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7 April 1995
Doc. 7274
REPORT on development co-operation policies
(Rapporteur: Mr TOWNEND, United Kingdom, European Democratic Group)
Summary:
With the end of the Cold War, and the remarkable economic growth of, or improved development prospects for, a large number of developing countries, notably in south-east Asia, the relations between developed and developing countries need to be redefined. In mankind's "race against time", European donor countries, many of which face budgetary constraints, must make sure that development co-operation resources are used more efficiently, and that they focus on the least developed countries, on the underprivileged in these countries, and on basic human needs.
"Good governance" in recipient countries - including democracy, human rights, environment protection and economic and social reform - should be central criteria for development assistance. Donor and recipient countries should jointly seek answers to the question why certain developing nations have developed so much faster than others, and adapt their co-operation accordingly. Greater access for developing countries' exports to the markets of industrialised countries - as stipulated in the Uruguay Round Agreement -is of particular importance.
I. Draft Resolution
1. Relations between developed and developing countries are undergoing fundamental change, calling for a new approach to development co-operation.
2. Among the major reasons behind this change are not only the end of the Cold War, but also the growing gap between a number of rapidly growing newly industrialised countries, with low labour costs and social standards, and other developing countries, notably in Africa, which make little or no progress toward sustainable human development.
3. At the same time, mankind is engaged in a "race against time", especially when considering the links between the rampant growth of world population, under-development and environmental destruction - causing certain countries and population strata to sink into ever deeper poverty.
4. The Assembly believes that access to markets, investment and borrowing is what matters most. It also holds that the effectiveness of aid is more important than either the amount of total development aid budgets, or arbitrarily set cash targets. It emphasises the need for a better public understanding of all the factors concerning aid, and the importance of encouraging more private aid from non-governmental organisations.
5. The Assembly therefore calls on member states to seek forthright answers to fundamental questions raised following decades of development co-operation - especially why certain developing countries have developed much faster than others, even though they have received less assistance, or why others, which have received large quantities of aid, are poorer than in the past - and to adapt their development co-operation policies accordingly.
6. Furthermore, the Assembly calls for development co-operation to be given new emphases in addition to those recommended in its Resolution 981 (1992) on the new north-south relationship, aiming at a concentration of more efficiently used resources on:
i. the least developed countries rather than the richer among them;
ii. the underprivileged people in these countries, instead of the privileged;
iii. basic needs which are normally not the object of private investment but which are nevertheless of great significance for economic development - such as primary health care, primary education, the promotion of agriculture in rural areas, environmental protection and population control, notably by supporting the Programme of Action adopted by the International Conference on Population and Development held in Cairo in September 1994.
7. The Assembly invites member states to make better use of scarce resources through:
i. refraining from giving other than humanitarian aid to warring countries, or official aid to countries where aid is spent on arms, or where it serves to maintain non-democratic regimes. Moreover, food aid should be reformed so as not to destroy local production in developing countries;
ii. achieving better "aid-efficacy", notably by making assistance contingent on "good governance" in recipient countries - including democracy and human rights, the absence of corruption, social reform favouring the disadvantaged, economic reform in the direction of market principles, adequate protection of the environment, and more open trade including with other developing countries.
8. Finally, the Assembly calls on member states of the Council of Europe and the European Union to allow developing countries effective access to the markets of industrialised countries by fully realising the Uruguay Round agreement, and to encourage developing countries also to build up trade among them.
II. Explanatory Memorandum
by Mr TOWNEND
CONTENTS
Page
I. INTRODUCTION: THE CHANGING ENVIRONMENT FOR
DEVELOPMENT ASSISTANCE 5
II. DEVELOPING COUNTRIES - AN INCREASINGLY
DIVERSE PICTURE 7
III. WHY DO CERTAIN DEVELOPING COUNTRIES GROW,
AND OTHERS STAGNATE? 8
a. Civil wars and regional conflicts 11
b. The importance of "good governance" 11
c. A wave of privatisation 12
d. Population growth and economic development 13
IV. IMPLICATIONS FOR FUTURE DEVELOPMENT
COOPERATION 14
V. CONCLUSIONS 17
APPENDIX 1: The Level of GNP and Population of Developing
Countries and Territories in 1992 and 1980-92,
Real Annual Growth Rate 18
I. INTRODUCTION: THE CHANGING ENVIRONMENT FOR DEVELOPMENT ASSISTANCE
1. At least since the early 1980s, the Parliamentary Assembly of the Council of Europe has made a significant contribution toward shaping the European discourse on "North-South" development co-operation. To the pioneering conference held in Lisbon in 1984 on the theme "North-South: Europe's Role", and the 1988 European Public Campaign on North-South Interdependence and Solidarity, can be added various resolutions and recommendations, seminars and other initiatives.
