In his review of the twentieth century, the noted historian Eric Hobsbawm wrote: "If humanity is to have a recognizable future, it cannot be by prolonging the past or the present If we try to build the third millennium on that basis, we shall fail. And the price of failure, that is to say, the alternative to a changed society, is darkness."1
How has society changed after three decades of foreign assistance? According to the United Nations Development Programme (UNDP), there have been some notable successes: life expectancy has risen by 17 years to age 63, infant mortality rates have dropped by 50 percent, access to safe water has grown by almost 70 percent, adult literacy rates have grown by one-third, and three-quarters of school age children are enrolled in schools.2 Since 1980, overall quality of life has improved by 44 percent with 15 countries, mostly in Asia. exhibiting high economic growth rates and significant improvements in their standard of living.3
There have also been failures. Approximately 13 billion people now live in poverty and their numbers are growing. Seventy percent of the poor are women.4 The UNDP indicates that 70 countries have average incomes that are lower than they were in 1980, and 43 others are poorer today than they were in 1970.5 Furthermore, income disparities between the rich and poor have doubled since 1960. The richest 20 percent of the world's population, who received 70 percent of the world's income 30 years ago, now receive 85 percent, while the poorest 20 percent have seen their share drop from 23 percent to 1.4 percent.6 It appears, therefore, that despite certain improvements in the quality of life of humans and quantifiable increases in the economic growth of nations, impoverishment is rising. Perhaps more significant is the fact that poverty does not appear to be a temporary phenomenon as the World Bank has argued, but an increasingly permanent one. Given widening income disparities, absolute economic growth clearly does not guarantee a more equitable distribution of income; to the contrary, it appears to guarantee just the opposite. Economic growth and poverty can exist side by side and have done so with considerable tenacity over the last several decades. Hence, it is not quantifiable growth itself-as measured, for example, in gross national product (GNP) - that should be emphasized by policymakers but its quality and structure.7
Yet economic growth has remained the focus of foreign aid and development assistance, rising impoverishment and income disparities notwithstanding. Prior to the end of the Cold War, development strategists believed that poverty in the developing nations could be addressed through economic growth via urban industrialization whose benefits would trickle down to the poor, creating opportunities for advancement While GNP growth rates in many developing countries were indeed impressive, the poor remained decidedly poor.
The failure of the modernization approach to economic development gave way, in the 1970s, to one that emphasized the structural relationship between the economies of the developed and developing worlds. The dependency school emerged and its theorists argued the significance of the structural relationship between a dominant and subordinate economy and the process by which the latter is exploited to serve the needs of the former. For dependency theorists, underdevelopment is shaped far more by the relations of trade than by those of production. In practical terms, development strategists of this period called for macro-level structural changes in the economic relations between rich (North) and poor (South) nations through more equitable commodity trade, known at the time as the New International Economic Order (NIEO). The NIEO deliberations at the time focused on the "Integrated Program for Commodities." At the micro level, poverty was to be addressed by ensuring the basic needs of the poor: adequate food, water and shelter. This approach, while important. regarded the poor as the objects rather than the subject of development.8
Yet the Group 77, an ad hoc coalition of developing countries whose membership now stands at 130 nations, also called for much more: basing 25 percent of all industrial manufacturing in their countries; the ability to repay loans in their own currency, the transfer by the developed world of less than 1 percent of the GNP worth to them; and greater economic independence overall. Perhaps the most important demand was for the United Nations General Assembly to handle development monies instead of the World Bank and the International Monetary Fund. The West did not agree to these terms. Although the objective remained economic growth, the debate centered on how to achieve it.
In the 1980s, development efforts globally reversed themselves. Often referred to as the 'lost decade,'9 the 1980s witnessed a crash in commodity prices and a rapid rise in interest rates, which created massive external debts within the developing world. With the election of conservative governments in the United States and other donor countries and a concomitant return to market-oriented strategies, continued access to foreign aid by the nations of the South was conditioned on their willingness to implement structural reforms that would guarantee debt repayment and open the developing economy to international investment flows. Structural adjustment became the new development paradigm, and it imposed immense economic hardship on the majority poor, loss of employment, declining access to public services, and rising costs often for the most basic of commodities. In many countries, infant mortality increased and nutrition levels fell. Austerity measures often led to popular protest that was met with political repression.10
POST-COLD-WAR FOREIGN ASSISTANCE AND DEVELOPMENT STRATEGIES
History has shown that aid is seldom synonymous with development Indeed, aid can cause and reinforce the underdevelopment and poverty it is theoretically meant to solve. Aid, simply put, turns on the reasons for why it is being given. As the case studies in this series on U.S. foreign assistance have shown, economic aid is primarily given to promote the political and strategic interests of donors. It is also given to further the donor's economic and commercial interests and less commonly for moral or ethical reasons although such reasons do apply.
With the end of the Cold War and the fall of communism, the call has been for less rather than more aid. One reason for this was the belief that global conditions would improve and the world would become a more stable and secure place. Hence, the political/security basis of foreign assistance would lessen if not end altogether. This perhaps would leave more money for addressing the problems of poverty specifically and development generally. Furthermore, the demise of the communist system was seen as a victory for the market-based approach to development; it was the market not the state that was the primary engine of economic growth, particularly in an age of globalization where the global economy is far larger and more powerful than that of any individual state. This in turn has led to an increased emphasis on expanded trade, foreign investment and commercial activities over traditional (state supported) aid programs and projects.11 Thus, the 1990s have seen a continuation of donordriven structural adjustment policies and their negative impact on the majority poor.
