The State and Challenges of International Development


The State and Challenges of International Development
Gábor Scheiring
April 2008

Musing on the situation of international development politics at the dawn of the 21st century, one has to ask the question whether the development path followed in the past decades has actually taken present and future generations closer to the fulfilment of their human rights and the creative unfolding of their freedom. How sustainable and just is the global order that came as the result of development following the Second World War? And if we find that the inequalities characterising today’s world are obscene , and the extent of the exploitation of the ecosystem is insane, what development policies shall we envision? This present study seeks the answer to that question. First, we have to identify the major challenges that international development faces, then we have to examine whether the development approaches applied so far are capable of giving appropriate answers to these. By drawing the conclusions of the theoretical overview, we can identify the major underlying causes, and we can sketch an alternative vision for the future. The study closes with the outline of the public policies needed to fulfill that vision.

The situation: the state of global capitalism
The changes taking place in our time face political actors with new challenges. Leaps in technology, global financial integration, the opportunities in transportation, travel for ever increasing masses and dynamically expanding global trade unite the world on an unprecedented scale. Although this process is a great opportunity for the development of a global society based on universal human rights and mutual understanding, the inequalities and imbalances straining deep down have unleashed serious problems on humanity. The logic of the market has outweighed social and ecological concerns globally. The global development of the past thirty years has not brought a significant decrease in poverty, it increased inequalities and the signs of ecological crisis have worsened. The most important problems are:
 The unchanged situation of poverty: The number of those living off of two dollars a day has increased, the number of those living off of one dollar has somewhat decreased, but this change is only due to China and India who do not align with the Washington orthodoxy. A participative poverty study of the World Bank, ’Voices of the poor’ shows that most of the poor have experinced a worsening of their situation, material insecurity has increased and the quality of life has worsened. This is due to what ’alternative economists’ often point out: well-being cannot be measured solely by per capita income.
 The escalation of inequalities globally and within individual countries. The wealthiest 20 percent of the world’s population had 70 percent of the world’s income in 1960. This share rose to 85 percent by 1991. The share of the poorest 20 percent fell from 2,3 to 1,4 percent. By the end of the millennium the wealthiest 5 percent of the world’s population earned 114 times as much as the poorest 5 percent, while the income of the wealthiest 1 percent equaled that of the poorest 57 percent. The wealth of the 200 richest Americans surpassed the income of 43 percent of the world’s population, or the total wealth of 1 billion Chinese. But differences grew within ’developed’ countries as well. According to the report of the OECD, in three quarters of the OECD countries inequalities grew sharply between 2002 and 2007. In some countries the income gap widened not only between the poorest and the richest, but also between the middle and upper classes (Canada, Finland, USA).
 Externalisation of the environmental costs of being ’developed’: Despite ever-increasing efficiency, the total global energy consumption has been continuously increasing and so has – although at a lesser rate – the emission of CO2. This process is mainly driven by industrialised countries and China. The ecological footprint of Hungarian citizens is 3,5 hectares per capita, according to 2008 data of the WWF. The biological capacity of our country is only 2,8 hectares per capita, which means we are living beyond our means. The ecological footprint of a typical North-American (4-5 hectares) is three times as much as the fair share of the land available on the planet. If everyone lived like the average Canadian or American, we would need at least 3-5 planets to live sustainably. The global capitalism of our times passes the ecological burdens of the welfare of the North unfairly on the Global South.
The reigning form of globalisation cannot be accused of causing all the problems of the world, of course. Increasing contacts between societies hold the potential of the world-wide strengthening of solidarity and peace. However, problems have overshadowed opportunities so far. This realisation gave birth to the globalisation-critical movement too. The critique of globalisation is not its total opposition, but the correction and regulation of imbalances (alter-, and not antiglobalism), in other words the creation of the conditions of democratically monitored global governance.
To what extent is the presently reigning development approach capable or incapable of meeting the above challenges? What mechanisms and causes can be identified underlying these problems? When confronting these questions, we have to recall the history of international development. To find core causes and to give explanations it is worth spending some time on different theories and approaches of international development.