2. The role of the Council of Europe in North-South co-operation was reiterated in the Declaration issued at the end of the Vienna Summit of Council of Europe Heads of State and Government in October 1993, which committed member states to the "bonds of friendship with non-European member states sharing the same values", and emphasised their "wish to develop with them our common efforts to promote peace and prosperity". The Declaration also pledged that the "deepening of co-operation in order to take account of the new European situation should in no way divert us from our responsibilities regarding North/South interdependence and solidarity".
3. The Assembly was among the first to recognise the implications for North-South co-operation of the downfall of the Soviet Union and communism. In brief, this put an end to the East-West ideological conflict, and to the competition, through aid, between the two super-powers the Soviet Union and the United States (and their respective allies) for the political allegiance of developing countries.
4. In other words, western developed countries are no longer forced to compete with its former adversary in expenditure in aid, in order to buy influence and support in an ideological conflict. This has brought about a significant change in the relations between the so-called North and South. It among other things makes it easier for donor countries to lay down criteria for aid. (As we shall see, the terms North and South will largely be abandoned in the following, as they are less and less descriptive of reality).
5. However, it is not only the end of the cold war that has brought about a change in the environment surrounding development assistance. Another factor is the competition from other demands in development aid budgets. They include trade promotion, spending on the environment, humanitarian relief, peace-keeping and the promotion of political transitions to democracy, not least in central and eastern Europe and in the former Soviet Union area. Related to this is the concern on the part of certain donors that their own bilateral programmes are being squeezed by growing, and seemingly unconstrained, international commitments. Finally, there is a certain loss of confidence in donor capitals as regards the capacity of parts of the United Nations system to deliver development assistance efficiently.
6. The "burden-sharing" of development aid among nations is also made more difficult by the disappearance of the Soviet Union, which at the time was a major donor (albeit largely of arms), and by the scaling-down of the assistance on the part of a number of Arab countries (at least outside the Gulf region). China's development aid, which used to be considerable not least in Africa, has also been scaled down as a result of the end of East-West confrontation.Thus, the only major donors in the world that remain are the twenty-one OECD member countries that are members of the OECD's Development Assistance Committee (DAC). The impact of some new, still relatively minor, donors such as Taiwan, the Republic of Korea, Singapore and Turkey is not yet sufficiently strong to alter this picture.
7. Finally, there is the power of financial markets. Private investment in developing countries (or "emerging markets", as they are called) surged from 1992 to 1994, rendering official development assistance less imperative. Thus, according to figures released by the World Bank, foreign direct investment in developing countries reached a record high in 1993. Total direct investment flows to all developing countries in 1993 was an estimated US$ 65,900 million. This total is up nearly 40% from the $ 47,300 million reached in 1992, and 2.5 times the 1990 total of $ 26,300 million. The report projects a 1994 total of $ 75 billion.
8. In addition, funds raised by developing countries on international capital markets through bonds or loans, totalled $ 76,100 million in 1993, $ 40,400 million in 1992 and $ 31,900 million in 1990. 55% of total foreign direct investment flows to developing countries in 1993 went to the East Asia and Pacific region, and over 70% of this - or 26 billion - went to China. Latin America accounted for 25% of the total, and Europe and Central Asia for 14%.
9. A significant factor in the overall increase, according to the report, has been the tendency in developing countries to transfer new infrastructure activity to the private sector, and to rely on foreign direct investment to provide the necessary finance. The World Bank projects overall infrastructure spending by developing countries to reach about $ 200,000 million annually, in order to modernise and expand telecommunications, utilities, transportation and other types of facilities. This will no doubt provide a long-term boon to developing countries, but also to industrialised countries asked to provide much of the material needed.
10. It cannot be the task of aid to compete with such private flows. Nevertheless, there is a reluctance among official donors to concentrate their aid programmes only on the poorest and least developing countries.
11. The new situation is nevertheless healthy, in that it forces donor countries and recipient countries alike to concentrate more on the real issues confronting mankind. These go from the truly global - such as the interrelated concepts of environmental protection and population policies - to the inner conditions in developing countries affecting not only them but indirectly the whole world community, such as the respect for democracy and human rights, people-based development and the introduction of market-oriented economic systems.
12. Nowhere was this more clearly stated than in Resolution 981 (1992) on North-South co-operation, which not only pointed to the plight of the Least Developed Countries which "face stagnation or even a fall in per capita income", but also raised the notion of a "vicious circle of underdevelopment, linking high population growth with poverty and environmental degradation", and called on Council of Europe member countries to "make development co-operation a more central political concern in the 1990s".
13. The goal of such co-operation should be, said the Resolution, to contribute to "human dignity and an existence which is economically productive, socially just and environmentally sound". More importantly, it laid down five criteria for development co-operation to be implemented by member states: the poverty in the recipient country (a "primary" criterion), respect for human rights, efforts to ensure economic and social reform, reduction of military expenditure and environmental protection.
