International support for the least developed countries: moving out of the mainstream

Next January the next United Nations Programme of Action for least developed countries (LDCs) will launch in Doha. It will set the framework for the next 10 years of international support for the world’s 46 officially poorest and most structurally disadvantaged countries, home to around a billion people.  

LDCs are low-income countries confronting severe structural impediments to sustainable development. Membership of the category is based on three criteria: income per capita, human assets and economic and environmental vulnerability.  

Assistance for LDCs currently falls under three categories: trade, aid and a range of ad hoc measures broadly aimed at help with taking part in the international system, such as lower contributions to the UN budget and support for travel to international meetings like the annual UN General Assembly.  

Support is largely based on the premise that LDCs are artificially or temporarily excluded from global commerce. Preferential market access, temporary development assistance and help with participating in multilateral processes are intended to tackle this defect, in turn helping the LDCs ‘catch up’.  

Dating to 1971, the category is the only one recognised in UN and multilateral legal texts. There is no official ‘developing country’ or ‘middle income’ category with associated support measures. Low income countries are not specifically targeted, and the small and vulnerable states are only recognised as a working group at the World Trade Organisation. They are not acknowledged in the legal texts. 

Although donors don’t meet aid pledges and support doesn’t go far enough, official targets are possible because the LDC group is officially recognised in the UN system and has legal bearing. An example of such a target is the commitment by developed countries to deliver 0.15-0.20% of gross national income (GNI) in development assistance to LDCs. The European Union offers duty-free, quota-free market access to LDC exports under its Everything But Arms (EBA) trade scheme for LDCs. 

The theory behind support for LDCs is implicitly based on the mainstream economics view that LDCs lag behind because they aren’t exposed enough to correct market prices and conditions. The removal of so-called distortions like overseas tariff and non-tariff barriers, alongside temporary development assistance and help taking part in the global system, is supposed to free up these economies to play a fuller role in the international economy. Economic growth will drive development and reduce poverty. 

The evidence shows that for most LDCs this theory never worked. Until the pandemic the economies of some LDCs were performing well. Up to 12 could leave the category in coming years. A few, like Bangladesh, Cambodia and Myanmar, were able to take advantage of lower tariffs for their garment exports. These three countries account for 87% of imports to the EU under EBA.  

But half were supposed to meet the criteria by 2020, according to international targets. 12 graduations falls well short. The six that have left since the formation of the category in 1971 have not all done so because of better international market access or special support measures. Commodity exports, tourism or improved health and education are mostly responsible.  

The remaining LDCs aren’t catching up. The gap is widening. The pandemic devastated the group. Gross domestic product (GDP) shrank 1.3% on average in 2020, with the economies of 37 contracting during the year and extreme poverty in the group rising by a staggering 84 million. But even before Covid, average real GDP per capita for the group had long diverged from other developing countries and the rest of the world.  

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National Fiscal Redistribution as “International” Development Assistance

The histories of international development and foreign aid often focus on aid between independent nations. Williams’ (2013: 234) history of international development aid only begins from the British Colonial Development Act of 1929. Markovits, Strange and Tingley’s (2019) history of foreign aid focuses on aid between “nations” or empires. Helleiner (2014), for instance, traces the origins of multilateral development finance proposals to China’s Sun Yat-sen in 1919.

There is, however, a major problem with these histories. Their starting points reveal a methodological nationalist approach. The history of states and societies since the modern era, is however more complex. The early modern era is well known for the spate of state consolidations and national formations. It may be argued that intra-national transfers within modernizing nations may represent important forms of regional development assistance that have been left out of the consideration of the history of development assistance.

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The power of private philanthropy in international development

By Arun Kumar and Sally Brooks

In 1959, the Ford and Rockefeller Foundations pledged seven million US$ to establish the International Rice Research Institute (IRRI) at Los Baños in the Philippines. They planted technologies originating in the US into the Philippines landscape, along with new institutions, infrastructures, and attitudes. Yet this intervention was far from unique, nor was it spectacular relative to other philanthropic ‘missions’ from the 20th century.

How did philanthropic foundations come to wield such influence over how we think about and do development, despite being so far removed from the poor and their poverty in the Global South?

In a recent paper published in the journal Economy and Society, we suggest that metaphors – bridge, leapfrog, platform, satellite, interdigitate – are useful for thinking about the machinations of philanthropic foundations. In the Philippines, for example, the Ford and Rockefeller foundations were trying to bridge what they saw as a developmental lag. In endowing new scientific institutions such as IRRI that juxtaposed spaces of modernity and underdevelopment, they saw themselves bringing so-called third world countries into present–day modernity from elsewhere by leapfrogging historical time. In so doing, they purposively bypassed actors that might otherwise have been central: such as post–colonial governments, trade unions, and peasantry, along with their respective interests and demands, while providing platforms for other – preferred – ideas, institutions, and interests to dominate.

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Reflections on aid and regime change in Ethiopia: a response to Cheeseman

By Jimi O. Adesina, Andrew M. Fischer and Nimi Hoffmann

In a piece, published on 22 December 2020, that he describes as the most important thing he wrote in 2020, Nic Cheeseman penned a strong criticism of what he calls the ‘model of authoritarian development’ in Africa. This phrase refers specifically to Ethiopia and Rwanda, the only two countries that fit the model, which is otherwise not generalisable to the rest of the continent. His argument, in a nutshell, is that donors have been increasingly enamoured with these two countries because they are seen as producing results. Yet the recent conflict in the Tigray region of Ethiopia shows that this argument needs to be questioned and discarded. He calls for supporting democracy in Africa, which he claims performs better in the long run than authoritarian regimes, especially in light of the conflicts and repression that inevitably emerge under authoritarianism. His argument could also be read as an implicit call for regime change, stoking donors to intensify political conditionalities on these countries before things get even worse.