Reality, however, has revealed that the post-Cold War world is, in many respects, not less but more insecure and unstable. The political and security imperatives underlying foreign assistance have thus become more pronounced, leaving even less for poverty alleviation and development as some of the case studies have argued. Moreover, as a result of market-based development and the tum toward a globalized world economy, the industrialized world itself is now experiencing problems of "domestic poverty, widening gaps between those who have been able to benefit from growth and those who have not, and a social welfare system increasingly (politically) unable to meet and address the needs of its citizens."12 While markets may be good at generating wealth, they are not good at distributing it The developed countries have seen unemployment levels rise (from 3 percent in 1975 to 8 percent in 199413), wage and income inequalities increase, and poverty grow, even among the middle classes. Indeed, between 1977 and 1987, the number of full-time American workers living in poverty rose by 43 percent.14 Furthermore, approximately 25 percent of American children now live at or below the poverty level.
By 1990, the inflation-adjusted average hourly wage of non-supervisory workers within American corporations was lower than in any year since 1965. Workers' median incomes grew by less than 1 percent in the 1980s, far below a growth rate of 41 percent during the 1960s. Between 1970 and the late 1980s, the real wages of the lowest paid 10 percent of the workforce declined by more than 30 percent Between 1971 and 1991, the most affluent 20 percent of households increased their share of household income from 43.5 percent to 46.5 percent In contrast, the poorest 20 percent saw their share of household income drop from 4.1 percent to 3.8 percent.15 In rich as in poor nations, wealth continues to be concentrated rather than distributed. Many of these disparities are structural in nature and require solutions that are also structural.
Two dilemmas emerge. First, as the industrialized nations experience greater economic and social problems domestically and their own internal requirements increase, foreign assistance levels will decline. The U.S. foreign aid budget has already been cut by 40 percent over the last four to five years. In 1993, according to the Organization for Economic Cooperation and Development (OECD), the volume of aid fell for the first time in a decade and fell by close to six percent in real terms. As a percentage of GNP, aid flows dropped to their lowest levels in twenty years.16 Since 1993, the trend toward less aid has continued.
Second, given the dominance of market ideologies and the continued emphasis on quantifiable economic growth, heightened political and security concerns as the basis of international aid, and the decline in foreign assistance levels, how is the problem of poverty in the developing world to be addressed?
The development literature is rich with material that identifies critical problems at the macro and micro levels and prescribes reasonable solutions. In response to the problems briefly articulated in this essay, for example, a good deal has been written about the issue of sustainability and the human dimensions of development.17 That is, making people not economics the focus of assistance efforts. This approach seeks to enlist the poor as agents in their own change through better education, training, access to social services etc. It also seeks to create an environment, both nationally and internationally, that will support local efforts. This approach, among others in the literature, has succeeded where many have failed.
The problem is not with the lack of viable approaches (or combination of approaches) but with the lack of political will to implement them. The real question remains: how can this will be generated? Globalization is making national borders and geographic boundaries irrelevant While this has clear economic implications - both positive and negative - it also has clear social and political ramifications. Today, it matters Jess and less whether one is poor in the United States or in Egypt since the problems of both countries are increasingly interrelated and the solutions for both increasingly interdependent The policies and actions of the United States and other donor nations abroad will directly affect them at home. The traditional parameters defining the "domestic" and the "international" are changing. Within such a global framework, the price of failure is incalculably high. As Hobsbawm implies, there is no alternative, then, but to succeed.
1 Eric Hobsbawm, The Age of Extremes: A History of the World, 1941-1991 (New York: Pantheon, 1994), p. 585.
2 United Nations Development Programme (UNDP), Human Development Report 1992 (New York: Oxford University Press, 1992). Betty Plewes, Gauri Sreenivasan, & Tim Draimin, "Sustainable Human Development as a Global Framework." International Journal 51, no. 2 (Spring 1996), p. 212, n. 1.
3 "A Global Poverty Trap?'' The Economist, July 20, 1996, p. 34.
4 Plewes et al. op. cit., p. 212. Also see, World Bank, World Development Report 1990 and World Development Report 1995 (New York: Oxford University Press, 1990 and 1995).
5 The Economist, op. cit.
7 Ibid .
8 Plewes et al. op. cit., p. 214.
9 Ibid., p. 215.
10 Ibid., pp. 214-215.
11 Roger C. Riddell, "The Moral Case for post-Cold War Development Aid," International Journal 51, no. 2 (Spring 1996), p. 202.
12 Ibid., pp. 202-203. The World Bank espouses a similar position in World Bank, World Development Report 1995 (New York: Oxford University Press, 1995).
13 Ibid., p. 196; and Organization for Economic Cooperation and Development (OECD), OECD Economic Outlook 57, (June 1995).
14 Ibid., p. 197.
15 All the hard data in this section derive from Riddell, op. cit., p. 197, n. 7.
16 Ibid ., p. 201. Also see OECD, Development Partnership in the New Global Context (Paris: OECD, 1995).
17 This idea is not new. See, for example, P.N. Rosenstein-Rodan, "International Aid for Underdeveloped Countries," Review of Economics and Statistics 43 (May 1961): 107-138; and H. Chenery and A.M. Strout, "Foreign Assistance and Economic Development," American Economic Review 56 (September 1966): 679-733.