14. Resolution 981, together with Resolution 1006 (1993), addressing specifically the problems facing the least developed countries (Rapporteur: Mrs Verspaget), have helped set the tone for a more realistic and constructive debate on Europe's future contribution to North-South co-operation.
II. DEVELOPING COUNTRIES - AN INCREASINGLY DIVERSE PICTURE
15. It is easy to fall prey to a "doom and gloom" mentality in looking at the developing world, when in actual fact statistical data give a brighter picture. Thus, over the past 25 years there has been unprecedented progress in developing countries as a group - manifesting itself, for instance, in a near halving of infant mortality, an increase by about 10 years in life expectancy, and almost a doubling of per capita incomes. The latter have, in fact, risen faster than was the case in the United Kingdom during the industrial revolution, or in the United States as it grew to economic maturity.
16. This notwithstanding, progress has been highly uneven among developing countries. Certain countries in East and South-East Asia have seen their incomes double, and then double again, in the last 25 years. Indeed, over the next ten years world economic growth is expected to be fuelled by the development in the dynamic economies in East and South-East Asia and Latin America.
17. Growth has also been extremely rapid in many countries in Latin America, even though the recent economic turmoil in Mexico has shown the fragility of many economies if they depart from policies of financial discipline.
18. What has been said does not, however, mean that poverty within rapidly developing nations has been overcome. In most, income differences among the rich and the poor, and among cities and countryside, have actually widened, pitting those who believe in an eventual "trickle down" from the wealthy to the destitute against those who fear an ever more gaping divide.
19. This was a central theme at the United Nations World Summit for Social Development held in Copenhagen, Denmark, from 6 to 12 March 1995. Although the Summit will be covered in greater detail by another Assembly committee (the Social, Health and Family Affairs Committee), it may be said that it reflected - for all its vague and abstract language ("They talked about poverty, not about the poor", an Indian trade unionist commented) - a healthy shift in the world's attention from economic development alone to such development which really counts for the needy in society. And although only Austria and Denmark generously announced the cancelling of debt owed them by the poorest developing countries, there was much less emphasis on any increase in aid volumes than on aid better given, and better used.
20. The world is at present witnessing a "global shift" of manufacturing - as well as, increasingly, service employment - away from wealthier countries to those with lower labour costs, for instance in east Asia. Never before have so many countries and regions in the world been involved in what can, with greater and greater justification, be called the "world economy".
21. Meanwhile, numerous countries in the former Soviet Union area can, together with certain poorer countries in Eastern Europe, be said to have joined the ranks of "traditional" developing countries. For instance, the gross national product in the five Central Asian successor republics to the Soviet Union - Kazahkstan, Kirghizia, Tadjikistan, Turkmenistan and Uzbekistan - fell by over 60% between 1991 and 1993. It is a telling sign that the OECD's Development Assistance Committee has enlarged the traditional list of developing countries to include in it the eastern Europe region and the Newly Independent States.
22. As has been indicated, a considerable number of countries are, in spite of the generally upward trend in world wealth, actually poorer today, than they were fifteen years ago. Appendix 1 lists the real annual growth rate (as well as the GNP per capita and population) for two groups of countries between 1980 and 1991: lower income countries (a per capita GNP below US$ 765 in 1992, including the 47 countries in the current United Nations list); and lower middle-income countries ($ 765-2,555).
23. The table shows that 36 countries in the table have experienced a diminution of GNP per capita in the period 1980-1991. Twenty-one of them are in Africa, 10 in Latin America and 5 in Middle and East/South-East Asia.
24. The above makes it increasingly problematic to talk about "a developing world" in the singular. This is hopeful, for it means, firstly, that development assistance may be concentrated on a lesser number of truly needy countries and, secondly, that the richer developing nations may be able to "pull" the others along with them in economic development. Finally, it means that policies tried successfully in countries that progress have a higher chance of becoming attractive also for countries that lag behind.
25. These developments illustrate that the term "North-South" no longer fully corresponds to "rich" and "poor". For there are relatively successful countries in the South, such as South Africa, Australia, Indonesia, Malaysia, Singapore and Mexico, whereas some of the countries of the former Soviet Union, in particular some in Asia, are much poorer.
III. WHY DO CERTAIN DEVELOPING COUNTRIES GROW, AND OTHERS STAGNATE?
26. As already mentioned, one benefit (apart from the many others) of the end of the East-West conflict, is that the world can at last concentrate on the real problems besetting mankind. Encouragingly enough, there also seems to be an increasing consensus - manifested in policy changes by more and more developing countries - that not only does a given country have to participate in the world economy in order to prosper, but as it does, it is also obliged to follow the rules of the world economy. And these rules are increasingly based on the principles of the market economy, free enterprise, fair and open trade, sound economic policies and "good governance" (see also paras. 44-47 below).
