Was Development Assistance a Mistake?

Was Development Assistance a Mistake?

By William Easterly

Summarized by Beny Trias Oktora
Master of Arts Candidate (MA) Major in International Development and Cooperation 2009, Graduate School of International Studies, Korea University

1. Introduction

Do rich countries have serious attention in helping poor countries? If yes why their economic development prescription for poor countries seems look like not fully serious attention and followed by crisis in 1980s in Latin America and in 1997s in East Asia. Those prescriptions were truly and especially endorsed by international finance and development organization (i.e. the World Bank and the International Monetary Fund). Furthermore, I argued that Western countries (i.e. most of Western European and North America countries: US and Canada) have already failed to give development assistance for poor countries in term on providing serious assistance in helping how to develop economic. They should learn from their mistaken when they colonized Africa and most parts of Asia. They thought they know everything and they should unloose their mind as imperialist and start to think in a different way.

Author builds this article based on three assumptions: We Know What Actions Achieve Economic Development, Our Advice and Money Will Make Those Correct Actions Happen and We Know Who “We” Are on examining how development assistance is working. At the end, those assumptions brought development assistance into mistaken. Author surprisingly argued to criticize the old problems attached on international finance and development organization.

2. We Know What Actions Achieve Economic Development

The changing pattern of economic development of prescription that are endorsed by international finance and development organization (i.e. World Bank and International Monetary Fund) and its economists have been coloring for economic development of poor countries. First after World War II to 1970s, those economists were very confident with their prescription a simple matter of raising the rate of investment to Gross Domestic Product (GDP). Second, they said first prescription simple sufficient but not enough and put new ingredient the importance of institutions such as property rights, contract enforcement, democratic accountability, and freedom from corruption. In the last decades, economists become confused on sort of formulation of good prescriptions on how to give economic growth to poor countries. They cited that there are success story at which countries had implemented the Washington Consensus (i.e. combinations of free market policy and institutional building) and on the other hand there are also success story on combinations of authoritarian and economic growth.

Finally, economists have confessed that they do know how to achieve growth but they have admitted cannot guarantee their prescriptions will succeed to develop of economic of poor countries. I argued that economists of the World Bank and IMF were too late to apprehend that their prescriptions are not fit for all poor countries in general because each country had their own characteristics.

3. Our Advice and Money Will Make Those Correct Actions Happen

The effects of aid on economic growth in poor countries are unclear. Especially in Africa continent, author emphasized that aid failed to spread effect for growth. Many or probably most of Africa countries received greater aids to induce economic growth. Economists cited that Korea as example the successfully utilizing aids as tool to boost their economy. Robustness of aids effects on economic development or simply economic growth are debatable and also empirical evidences are quite less.

The worse fact that is not clear mechanism to evaluate the effectiveness of aid assistance to foster economic development or no feedback mechanism to value that aid assistance is successfully targeted or not. Also aid assistance does not attach recipient countries with appropriate means to comment about what necessary aid assistance for them. As the results, aid assistance not achieved the real target for instance the good school building without textbooks and even the worse without teacher and so on. Simply state that no bottom-up approach that has already implemented in aid assistance.

4. We Know Who “We” Are

Author feels that term of “We” is placed in blur domain. Who is the most responsible for development? Experts in development? No one can ensure that experts can formulate such policy that could help poor countries to develop their economy. Author cited some greatest scholars argued doubted that experts easily can formulate thesis for changing situation in poor countries. Author final remark in this section experts efforts still have been asked to contribute is very unclear.

Experts’ efforts should consider bottom-up approach rather than their creative thinking because the real condition is the field not in experts head.

5. Conclusion

Overall this article seems to be confession of wrong formulation of international finance and development organization (i.e. the World Bank and the International Monetary Fund) and overconfident of rich country economists in giving advice and assistance of development to poor countries. My suggestion is very obvious that international finance and development organization: the World Bank and the International Monetary Fund need to conduct reform to formulate clearly policy on development and unleashing from greater influence of interest group.

I cite from Rodrik (2001) in Development Strategies for The Next Century, he argued that “Economic development ultimately derives from a home-grown strategy, and not from the world market. Policy makers in developing countries should avoid fads, put globalization in perspective, and focus on domestic institution building. They should have more confidence in themselves and in domestic institution building, and place less faith on the global economy and blueprints emanating there from”. Being confidence to tackle its problems with its own characteristics are indispensable. Thus it is not necessary to conclude that development assistance not important as long as there are significant reforms in the way of developments assistance policy is formulated and what experts approach in formulating advice for poor countries.