by Jurgen Brauer, February 2004
Copyright: J. Brauer. No reproduction without permission.

The earth now houses more than six billion people. About half live in Asia. China and India weigh in with more than a billion people each. Most of the world's population is young, not yet having entered their reproductive years. Most also are desperately poor, and lack good health and education.

Would that anyone ever actually read Dickens and compared his writings to today's very real conditions in what we call the "third world."

The squalor in which today's poor live is beyond description. They are destitute to a degree that western consumers cannot imagine. Around Christmas time, I find it more than ironic to see romanticized versions of Charles Dickens' trenchant novels on TV, its viewing consumers never realizing that what held for England in the 19th century is amply true in the rest of the world in the 21st century. Would that anyone ever actually read Dickens and compared his writings to today's very real conditions in what we call the "third world."

True, many governments of third world countries deserve much of the blame. Over the years, billions of dollars in official development assistance have been squandered on unproductive mega-projects, squirreled away by corrupt officials, swept along channels of bribery, and have unduly enriched many undeserving civil servants. Golden bullets of development policy and development assistance are few. Good governance is among them, but it is difficult to enforce so long as we hold on to outdated notions of national sovereignty that mutes just and proper criticism. What counts is whether whatever assistance is made available arrives to make a measurable difference in people's lives on the ground. If of a dollar given in aid, 80 cents disappear in the channels, and only 20 cents arrive, then aid is bad policy on the face of it.

There is a difference between assistance and aid. Development aid is and should be exactly that, aid to the poor and needy to supply basic necessities of water, food, shelter, medicine. It can and should be directly channeled to the recipients. Development assistance is a different matter. It assists countries to obtain low-interest loans to build transportation infrastructure or electric power grids. A long-standing problem here is that poor countries are nonetheless obligated to eventually repay these loans. But many countries are unable to do so, as their economies simply do not generate sufficient economic growth and, with it, tax revenue. So they borrow and enter the equivalent of debt bondage, paying interest to their creditors all the while.

A number of people in the rich, western countries are protesting this state of affairs and mobilize to get governments of the rich countries to offer debt relief. This is well-intended but actually plays into the hands of the system. What poor countries need is genuine economic growth. Growth comes from the ability to trade. But western countries often bloc access to their lucrative markets. For example, official development assistance runs on the order of $150 billion or so. But the west subsidizes its agricultural sector to the tune of $300 billion to keep it "competitive."

A sugarcane farmer in South Africa would much rather have unrestricted access to sell sugar in Europe and the United States than to be forced into poverty, have his government borrow money for "assistance," and be forced to work at menial jobs to pay taxes so that his government can pay interest on its loans.

The good-hearted people in the west who demonstrate for debt relief should take on their farmers, not their governments.

The good-hearted people in the west who demonstrate for debt relief should take on their farmers, not their governments. It disturbs me greatly to observe good-hearted people waste their energies.

Another misguided notion is that globalization is somehow bad for the people of poor countries. If the west were to open its markets, it would be a good thing for the poor countries. In truth, it is the absence of markets, or restricted access to markets, not their presence, that causes problems. Would that demonstrators would acknowledge the point.

Targeted development aid, combined with truly open markets might make development assistance with all its debt-bondage problems superfluous. Private capital flows are another source of funds for poor countries. Private capital seeks profit opportunities. In the 1990s, private capital exceeded for a time official financial flows. When governments of developing countries run honest shows, are politically stable, and proffer solid fiscal and monetary policies, private investors will feel confident enough to take private business risks. There is good reason why Asian countries receive more private capital flows than African countries.