27. The world economy has, it must be admitted, held some bad news for many developing countries. Those depending heavily on a few commodities have suffered, as prices have stagnated or decreased. In addition, most efforts to reverse price slides, or to compensate producers, have been in vain, for it is difficult if not impossible to counteract market forces over any longer period of time.
28. To this should be added the protectionism often observed by developed countries vis-ŕ-vis imports from developing ones. There is much wisdom in the expression "trade is better than aid", but the developed world has for long maintained what often amounts to prohibitive import obstacles, for instance in certain food commodities.
29. The debt situation of the developing countries as a whole continues to improve. Thus, the stock of debt, which increased by 4% in current terms in 1992 to US$ 1542 billion is growing at a slower, but also more serviceable pace. Most of the recent growth of debt stocks has been in the form of concessional debt. At just under $ 148 billion in 1992, debt service payments are also falling slowly, with an increase in amortisation payments and a decrease in interest payments. Debt relief, low interest rates and the changing composition of debt stocks, have contributed to these encouraging trade trends in debt service payments.
30. This notwithstanding, the debt situation of the poorer developing countries remains difficult, with bilateral and multilateral development banks in the north as the main creditors. These countries have limited access to the international capital market and will therefore remain almost entirely dependent on official development assistance.
31. Most of the heavily indebted countries are to be found in sub-Saharan Africa. Their debt is not very important in absolute figures, and it does not pose any financial threat to any creditor. The debt for the most indebted thirty or so low-income countries in 1992 amounted to about US$ 200 billion, compared with a total debt of developing countries of about US$ 1600 billion. However, the debt burden for these poor countries is very onerous when seen against their repaying ability, and it presents a serious obstacle to their development.
32. The annual interest payment and payment on principal of the foreign debt of some countries exceed the yearly export income, as can be seen in the table below:
Nicaragua 364%
Guinea-Bissau 261%
Mozambique 160%
Uganda 110%
Madagascar 82%
Ethiopia 66%
Zambia 64%
Bolivia 58%
Angola 45%
Tanzania 43%
Table 1: Agreed payments of interest and mortgage, as a percentage of income from exports of goods and services in a number of indebted low-income countries (1992 figures; Source: Swedish Foreign Ministry "Briefing", N° 2, 1994.)
33. Numerous developing countries, however, are trying new ways to improve their lot. One is to diversify exports. Thailand, for instance, was poorer than the countries of sub-Saharan Africa in the mid-1960s. Today, it is a Newly Industrialised Country, with half its exports being manufactures.
34. Indeed, the share of Ghana in the world cocoa exports slipped from 29% in 1970 to only 8% in 1986. Meanwhile, Uganda's and Sudan's respective shares of world cotton exports fell by about half in the same period. If Africa had simply managed to maintain its share in these and similar commodities, it would have enjoyed an additional US$ 10 billion in export revenues, a figure approaching what it receives in foreign aid.
35. Protectionism by industrialised countries will be much more difficult to uphold after the entry into force of the Uruguay Round and the coming into being of the new World Trade Organisation. If merchandise trade volumes in industrialised countries are expected to be 7-8% above what they would have been without the Uruguay Round, then developing countries are expected to secure an even greater expansion in trade, or about 14%.
36. Developing and transition economies alike will benefit from the elimination of various "grey area measures", such as voluntary export restraints, and a tighter disciplines on the use of anti-dumping measures. The improved disputes settlement mechanism will enforce concepts, principles and rules that ensure fair and equitable treatment for all - large and small, rich and poor. As for market access, the Uruguay Round means a cut on the part of industrialised countries by 40% on their duties on imports of industrial goods from developing countries, bringing them to an average of only 3.9%.
37. Furthermore, the phasing-out of the Multifibre Arrangement means a much freer access for textiles and clothing from developing countries. The agreement regarding agriculture is expected to stabilise world food markets, and provide potential trade opportunities for developing countries. Finally, developing countries will benefit from "asymmetrical" rules with regard to developed countries; they will be required to bind fewer tariffs than developed countries, and open fewer service sectors.
38. Because it commits all countries - developed and developing - within a much more binding framework than before, the Uruguay Round should also be able to stimulate trade among developing countries themselves. To illustrate, trade between, say, the Ivory Coast and Nigeria is only a fraction of these countries' trade with a much more distant Europe. And yet, because they are at roughly the same stage of development, these countries could benefit enormously from greater exchanges, and specialisation that would follow.
39. The initiatives afoot in various parts of the developing world -such as the 18-strong Asia Pacific Economic Co-operation forum (APEC) group, including the United States, Japan and China, or the Latin American group Mercosur, uniting 190 million people (among them Argentina, Brazil, Paraguay and Uruguay) - are encouraging signs of the wish by developing countries to take matters in their own hands and intensify commercial relations.
