The Biggest Development Agencies Forget Big Parts of Development

The largest international development agencies- the World Bank, USAID, DFID, etc.- perform some valuable roles and have huge resources when compared to NGOs.  However, these governmental development agencies, by which I mean both national and multilateral agencies, tend to ignore major parts of development.  While the most important factors leading to development will not originate in external actors, governmental development agencies still ignore many of the development issues relevant to international actors.  They have two main blind spots: an excessively aid-oriented focus and disproportionate focus on the policies of developing countries at the expense of developed ones.

As the Center for Global Development highlighted in a recent report, aid is just a small part of development.  For example, 3.4 times more money comes into developing countries through remittances than aid.  Development agencies should focus more on aid than other parts of development since this is the aspect they are best placed to perform, and when done well aid can also have indirect benefits for other important factors in development.  However, there is no reason that governmental development agencies should focus on aid, and loans in the case of the World Bank, to the near exclusion of other important issues, such as trade, remittances, and other “beyond aid policies,” as they have tended to do in the past.  As the Center for Global Development argues, “the benefits to poor people that can be brought about by even quite modest ‘beyond aid’ policy changes are likely to be much larger than can be brought about through aid alone.”

The other major blind spot of governmental development agencies, and one which frequently prevents them from looking beyond aid, is their tendency to focus exclusively on the role of developing countries in development.  They focus on projects in developing countries and push for policies and institutions in these countries to enable development.  These are valuable practices when done right.  However, these major governmental development agencies tend to focus only on one side of the equation, neglecting the role developed countries play in global poverty and development.  The outcomes of poor people in developing countries are closely tied to the policies of developed countries.  While the World Bank would focus on technical assistance to farmers in developing countries, such as more efficient fertilizers and reducing soil degradation, the larger problem for the farmers might be that they cannot compete with foreign producers benefiting from US and EU agricultural subsidies.  Immigration and banking policy’s effects on remittances, interest payments on debt, and the effects of climate change all have profound impacts on development, yet the role of developed countries in perpetuating these problems is largely ignored by governmental development agencies.

The disproportionate focus on aid can largely be fixed for cases that do not also involve the second blind spot.  Development agencies will have to shift their activities and be more willing to work politically, but it is not excessively difficult for them to realign their focuses.  The second blind spot is much more difficult to reform.  Multilateral development agencies tend to be primarily controlled and funded by developed countries and this is entirely the case for the national development agencies of developed countries.  Many policies that could have huge benefits to developing countries are not clearly beneficial to developed countries, and undoubtedly some require stripping away the advantages developed countries have traditionally enjoyed.  Furthermore, wealthy countries do not appreciate having the agencies they fund telling them what to do, and currently policies must always be presented as win-wins to have any chance of passage.  I do not think these problems make governmental development agencies useless, as they can still make important contributions through effective aid without changing the policies of developed countries.  Despite the constraints presented by governmental control, it does allow for far more resources than NGOs can ever achieve.  However, governmental development agencies do need to find ways to push the limits of their mandates and better engage with multiple aspects of development, but even with these improvements many problems will remain.

These shortcomings are why, for all their flaws, I think NGOs are far more effective than the size of their budgets suggest.  Rather than being enormously constrained by governmental control, NGOs are able to engage in advocacy and a broader range of development issues.  The recent issues surrounding Somali remittances highlight these advantages.  Even though an already impoverished Somalia receives more from remittances than all aid and foreign direct investment combined, the US plans to cut off 60 to 80 percent of these remittances out of a primarily unfounded fear of the money finding its way to al-Shabaab.  Oxfam extensively covered the issue and called upon the US to reverse its decision, but governmental development agencies were largely silent.  This issue would have required them to deal with something that did not involve aid and challenges the policies of the US.  It will cause enormous damage to Somali citizens far outweighing aid’s benefits, but crucial issues like this are beyond the narrow scope of governmental development agencies.

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