Approaches in international development
The idea that one part of the world has to be made to catch up with the other half became an important notion of international politics after the Second World War. The dominant economic theory of the age was Keynesian economics. Keynesian economics was built on the experience of the beginning of the 20th Century: totally unregulated markets generate crises which can be mitigated by state intervention. The planning of economic growth is a task of the state, relying on the inventory of macroeconomics, whereby sudden crises can be avoided and extreme poverty can be overcome. State programmes (public works, healthcare) and planning can help capitalism take civilisation to a level of higher quality. Identifying development with economic growth was supported by the invention of the ’great indicator’ (GNP) in 1939. It became possible to rank countries of totally different structures, histories and cultures by one universal measure of development. Experts of development threw themselves into the task of lifting undeveloped regions up, driven by the optimism and success of the post world war reconstruction and the hey-day of capitalism.
Since the succes of development was identified with the advancement on the GNP scale, the increasing of material incomes was in the focus of development politics. Aims suchs as autonomy, freedom or justice only appeared as a result of increasing incomes in development policies. Non-economic aims, like the cultural integrity of a society or the taking into account of certain religious concerns were beyond the horizon of development. Underdeveloped countries had one choice: copying industrial civilisation.
The programme of development abused non-European cultures not only through its specific paradigmatic content. The imperial expansion of the USA was built not on direct oppression or colonisation like earlier British or Western-European practice. Acting as a global superpower after the Second World War, the USA used integration to the world economy as a peculiar form of domination. The organisation of world economy with its giant corporations and developed trade networks helped its own growth. When America wanted to compete with expanding communism, it had to offer an attractive alternative to hesitating ’underdeveloped’ states. Development built on Keynesian economics, the gradual increasing of national income and state organised industrialisation all came down to preventing the discontented of the Thirld World from recognising the way out in the soviet model.
It is easy to recognise this power-political content in the early theories of development. After the Second World War modernisation played the main role in development politics apart from Keynesian economics, mentioned already. The theory of modernisation is a typical example of the linear view of time and the hierarchical view of space. Rostow identifies five stations in his classic book, The Stages of Economic Growth , which countries go through during their development. The first one is traditional society, which is based on the image of pre-enlightenment Europe, where most of the population works in agriculture. The second one is the preparation of the take-off, in which scientific and technological progress gradually dismantles the barriers of traditional society, the role of agriculture starts to decrease, working class evolves. The third phase is the take-off, during which continuous investments bring a considerable economic growth to society, the processing industry takes the lead role and at the same time the political institutions necessary for the functioning of modern capitalism evolve. The fourth is the phase of maturity, in which the growth of the leading sector induces the growth of other industrial sectors, the whole society is turned into an industrialised society built on mass production and consumption. And at last, the fifth phase is that of mass consumption, in which the economy is built on producing complex consumer goods and services. Rostow considered only the USA to be in the fifth phase, Japan and Europe are ’coming close’, while the Soviet Union is ’awkwardly flirting’ with it. The aim of development politics is to help underdeveloped countries through these phases of development, so that they can step on the road where the USA is the first. It is perhaps little surprising that Rostow subtitled his work ’A Non-Communist Manifesto’.
While the forties and the fifties were ruled by Keynesian economics and the theory of modernisation, the sixties and the seventies brought a less optimistic air as a reaction: this is the age of structuralism and the theories of dependency. The thesis is that taking part in the ruling form of the international division of labour and the copying of industrialised societies does not lead to development. The interest of developed countries is that underdeveloped countries get stuck on a level of development where there is the kind of production that the developed need, but their economy is missing because it is set up for a different kind of production. So in these theories the connection to developed capitalist countries does not mean a start on the road of modernisation, it does not lead to catching up but leads to conserving dependency and being underdeveloped. One characteristic of the modernisation of colonial times is that most of the income was not invested locally (as it happened in the colonialist countries) but was taken out of the country. The end of the colonial era did not bring this kind of exploitation to an end, since the leading industrial sectors of underdeveloped countries are often controlled by companies of the developed ones, so the profit still flows out of the local economy. The profit that does not flow out is used up by the consumption of luxury goods by the comprador elite, which organizes and controls the local economy representing foreign interests. This elite is incapable of fulfilling the modernisation role characteristic of the bourgeoisie of western societies. Participation in the international division of labour conserves dependency and the state of being underdeveloped through unequal rates of exchange as well. Due to the decreasing price of raw materials relative to processed products, exporters of raw materials cannot step into the next phase of development. If and when they can switch from raw material export to the export of industrial products, the production of products and services with complex technological content take the role of processed products in the developed countries, the profitability of which surpasses the profitability of those products produced in the Third World (the industrial technology and organisational skills needed for that kind of production rests in the centres of the world economy), so dependency is once again conserved. The cure offered by the dependency theory is using an import-substituting economic policy to become independent of the poverty-conserving international division of labour and so to build up the actors and institutions of the local economy. The decline of the popularity of dependency theories was triggered by the experience that breaking the state of dependency is possible, the most often quoted example of which is India. Whether these successful break-outs were built on unlimited integration or a particular kind of development of the local economy is a question still disputed.
Although it was the battle between classical modernisation theory and dependency theories that was behind the development policies until the eighties, it is worth noting that there were alternative theories of development that broke with the traditional approach at other points. The theory of basic needs, that made a great career in the seventies, was one of them, or Amartya Sen’s capabilities approach to development or Maurice Strong’s theory of eco-development that was developed within the UNEP at the beginning of the seventies, or the concept of human scale development developed by Max-Neef in the eighties. However the winner of the theoretical duels were not the alternative development concepts but neoliberalism. A major change started in the seventies in the thinking about economic policies. The welfare state showed its first signs of crisis at this time. The liberation of the self-caring individual who is aware of their rights and obligations, liberalisation, competition-based market economy, residual instead of universal public services and the libertarian concept of the ’minimal state’ promised to offer a cure for the most pressing problems of the welfare state. Ronald Reagan and Margaret Thatcher played a pioneering role in carrying out neoliberal policies, while the World Bank and the IMF did the same in the field of international development.
The recipe of neoliberalism is summarised by the Washington consensus. The ten points in this collection of rules line out what policy conditions need to be met to successfully integrate into the world economy. The points composed by John Williamson can be summarised like this: fiscal discipline (stabilisation), cutting unnecessary expenditure (generally by cutting social benefits and redistribution), liberalisation of finances, liberalisation of the flow of capital, trade liberalisation, general deregulation and the dismantling of state ownership (privatisation). The Washington consensus is thus the public policy of neoliberalism. Its points can be clustered around the quartet of stabilisation–liberalisation–deregulation–privatisation. This is, or rather was, the essence of neoliberalism. The age of neoliberal globalisation built on the Washington consensus did not fulfill the expectations its supporters had. Around the turn of the millennium more and more of those in development politics started looking for a new paradigm.
The most well known insider critic of the official side, Nobel-prize winning economist Joseph Stiglitz of Columbia University, launched the programme of the post-washington consensus, confronting the ten points lined out by Williamson in the Washington consensus. Ignoring poverty and the state of health care, and deserting environmental problems can divert our attention from the practically unsustainable economic development. Stiglitz says that the unsuccessful break-out attempts of Latin-American countries point to the faults of neoliberal orthodoxy. He thinks that neoliberalism and the Washington consensus have broken free from their own economic foundations, ignoring the newest findings of economics. The state playing a role is always a precondition of sustainable development: the most important elements of this role are widely available education and helath care, social services, massive research and development and strong environmental politics. Stiglitz does not consider privatisation a magic tool either, bringing cases into the ’mainstream’ economic discourse which exemplify the failure of public services provided by private companies, pointing out the potential of state and local council ownership at the same time. The lack of regulatory capacity and corruption often set back the performance of private companies. Stiglitz does not see mending the Washington consensus sufficient, some of the basic theses have to be re-thought. It is worth noting that this discourse basically did not happen in Hungary. Moving towards the post-Washington consensus, the revival of political liberalism in form of the critique of economic liberalism is still waiting to be seen due to our peculiar historical situation and dependency on our path.