40. Rethinking is also under way regarding the valuation of national currencies. For many years numerous developing countries overvalued their currencies in order to make imports cheaper, especially from the industrialised world. However, it also made their exports less competitive. In January 1994 the countries participating in the African franc zone, realising this, devalued the seriously overvalued CFA franc by 50% - causing considerable short-term suffering for a population used to cheap food imports, but at the same time stimulating domestic agrarian production and exports.
a. Civil wars and regional conflicts
41. Of the countries cited in Appendix 1, at least twenty have recently been or are being involved in civil war or regional conflict. Indeed, of the 82 armed conflicts counted by the UNDP between 1989 and 1992, only 3 were between states, the others being internal.
42. War stops development. In the last 30 years, wars have claimed nearly 7 million victims in Africa, either directly or indirectly, by making the provision of food and basic social services difficult or impossible. Wars uproot people. Refugees cannot, apart from any consideration, be economically productive.
43. Even in the absence of war, the threat of it occurring often gives rise to excessive spending on the military; and even without such a threat, many governments still spend too much on arms, enabling one group of people more effectively to control, or even slaughter, another group within the same country, such as in the recent tragic case of Rwanda. The UNDP 1993 Human Development Report states that, on average, poor countries have about 20 soldiers for every doctor. Furthermore, it says, between 1960 and 1987, military spending in poor countries increased three times as fast as in rich ones. The Parliamentary Assembly criterion of "reduced military expenditure" for continued development assistance (Resolution 981 (1992)) takes on a particular importance in this regard.
b. The importance of "good governance"
44. Linked with this is the question of democracy versus dictatorship. Dictators are not only unlikely to care about the suffering of ordinary people, or about broad-based, long-term economic development. In addition, as rule becomes more personalised and power more concentrated, policies tend to become less predictable, more arbitrary. Personal agrandissement and short-term political advantage lead to economic irrationality. Manipulating the distribution of wealth becomes more important than its creation.
45. Dictatorships should no longer be tolerated. Official aid to countries where the democratic process has been halted should in principle be interrupted, save for humanitarian purposes in emergency situations. Resolution 981 comes out in unequivocal favour of democracy, respect for human rights and the establishment of an efficient and accountable administration. Fortunately for these principles, it seems as if the increased economic competition among nations will render dictatorships less and less viable from the economic development point of view, but there is still a long way to go.
46. Unfortunately, many northern donor countries are failing to attach conditions about human rights and good governance, and are still giving aid to countries such as Kenya and Zaire, where opposition leaders are regularly harassed and jailed. Despite this, western donors have recently restored aid to Kenya where it had been cut off, and given another Ł526 million. Nigeria's military regime has rejected democracy outright, arrested critics and shut down newspapers. Only a few weeks ago the rights of Nigerians were further eroded by a decree that judges could accept gifts of money or property.
47. Assistance may in many circumstances be necessary, but it should also be recognised that external support only takes needy countries so far. You can throw money after development, but it will happen only if it is used intelligently through the intermediary of a devoted and honest recipient government. Perhaps donor countries in the recent decades were too caught up in a "mechanistic" view of the world and of the determinants of economic development in order to realise this basic fact. If the Marshall Plan succeeded in Europe after the second World War, it was not only because of the size of the material aid, but also of the dedication by everybody concerned to make it function.
c. A wave of privatisation
48. In the years following their independence, many developing countries did not have an established private sector, or the managerial expertise needed to run large enterprises. Economic development was instead fostered by the creation of large state-owned enterprises. Governments provided trained personnel and implemented regulation deemed necessary to protect newly created "infant industries" from foreign competition. Privatisation efforts in any developing countries became even more difficult as the state became deeply involved in practically all aspects of economic life.
49. Five-year development plans supported by a strong public sector may be suitable for the reconstruction of a post-war, or recently decolonialised, economy. However, in an environment of rapid change it is hard to predict, say, the demand for a new product five years ahead. Business decisions based on such guesses might well result in commercial
failure. This has been widely recognised and is one of the reasons why privatisation is now tried by governments throughout the developing world, often at the instigation of international bodies such as the World Bank or the IMF.
50. Opportunities also exist for stimulating the services sector, or the "hidden economy", where private initiatives generated by the local population could contribute to economic diversification and the alleviation of poverty. In addition, privatisation in developing countries has helped develop the market for capital. More shares in circulation have meant a capital market more attractive to foreign investment, which as we have seen (paras 7-9) is increasing dramatically in most developing countries.
51. In sum, privatisation in developing countries, provided it can benefit all layers of the population, benefits economic development directly but also indirectly, for it enhances competition and normally leaves less room for corruption. A new generation eager to try this new tool is coming of age in the developing world, and they should be encouraged.
