39 – “Development” Aid

International development assistance has always been political. Between 1946 and 1959, most US aid went to the nations of Europe under the Marshall Plan, which called for the rebuilding of European nations, in large part in order to discourage the rise of Communism. The former enemy nation of Germany was a major recipient of that funding. Latin American countries which had been allies of the US during the war received less than 2% of US aid. When this issue was raised, the Latin Americans were bluntly told that US priorities lay elsewhere.

When a new focus on helping lesser developed nations arose in the 60s, European nations tended to focus their aid on their former colonies. Much US aid in this period went to countries in the Western Hemisphere as an extension of the Monroe Doctrine, which essentially asserts US opposition to any European involvement in the Americas. Other US aid went to countries which they feared might fall prey to Communism or to countries where the United States had strategic interests.

From the point of view of policy makers, this was simply common sense. But unfortunately it also meant that often the poorest and most needy countries–countries which had no particular strategic or economic value–were the countries least likely to receive aid.

An even more serious problem with the concept of foreign aid was the assumptions upon which it was based–in particular, the assumptions which donor nations made about what qualified as “development.”

“Development” isn’t necessarily a very clear concept. After all, all countries are developing to some extent. Conditions are not the same today in Canada as they were ten years ago; hopefully they’ve improved slightly. That’s evidence of development.

The term “developing countries” generally refers to countries which are still developing their capacity to ensure that their citizens have reasonable access to a decent standard of living and the satisfaction of basic human needs. If that definition of development is accepted, then it must also be accepted that there isn’t necessarily one single formula for achieving development which can be universally applied. The way in which an agricultural community would seek to achieve these ends is different from the way an industrialized community would do so.

But with the advent of international development assistance, donor nations, in effect, held up a particular model of development as the norm. The assumption was that non-industrialized nations must necessarily be “under-developed.” And because the economies of most Third World nations at that time were based on agriculture and commodity production, it was assumed that the cure for their poverty would be found through expanding their capacity for industrialization.

Of course, aid was provided to help developing nations improve their agricultural potential, but real development, it was believed, would only be achieved through “modernization”–which meant developing an industrial base.

In order to do that, developing nations would require machinery, expertise, and so forth, which were only available from the richer nations. Third World nations received some of these in the form of international development assistance. But that assistance had at least two catches.

First, it allowed someone else–the donor country–to define the course of development in the recipient nation. This is a variation on the point I made earlier that all too often developing countries have had less control over their own sovereignty than wealthier nations have had. Aid was available but only for the types of development approved of by the donor nations.

The second catch was that assistance was only intended to help poorer nations get started on the road to development. After an initial aid investment, the recipient countries were expected to assume responsibility for continuing that development from their own resources.

This resulted in transfers of technology which seemed promising for a short time, but then fell through when the recipient nations were unable to maintain them. Development seminars in the 1980s were filled with stories of imported farm machinery throughout Africa which was left to rust in the sun because the local population didn’t have the capacity to provide the required maintenance or to purchase spare parts.

Nations, like the Dominican Republic, which in the 1970s made a commitment to modernization, were required to find ways of raising money to continue the process of industrializing. Until they were able to meet their own needs internally, they would have to continue purchasing machinery, industrial equipment, expertise, medicines, petroleum, and so forth from more developed nations. And in order to do that, they required what’s called “foreign exchange.”