility rates continue to decline worldwide, from an average of 6.0 children per woman in 1970 to 3.6 in 1993.13

This earlier-than-expected population stability dramatizes the glaring nature of poverty in the remaining poor world. Partly because of declining population growth rates, social well-being is improving. Infant mortality has declined from 180 per thousand births in 1950­55 to 69 per thousand in 1990­95, or illustrated more dramatically, infant deaths have fallen from nearly one out of every five babies to fewer than one in fourteen. Average lifeexpectancy in developing countries has increased by half, from 40.7 years in 1950­55 to 62.4 years in 1990­95.14

We are becoming an educated globe.15 Schooling has become nearly universal at the primary level in developing countries. Ninety-seven percent of all children attend primary school, and half of all children are in secondary school. Schooling for girls has also expanded dramatically; primary school enrollment has nearly doubled in South Asia, from 50 percent in 1970 to 93 percent in 1992.

The good news from developing countries must not distract from our ability to face the challenges and risks that remain for poor, late-developing countries. These macrodata disguise serious, even explosive problems - the gross mal-distribution of income, food insecurity, widespread squalor, and massive underemployment in most of the world's cities.

According to the United Nations, the poorest 20 percent of the world's people saw their share of global income decline from 2.3 percent to 1.4 percent in the past thirty years. The proportion of poor people experiencing negative growth more than tripled, from 5 percent to 18 percent of the world's population. Incomes in sub-Saharan Africa began to decline in the late 1970s; twenty of these countries are still below their per capita incomes of twenty years ago.16 Literacy is declining; nearly 60 million children in Africa leave primary school early .17

Table 1.2 - Poor Countries in Other Regions

Source: World Bank, 1998 World Bank Atlas, pp.16-17, 24-25.

Furthermore, countries can prosper temporarily, then collapse. The term failed state is now common. Successful development entails robust governments and markets that are capable of weathering economic and political setbacks. Development comes with no lifetime guarantee. The failed states of Somalia and Sudan are joined by those of the new Congo (formerly Zaire) and Liberia. Several of Asia's successes have faltered.

We should also look to our own backyard; slippage has occurred with alarming regularity among our southern neighbors. The relatively high income levels in Latin America have declined over the past decade. Eleven countries out of the twenty-six experienced declines in per capita incomes over the twenty years between 1975 and 1995.18

Finally, the difference between recognized developing countries and still-poor ones offers confirmation that development is now the norm and not the exception. That is good news. But it is also true that the scale and complexion of poverty remain serious. Eighty million people are added to the world's population each year, primarily in Africa, South Asia, and China. It is Africa, however, that is least able to handle these burgeoning numbers.

Unlike the rest of the world, which is approaching population stability, Africa's population will double in the next two generations¹⁹ The development record, taken as a whole, is a good one. Now, can Africa come to embrace every expectation for its own prosperity?

 

NOTES

1. Albert Camus, quoted in Robert Royal, "The Other Camus," The Wilson Quarterly, Autumn 1995, p. 52.
2. The Council on Foreign Relations, Financing American Leadership: Protecting American Interests and Promoting American Values, January 1997; and USAID, Polls and Public   Opinion: The Myth of Opposition to Foreign Assistance, January 23, 1995.
3. USAID, Office of Reimbursable Development Programs, Benefits to the United States from American Technical Assistance Activities Abroad, Some Case Studies, 1972.
4. Philip G. Pardey et al., Hidden Harvest: U.S. Benefits From International Research Aid, International Food Policy Research Institute (IFPRI), Food Policy Statements, September         1996, preface and p. 11.
5. John Eriksson, principal author, The International Response to Conflict and Genocide: Lessons from the Rwanda Experience, Synthesis Report, The Danish Government and the Organization for Economic Co-operation and Development, Development Assistance Committee (OECD, DAC) Joint Evaluation of Emergency Assistance to Rwanda, 1996, pp. 25 and 34.
6. D. Smith, The State of War and Peace Atlas, Third Edition, London: The Penguin Group, 1997. Quoted in IFPRI, The World Food Situation: Recent Developments, Emerging Issues, and Long-Term Prospects, October 27, 1997, p. 25.
7. Throughout the book I use AID to refer to the United States Agency for International Development - often referred to officially as "USAID." I prefer the term AID, spoken as "A­I­D." I use aid to refer to donor assistance generally, including bilateral donor governments, multilateral development banks, the World Bank, the IMF, and the specialized United Nations agencies.
8. USAID, U.S. Overseas Loans and Grants and Assistance from International Organizations, July 1, 1945­September 30, 1996, p. 4.
9. Ibid, p. 4.
10. Ibid, p. 225.
11. For reviews of multilateral and bilateral donors see the annual OECD, DAC reports (for the DAC's aid database, see www.oecd.org/dac); John W. Koehring, AID's In-Country Presence - An Assessment, USAID, Center for Development Information and Evaluation (CDIE), October 1992; and Peter J. Schraeder, Steven W. Hook, and Bruce Taylor, "Clarifying The Foreign Aid Puzzle - A Comparison of American, Japanese, French, and Swedish Aid Flows," World Politics, 50:2, January 1998.
12. David Seckler and Michael Rock, World Population Growth and Food Demand to 2035, Washington, D.C.: Winrock International, September 1996, p. 1. See also David Seckler, Trends in World Food Needs: Toward Zero Growth In The 21st Century, Winrock International, 1994; and David Seckler and Gerald Cox, Fertility Rates and Population Projections: Why The United Nations Low Population Project Is Best, Winrock International, 1994.
13. World Bank, 1996 World Bank Atlas, pp. 18­19.
14. World Bank Atlas, for 1996 and 1997; and James W. Fox, What Do We Know About World Poverty? USAID, CDIE, Evaluation Special Study Report No. 74, May 1995, p. 2.
15. Fox, 1995, pp. 9­10.
16. United Nations Development Programme, Human Development Report 1996, New York: Oxford University Press, 1996, p. 2.
17. Kevin Watkins, "Life and Debt Situation," The Financial Times, January 23, 1998.
18. Inter-American Development Bank, IDB 1996 Pocket Profiles, pp. 6­27.
19. Seckler and Rock, 1996, Table 1 and p.10, and Per Pinstrup-Andersen, Rajul Pandya-Lorch, and Mark W. Rosegrant, The World Food Situation: Recent Developments, Emerging Issues, and Long-Term Prospects, Washington, D.C.: IFPRI, October 27, 1997, pp. 5, 15, 49, 50.

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