52. This brings us to the need to tackle the problem of corruption, a phenomenon certainly not confined to developing countries, but which is particularly harmful there due to these countries' relative economic weakness and vulnerability. For instance, it is estimated that 10% of the gross domestic product of Nigeria - or about US$ 3 billion - "disappeared" out of its public accounts in 1992.
53. As anyone know who has visited Zaire, bribes have to be paid at every move in the country, from the airport where your passport may disappear, to locating your suitcases, passing through customs or getting rid of soldiers assailing you during every move. At the Hearing on the Bretton Woods institutions, organised by the Committee on Economic Affairs and Development in Geneva in December 1994, it was stated that $20 billion are stacked away by African leaders in numbered accounts in Switzerland. Given its size, corruption can therefore be said to have become a clear impediment to economic development.
54. In looking for answers to the question why certain countries develop quickly and others much less so or not at all, culture and tradition can provide important clues. For instance, the contrast between some Asian countries and certain other regions in the world is stark. Could it be that there is a particularly strong work ethic in these Asian countries? This is also borne out by the rather poor correlation between the amount of outside assistance on the one hand, and economic growth on the other. In many of the countries that have received the most aid, and have the highest levels of capital investment, growth has been negligible. For at least 47 countries, aid represented more than 5% of their GNP in 1988. Many of those countries were in sub-Saharan Africa, where GDP per head has been virtually flat for a quarter of a century.
55. Yet, as David Lindauer and Michael Roemer of the Harvard Institute for International Development point out in a recent study, some of these countries are investing a share of GDP almost as large as that of much faster-growing south-east Asian countries. Cameroon, Côte d'Ivoire, Kenya, Tanzania and Zambia all invested at least 20% of GDP, a figure comparable with that of Indonesia or Thailand.
56. Such rough comparisons may prove little, but they draw attention to an awkward point. Some third world countries have enjoyed fast economic growth with relatively little aid per head. In particular, some Asian success stories, such as China and Vietnam, had little or no aid at a time when donors were pouring money into Africa. If some countries can achieve economic growth with little aid, while other countries which get a great deal of aid do not grow at all, do we not have to rethink the whole way in which aid is given?
57. Robert Cassen, a British aid expert, concludes that aid has worked badly in Africa, and better in south Asia. Where aid has not worked the reasons, he says, are sometimes that donors fail to learn from their mistakes or the mistakes of others; and sometimes that a recipient country fails to make the most of what is offered to it.
d. Population growth and economic development
58. There is general consensus that, if economic development and per capita income goes beyond a certain "critical point", people will feel more secure about their future and old age, and produce fewer children. This has certainly been seen over the last century in the developed world, and it can be observed already in certain rapidly growing developing countries.
59. However, population growth when seen worldwide is such that many countries may never reach that enviable point. The excellent report presented by the Assembly's Committee on Migration, Refugees and Demography on "Demographic Change and Sustainable Development" (Recommendation 1243 (1994); Doc. 7089; Rapporteur: Mrs Robert) foresees an increase in the world's population from the present 5.7 billion, to between 7 and 12 billion over the next three decades. Developing countries will account for over 95% of the increase.
60. Among people who are against any kind of population control there are not only those who invoke religious or ethical reasons, but also those who feel that population growth favours economic development. In brief, they hold that the more people there are, the more trade and other exchanges there will be, and the better off everybody will be.
61. The main problem however, as your Rapporteur sees it, is that population growth of the kind we are seeing "eats away" at the environment. The expansion of cities, especially slums, in scarce, agriculturally fertile areas, deprive countries like Egypt of the possibility to feed themselves. Population pressure also increases soil erosion, as less fertile land is over-cultivated and ever-scarcer wood assembled for cooking and heating purposes. As the countryside can no longer feed its inhabitants mass migration to cities sets in, destroying the equilibrium between the two and rendering the whole country increasingly dependent on food imports. The whole fabric of a country risks being rent asunder in this way.
62. Many a heated debate in the Committee on Economic Affairs and Development and in the Parliamentary Assembly over this issue - not least in connection with the previously mentioned Assembly report on world demography - has shown its sensitive nature. However, the Rapporteur feels that it can no longer be brushed under the carpet, for it predestines millions of children in the developing world to an existence in squalor and hopelessness.
IV. IMPLICATIONS FOR FUTURE DEVELOPMENT CO-OPERATION
63. OECD figures for official development figures for 1993 show a substantial decrease from earlier years. In 1993 it amounted to 54.8 billion dollars, down from 60.8 billion dollars in 1992. Indications given to the Rapporteur, not least during the Committee's discussion with the OECD in the course of its 1994 report on the activities of that organisation (Rapporteur: Mr Bloetzer), are that few governments plan to increase expenditure, whilst several foresee further reductions in real terms. (Table 1 below shows official development assistance from DAC countries over the period 1989-1993.)