Cheeseman’s argument rests on a number of misleading empirical assertions which have important implications for the conclusions that he draws. In clarifying these, our point is not to defend authoritarianism. Instead, we hope to inject a measure of interpretative caution and to guard against opportunistically using crises to fan the disciplinary zeal of donors, particularly in a context of increasingly militarised aid regimes that have been associated with disastrous ventures into regime change.

We make two points. First, his story of aid dynamics in Ethiopia is not supported by the data he cites, which instead reflect the rise of economic ‘reform’ programmes pushed by the World Bank and IMF. The country’s current economic difficulties also need to be placed in the context of the systemic financial crisis currently slamming the continent, in which both authoritarian and (nominally) democratic regimes are faring poorly.

Second, we reflect on Cheeseman’s vision of aid as a lever of regime change. Within already stringent economic adjustment programmes, his call for intensifying political conditionalities amounts to a Good Governance Agenda 2.0. It ignores the legacy of the structural adjustment programmes in subverting deliberative governance on the continent during the 1980s and 1990s. 

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Green Structural Adjustment in The World Bank’s Resilient Cities

 

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Jakarta, Indonesia

By Patrick Bigger and Sophie Webber

Cities across the world are facing a double-barreled existential problem: how to adapt to climate change and how to pay for it. Over the next thirty years, more than 570 coastal cities are poised to face frequent catastrophic flooding owing to sea level rise and more intense storms, while as many as 3.2 billion urban residents may run out of water by 2050. Other looming crises include soaring urban temperatures, the urgent need to transition away from fossil-fueled energy and transport systems, and plummeting rates of local biodiversity.

Responding to these problems will, international bodies project, require a virtually unprecedented buildout of infrastructure, from hardened municipal water and sewage systems, to urban afforestation, to renewable energy systems. This massive infrastructural program coincides with global economic conditions marked by the lingering ideological stranglehold of austerity, unprecedented levels of capital concentration, and now, myriad uncertainties produced by COVID-19. Cities across the world are facing a double-barreled existential problem: how to adapt to climate change and how to pay for it. Over the next thirty years, more than 570 coastal cities are poised to face frequent catastrophic flooding owing to sea level rise and more intense storms, while as many as 3.2 billion urban residents may run out of water by 2050. Other looming crises include soaring urban temperatures, the urgent need to transition away from fossil-fueled energy and transport systems, and plummeting rates of local biodiversity.

In response to the twin problems of resilient infrastructure needs and public fiscal constraints, the World Bank and an array of partner institutions from the Rockefeller Foundation to USAID have been ramping up programs to facilitate private investment in urban resilience. From a baseline of $10 billion across 77 cities in 2016, the World Bank aims to ‘catalyze’ investment of more than $500 billion into urban resilience projects across 500 cities by 2025. Read More »

The latest significant step in the UK’s development agenda

Michael Haig DFiD CC BY-NC-ND 2.0

By Susan Newman and Sara Stevano

Johnson’s announcement on 16 June that Department for International Development (DfID) would be merged into the Foreign and Commonwealth Office (FCO) has been met with criticism and condemnation from aid charities, NGOs and humanitarian organisations. By institutionally tying aid to UK foreign policy objectives, the merger would shift humanitarian aid away from the immediate needs for relief and longer-term development.

This latest move to merge the departments should be seen as the latest, and a very significant, step in the restructuring and redefinition of British Official Development Assistance (ODA) to serve the interests of British capital investment abroad, that has been taking place over the last decade. These developments need to be considered within a wider shift in development policy that has been shaped by the demand for new assets by investors in the global North in the context of a global savings glut that has grown out of economic slowdown.Read More »

Lean on me: Development financial struggles and national development banks

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National development banks are back in fashion and here to stay. A number of countries benefited from the global economic boom during the 2000s as exports and commodity revenues surged. These countries’ governments stored some of the current and fiscal account surpluses and used the capital to expand state financial institutions. Two prominent types of institutions have grown rapidly, namely sovereign wealth funds (SWFs) and national development banks (NDBs), which often have financial return and development stimulation as their core mandates, respectively. Much attention has been afforded to how these organisations’ activities have turned into a global force. For example, the Norwegian SWF’s investment spans across 73 countries, including shares in more than 9,000 companies, and China’s NDBs have emerged as the developing world’s leading project backer.

More recently, NDBs have been identified as important agents in funding domestic development projects in a wide range of developing and advanced countries. The perceived role of NDBs is shifting from a reactive counter-cyclical role towards a proactive patient capitalist role. Popularity in NDBs may appear to be obvious due to the rising interest in pursuing state-designed development planning and industrial strategies over the past decade. While many observations have focused on the growing inclination towards state activism as catalyst to NDBs’ expansion around the world, this piece examines three structural challenges incentivising developing countries to mobilise NDBs. Read More »

Philanthrocapitalism: How to Legitimize the Hegemony of the Rich with a “Good Vibes” Discourse

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Melinda Gates speaking at DFID. Photo: DFID.

Is philanthrocapitalism a vehicle for so-called “development”? In an article recently released in Globalizations (here), Juanjo Mediavilla (University of Valladolid, Spain) and I analysed the phenomenon of philanthrocapitalism as a financing for development (FfD) instrument from the perspective of Critical Development Studies and Discourse Theory. We argue that we are witnessing the deepening of a neoliberal development agenda, where philanthrocapitalism and the elites play a key role. Read More »