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Development assistance for the poor in not-so-poor countries

The United Kingdom’s recent announcement to continue giving grant to “India” –rated as having one of the world’s fastest growing economies- has triggered a debate on the current model of development assistance. Over the past few years a large number of once-poor countries and major recipients of foreign aid have reached middle-income country status, which is set by the World Bank at $1,000 per person per year.

As per World Bank’s annual reclassification of countries carried out in July 2010, Senegal, Tuvalu, Uzbekistan, Vietnam and Yemen are five more developing countries that officially lost their “poor” status and acquired middle-income country (MIC) status.

Other growing MICs include Ghana, Cameron, Angola, and Sudan. This rising trend bears testimony to the fact that the problem of global poverty has changed and is no longer confined to “poor countries.” New Institute of Development Services (IDS) research shows that there is a new “bottom billion” of the 960million poor people or 72 per cent of the world’s poor who live not in poor countries but in MICs. This is a dramatic change from just two decades ago, when 93 per cent of poor people lived in low-income countries (LICs).

What does this changing state of global poverty mean to the donors? Should international agencies with a focus on poverty reduction recalibrate their engagement in MIC’s?

In, Poor Countries Or Poor People, Ravi Kanbur argues that the development cooperation literature identifies three arguments for continued assistance:
1) Pockets of Poverty: Assistance is called for by poverty no matter where it occurs–whether in poor countries or in non-poor countries. It is poor people who matter fundamentally, and poor countries matter only indirectly, as a leading indicator of where the poor might live. And it is of course this indicator that might be brought into question in the new global patterns of poverty.

2) Spillover Effects: Poverty in MICs may lead to cross-border negative externalities to other countries, especially LICs and the poor who live in them. There are many examples of such spillovers, including global warming and other environmental externalities, financial crises and their spillover effects, the spread of infectious diseases, and migration.

3) Knowledge Transfer: By engaging with MICs, aid agencies gain knowledge that can then be useful to reduce poverty in poorer countries, such as implementing social safety nets. These provide minimum levels of social protection or guard against economic and other shocks with cash payments, or food or other measures, given directly to the poor.

Global poverty is no longer construed as a problem afflicting only the world’s “poor countries.” This fact makes it imperative for the new and old donors to rethink their approaches and strategies. Donors should design aid policies in context of the changing concepts of global poverty and decide on the aid objectives, allocations and instruments to meet this “new geography of global poverty.”

Laurence Chandy and Geoffrey Gertz at the Brookings Institution believe that by 2015 the proportion of the world’s poor in MICs will still be 55%, which implies that many of the MICs still need aid.

However, while making aid decisions, donors should take into account the fact that MICs are diverse groups and require more detailed sub-categories. Thus we have emerging powers like India and Indonesia, where the aid is not enough compared to the size of the economies; they still have substantial pockets of poverty. Similarly countries like Pakistan and Nigeria are fragile MICs and the aid again is small compared to the size of their economies. Then there are stagnant, non -fragile MICs and also fast growing poor countries such as Ghana.

The essence of the development assistance is to realize the objective of reducing global poverty and this can be done only if donors continue to work in the MICs, because that is where most of the poor live.

Finally as Richard Miller says in his book, Globalizing Justice: The Ethics of Poverty and Power, there may be a moral obligation to give development assistance to MICs, because they are still part of global power relations (for example in trade and finance patterns) that may disadvantage them to some extent until those global relationships change.

For more information, please see
http://www.ids.ac.uk/go/idsproject/the-new-bottom-billion
http://www.ids.ac.uk/go/idspublication/poor-countries-or-poor-people-development-assistance-and-the-new-geography-of-global-poverty
http://www.brookings.edu/papers/2011/01_global_poverty_chandy.aspx

Local students, global vision

A group of fifth graders is ready to make change—by collecting it. I was impressed by this story, reported in the Longview Daily News about fifth grade girls who approached their principal about doing something for the people of Afghanistan. The request corresponded with a local Pennies for Peace campaign, leading up to a visit to Longview by Greg Mortensen, Nobel Peace prize nominee, author of Three Cups of Tea, and founder of the Central Asia Institute (CAI), which works to promote education in Pakistan and Afghanistan. A program of CAI, Pennies for Peace provides school curriculum on cultural issues and philanthropy in conjunction with a penny drive. The Longview school that raises the most money will get to send a delegation to meet Mortensen and give him the check.

The article indicates that the girls not only understood the work that Mortensen was doing, they were also excited about the prospect of meeting him and proud of the chance to help bring education to kids, especially girls, on the other side of the world.

