On 16-17 October, the European Commission will be hosting EU Development Days, a two-day forum on international affairs and development cooperation that will see Heads of State, Nobel Prize laureates, business leaders, and development professionals meet to discuss some of the global issue that are at risk of slipping down the international agenda in the wake of the economic crisis. Debating Europe will be covering DevDays, and we will be publishing posts on each of the three main themes of the event: food security (which we’ve already looked at here), inclusive growth (which you can debate here) and how to encourage the private sector to engage in development.
Today’s post will be asking how Europe can help support robust and competitive private sectors in developing countries. Back in June, we published an interview with Andris Piebalgs, European Commissioner for Development, in which we asked him whether European development aid was being spent effectively. It’s an important question (Europe is, after all, the single largest donor of overseas development aid in the world). However, for development to be sustainable it cannot rely on aid alone.
Christos, one of our regular commenters, argued that he would like to see:
Industries being set up in Africa, more fair trade established, and the African nations being able to exploit their natural resources and provide them to the global markets for the benefit of their people first… Invest not with aid and loans, but with factories and jobs in Africa; universities, hospitals and so on… But who would do that now, eh?
Actually, this is already taking place (although the global economic crisis is starting to bite). Whilst there are still enormous economic disparities between Europe and Africa, over the last decade many African countries (just as in other developing regions) have been posting annual growth figures that Europeans can only dream of. Across the whole of Africa, real GDP rose by 4.9 percent a year from 2000 to 2008 (more than double its pace in the eighties and nineties).
Again, this raises some of the questions we’ve been discussing on Debating Europe. How can we best encourage investment and private sector growth? Is our current approach (as William argues) encouraging dependency and wastage? And, at the same time, are we risking “aid fatigue” in Europe as we struggle with austerity ourselves? One of our commenters, Catherine, posed the question: “Can you please explain why our European leaders feel they should be sending aid to countries outside Europe when those in Europe are already starving?“
It’s worth pointing out that the United Nations World Food Programme estimates 98 per cent of the world’s hungry live in developing countries (and, in fact, 65 per cent live in just seven countries: India, China, the Democratic Republic of Congo, Bangladesh, Indonesia, Pakistan and Ethiopia). So, whilst starvation and malnutrition undoubtedly do occur in developed countries, the levels are not comparable. However, Catherine’s general sentiment was clearly shared by several of our commenters (Albert, for example, wrote simply: “Finland cannot solve the world’s problems. Sorry.“).
Earlier this week, we took some of these questions to Evan Lieberman, Professor of Politics at Princeton University. Professor Lieberman specialises particularly in the politics and governance issues of Southern Africa, and keeps a blog on African governance and development. We put some of your comments about development aid to him, and asked him to respond.
Rather than “dependency”, Professor Lieberman argues that:
Another way of putting that is to say that there’s not sufficient sense of empowerment among people in Africa. So, it begs the question of what role should aid play.
He believes that aid can undoubtebly be effective in certain areas:
In areas of global public health, I think that there remains a really important role for aid; [with] expensive medicines and technologies, particularly when it comes to pandemic problems like HIV/AIDs, maleria, tuberculosis and so on, I think international aid has a really important role to play. And, if you look at trends in life expectencies and people who are living longer even though they’re HIV positive, it’s quite encouraging and I think we can think about that as a real success story for international aid…
However, he also stresses that aid should lead to sustainable development, and projects that can’t stand on their own two feet over the long-term should not be funded:
I think that more and more, we see projects that are really trying to rigourously evaluate whether certain types of aid projects and development projects are working. And the ones that aren’t: we should stop doing those. We shouldn’t be spending money on projects that don’t have a logical basis for long-term sustainable development without aid.
We also put a comment to Professor Lieberman that was sent in from Josephine, who argued that: “Before tackling inequalities, you have to tackle corruption [and] tax evasion.”
What do YOU think? How can Europe help support robust and competitive private sectors in developing countries? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.
Ahead of the European Development Days forum, the International Development site DevEx (an official partner of EU DevDays) has published an interview with Bernardo Guillamon – manager of the IDB’s Office of Outreach and Partnerships, which is in charge of promoting partnerships between public and private sector organisations and the bank. You can read the interview here.