64. In sum, the present moment in the evolution of development co-operation seems to be one of profound transformation. In the United States there appears to be a high degree of "aid fatigue" and loss of public support. However, new constituencies are emerging among a "sustainable development" coalition of NGOs, members of Congress and African-American groups. In Canada the "aid fatigue" factor seems to be less important (surveys show that the majority of Canadians still support aid for poor countries), while a political shift is under way toward domestic spending priorities.
65. For European countries, there are varied levels of "fatigue". In general, public support and involvement remain relatively high (as shown in recent gallups in eg Belgium and Germany). The countries are outward looking and aid levels still rather steady (although set to decline in real terms in most countries). The general public in particular still seem to support the principle of aid as a means to alleviate poverty in developing countries, and to relieve suffering caused by disasters. With public spending budgets being trimmed, notably in their social welfare components, official aid is liable, however, ultimately to be an indirect victim.
66. The role of the Council of Europe's North-South Centre in raising awareness among the European public of "North-South" interdependence issues should not be underestimated in this context. As part of its so-called "quadrilogue", it works closely with a large number of NGOs which are important for "constituency building" and public education. NGOs as a group are intellectually and financially strong, and active in both donor and recipient countries.
67. In a democracy politicians, however, ultimately have to respect and act in accordance with the popular will. And as regards foreign aid, more and more people are questioning the "conventional wisdom", and pose a number of questions some of which the Rapporteur has tried to answer in the foregoing. As important as it is for us politicians to enhance public understanding of all the factors concerning development assistance - and this was stressed out by several committee colleagues - as essential it is that we do not engage in any "white-wash" of development aid, for that would ultimately only widen the gap between us and our constituents.
68. The questions increasingly put include:
- why countries who have received large quantities of aid are poorer today than they were in the past;
- why several Asian and Latin American countries have done so much better than many other countries;
- whether the aim should be to alleviate absolute, rather than relative, poverty. If we are only dealing with absolute poverty, it is to be hoped that over the years the problem can be solved. If we are talking about relative poverty, however, then the problem will never be solved.
- whether aid could actually be damaging in some cases, such as where
* where it keeps wars going,
* where it destroys local agriculture,
* where it is spent on arms, or releases other funds for arms, or
* where it finances non-democratic regimes.
69. Another question posed by the public is whether - given the importance to Europe of its newly freed central and eastern parts - more aid ought not to be given there, with less of necessity remaining available for the "traditional" developing countries. Furthermore, it is asked, are open markets in developed countries not more important to the developing countries than aid?
70. Questions are also put about the time-frame of aid. Should it be more short-term than long-term? And what about the risk of having "aid dependency" develop? Finally, people question the way aid is shared out. Thus, the richest 40% of the developing world receives about twice as much per capita as the poorest 40%, and big military spenders double the sum per head as the less belligerent. El Salvador receives five times as much aid as Bangladesh, even though the latter has 24 times as many people, and is five times poorer than El Salvador.
71. Furthermore, the World Bank reckons that of all the aid going to low-income countries in 1988, a mere 2% went on primary health care and 1% on population programmes. Aid for health care goes disproportionately to hospitals, aid for education to universities. In sub-Saharan Africa in the 1980s, only one dollar of ODA went on each primary pupil; eleven dollars on each secondary pupil; and 575 dollars on each university student.
72. It seems highly unlikely that, given the above, the United Nations target to have official development assistance reach 0.7% of GNP will be met by most Council of Europe member states (even though a few have actually surpassed it). It should be recalled in this context that the figure of 0.7% was, as the Rapporteur sees it, an arbitrary figure plucked out of thin air for political reasons to put pressure on the developed world by the developing world. It is time this figure was reviewed as more and more taxpayers in the North question not only the effectiveness of aid but the overall amount. Funds raised by NGOs from voluntary donations are preferable in that they are given voluntarily and are often more effectively spent.
73. The Rapporteur's feeling about the 0.7% target was not, however, shared by all of his colleagues on the Committee on Economic Affairs and Development. Some, including a former Development Co-operation Minister, saw it as a "minimum", in view of what she considered to be a widening gap between the "have" and the "have not" nations of the world. Others, while not denying its somewhat arbitrary nature, spoke of the importance of nevertheless having a tangible target, even though it may not be fully met.
74. Furthermore, the Rapporteur's search for explanations to growth in cultural/work ethics factors (eg South-East Asia's success) drew fire from one colleague, who considered this a superficial analysis of the development problems of parts of, say, sub-Saharan Africa. And another drew attention to the shared responsibility for arms spending among donor and recipient nations. More often than not, he said, development aid is tied to weapons purchases, for the benefit of employment and export earnings in the donor country itself.
75. Making sure that development assistance reaches the most needy and has the greatest effect on development is more than just an ethical or moral concern. It is also a factor in the race against time which mankind is now in. Population growth, environmental destruction and the risks of devastating regional conflicts all indicate that we have little time left to make development aid the "best value for money".