At Global Washington, we are thrilled to hear that young students—tomorrow’s leaders—are aware of global issues and are already enthusiastic about making their world a better place. As participants in a broad-based, statewide coalition of academic institutions, non-profit organizations, and leading businesses, Global Washington members are uniquely positioned to coordinate and build a shared strategy for international education.

Since 2008, Global Washington has convened education experts from across the state to identify avenues for collaboration around this important topic. Our education working group is currently focusing on three areas: world languages, building a global classroom in the U.S. and abroad, and pedagogy and competence building.

We are convening three task forces around each of the education focus areas. We are also planning an International Education Conference in September and developing an advocacy plan to ensure that the development of a cohesive international education system is a critical policy issue for the state of Washington.

Please contact us if you’d like to get involved in our education work and help transform Washington State students into responsible global citizens and peacemakers.

These Longview students have the right idea. What are some of yours?

Read the full article on the Longview “Pennies for Peace” drive

Pennies for Peace

Central Asia Institute

Global Washington International Education Resources

The Budget Crunch: Why Save Aid?

With passage of the Fiscal Year 2011 Continuing Resolution appropriations bill in the House of Representatives, consideration of the stop-gap measure moves to the Senate. With the bill, the ever-growing debate on what to cut from the budget also heads to the Senate. Unfortunately, the U.S. International Affairs Budget lies directly in the cross hairs of the deficit hawks.

Maybe lawmakers scrambling to find budget cuts are emboldened to target foreign aid programs because the American public erroneously believes that 25% of the federal budget is spent on foreign aid. In fact, approximately 1% of the U.S. budget is committed to the International Affairs Budget.

Or, perhaps, as former Bush Administration speech writer Michael Gerson suggests, our elected officials are misguided in thinking our current budget crisis is because of spending “too much on bed nets and AIDS drugs,” and not because of “entitlements and aging population and health cost inflation.”

But why should Americans be interested in saving foreign aid programming in such a dire fiscal situation? Much is said about America’s moral imperative to invest in development programming. As a super power with the world’s largest economy and which is undeniably linked to the rest of the world, Americans have an obligation to look out for those less fortunate than ourselves. Those who, try as they might, are unable to break themselves from the cycles of poverty, disease, and violent conflict that ravage the developing world. We must help those that are at a distinct disadvantage from their counterparts in the developed world to continue America’s commitment to humanitarian values.

But let us forget for a moment that roughly 1 billion people live on $1.25 per day. Forget that 33.3 million people are currently living with HIV around the world, 1.8 million of which died in 2009 because of their disease. Forget that rising global food prices are the cause of 925 million people worldwide suffering from debilitating hunger. And let us certainly forget that through its foreign aid programs the United States can do something about it.

Instead, let us consider the value added to the American public through strong investment in global development. Without humanitarian values to back up our foreign aid budget, what is there to encourage lawmakers to fully fund global development activities? In other words, in such a difficult economic situation, what’s in it for us?

First, investing in the International Affairs Budget means investing in national security. By investing in programs such as Peacekeeping Operations, International Military Education and Training, International Narcotics Control and Law Enforcement, and Nonproliferation, Anti-Terrorism, Demining and Related Programs, the U.S. is strengthening its national security and saving on costs of military engagement. These programs help cultivate strong diplomatic relations, stabilize conflict areas, and reduce the threats of terrorism and drug trafficking on America’s doorstep.

Military professionals and civilians alike agree that our development funding is a vital component to national security. In a letter to Congress in support of the International Affairs Budget, Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen reasoned “the more significant the cuts, the longer military operations will take, and the more and more lives are at risk!” In an editorial published recently, Representative Steve Rothman went so far as to claim that because of the national security component of the development budget, “our foreign aid and diplomatic budget has a return on investment that is at least a thousand fold.”

More importantly, investing in the International Affairs Budget has a decided economic benefit for American businesses and the economy at large. Ensuring economic growth in the developing world opens markets to international trade. Because of the investment in out development programs, American businesses are able to penetrate these new markets more readily.

Take for example, the US Trade and Development Agency helps American companies to break into new markets by establishing links between the companies and potential export and trade opportunities. In 2010 alone, the USTDA funded activities that accounted for $2 billion in U.S. exports. The Overseas Private Investment Corporation finances and insures U.S. business ventures in emerging markets, at no cost to American taxpayers. Both of these agencies are vital components of the U.S. foreign assistance strategy as they are integral to economic growth in the development world as well as economic prosperity and job creation in the United States.

Without a robust International Affairs budget the United States is at a severe disadvantage in its quest for national security and economic prosperity.  We must combine these two reasons with the American legacy of humanitarian responsibility to truly harness the world’s potential and create stability. Because, in the end, a stable and prosperous world is a safe a prosperous United States.