76. We must make sure that assistance does not encourage a "dependency attitude" in recipient countries, bloat the public sector at the expense of the private one, promote corruption, hinder the emergence of a domestic banking sector, or expand food imports to the detriment of local agriculture.
77. Agriculture is very important for long-term economic development, although it has received relatively limited attention in the present report. The Assembly's Committee on Agriculture and Rural Development has devoted considerable attention to the problems of agriculture in developing countries in various reports. We should not take the present "safe" level of overall global food production for granted. A country like China is destroying its scarce farm land at an alarming rate through the indiscriminate growth of cities and industry, and can be expected in the next few years to rapidly increase its demand for food products on the world market. Good development assistance is thus one that also helps this sector in the national economy of developing countries.
78. We must learn from the mistakes of the past. The new trend in development co-operation - encouraged of course by the "success stories" of certain countries - is an emphasis on such things as democracy, human rights, environmental protection, market orientation and privatisation, de-bureaucratisation and the quality of government. "Participatory development" can lead to the creation of a "civil society" with room for greater assistance to the needy.
79. Development assistance should be more directed toward primary education and primary health care, toward improving the lot of women and on population programmes (as also emphasised in the "Robert" report). Less should go on large capital programmes, and less to countries with a big military. "Conditionality" in aid is becoming more and more widespread, and the debate on how and where to use it is intensifying.
80. The Committee on Economic Affairs and development focused on these issues in a Hearing it organised in April 1993 in Paris on the theme "Human Development and Freedom in the Developing World". The Hearing concluded that any development must build on the two principles contained in this title, in order to have a chance of becoming sustainable. And they are increasingly at the centre of the preoccupations of the European Union, the UNDP, the OECD and the World Bank. (See also the Assembly's Resolution 1057 (1995) on the activities of the World Bank and the IMF (Doc. 7256); Rapporteur: Mrs Verspaget.)
V. CONCLUSIONS
81. Developed and developing countries are at a crossroads. A new approach to relations between the two sides is called for. Certain developing countries are setting an example for others to follow. The Uruguay Round has set the stage for a lasting expansion and diversification of world trade, and everything must be done to ensure that it can benefit poorer countries in particular. Private investment to developing countries - and not just the richer ones - is increasing rapidly, covering needs that in the past were satisfied through official development assistance, permitting the latter to concentrate on areas traditionally, and perhaps understandably, neglected by private investments (and yet ultimately benefitting them to the highest degree). The Parliamentary Assembly, with its long tradition of work on behalf of a relationship between Europe and the developing world, has a special duty to draw attention to the new situation and its requirements.
82. As Mr. James Michel, Chairman of the OECD's Development Assistance Committee, put it when he addressed the Committee on Economic Affairs and Development: "With all that has been learned and all that has been achieved over the past three decades, we should have a high degree of confidence that we understand what should and should not be done to foster sustainable development. We should now be approaching with enthusiasm the remaining challenges, formidable though they may be."
APPENDIX 1
Table: The Level of GNP and Population of Developing Countries and Territories in 1992, and 1980-92 Real Annual Growth Rate
(Source: 1993 OECD Development Co-operation Report)
Reporting committee: Committee on Economic Affairs and Development.
Budgetary implications for the Assembly: none.
Reference to committee: Doc. 6973 and Reference No. 1912 of 24 January 1994.
Draft resolution adopted by the committee on 3 April 1995.
Members of the committee: Mr Davis (Chairman) (Alternate: Lord Kirkhill), MM. Rodrigues, Pavlidis (Vice-Chairmen), Ala-Nissilä, Andreoli, Bársony, Behrendt, Billing, Gudmundur Bjarnason, Mrs Blattmann, MM. Bloetzer, Bogár, Bonnici, Mrs Burbiené, MM. Buzatu, Caballero (Alternate: Mrs Guirado), Mrs Calner, MM. Cerqueda Gispert, Coviello, Mrs Degn, Mr Demiralp, Mrs Durrieu, Dame Peggy Fenner, MM. Figel, Goop, Jagmetti, Kempinaire, Kiliç, Kirilov, Kiršteins, Kolář, Konecny, La Russa, Latronico, Le Grand, Leers, Liapis, Malinowski, Mändmets, Mautner-Markhof, McDowell, Minkov, Novák, Pahor, Pinto, Poppe, Puche, Radulescu Botica (Alternate: Botis Griguta), Rippinger, Schmitz, Townend, Uczkiewicz (Alternate: Wielowieyski), Valleix, Mrs Verspaget (Alternate: Blaauw), MM. Vrettos, Wintgens.
N.B. The names of those members present at the meeting are printed in italics.
Secretaries to the committee: MM. Torbiörn and Mezei.