Globalisation and development
According to the approach of the Washington consesus, which is widely popularised - by the press and politicians -, only those countries can hope to start economic growth and development which take part in international trade and can attract foreign investment. The rhetorics of the World Bank from the end of the eighties was more and more dominated by those elements which, in retrospect, can be seen as a propaganda for globalisation and neoliberal economics. But the openly stated objective of the World Bank was the same ten years ago as it is now: reducing poverty. The road to this, according to neoliberal recipees, leads through reaching the ’great balances’ of the economy and through economic growth induced by getting involved in world economic processes. But the measures taken in order to reach the ’great balances’ always brings the worsening of the situation of the poorest. A number of reports have shown this and the World Bank itself also acknowledges it. Liberal structural reforms bring ’painful changes for the employees’, and ’undoubtedly, employees usually need to suffer during structural adjustment, maybe even more than capital does”. (But the Bank adds that we should not forget: this suffering is more due to earlier ’populist’ politics rather than the liberal reforms, and if we turn back from half way through the reforms, we cause even more harm to workers.) That is, the strategy of overcoming poverty means that first it gets a little worse, the poor become even poorer, social differences increase, but on the long run we can expect an improvement. Only neoliberal reforms can bring economic growth, and the latter will inevitably improve the situation of the poor. However, even the World Bank acknowledges that the growth of social differences can very well go hand in hand with economic growth.
Thus, reaching the declared aim of ’poverty reduction’ is not really helped by the intervention programmes. It seems that the model rather follows the logic that economic opening and liberal reforms create the basis for economic growth, which in turn will ease the problem of poverty and inequality. We saw earlier that the link between the last two elements of the chain of logic (economic growth and the easing of social problems) is quite problematic. Growth is at best a necessary but not a sufficient condition for increasing social well-being. (Let us quickly add: maybe not even necessary. We could always ask: what extent is necessary? Is a yearly 2% of growth enough? Do we need more, or is less enough? What is it enough for?) But the link between the first two elements in the chain is at least equally questionable, that is that liberal reforms induce growth.
One of the papers of the World Bank gives a detailed argument, supported with statistical data, saying that following structural adjustment programmes brings economic growth. It compares the economic performance of 26 African countries from the beginning of the eighties to the beginning of the nineties and it concludes that the countries following the recommendations of the World bank, turning towards world trade, applying neoliberal recipees were more successful than others. Without going into details, let us just refer to the analytic critcism by Castells (1996: 148-152), in which he explains that the argument is based on highly questionable statistical solutions. The reality is that higher economic growth is not at all related to whether a country applied the recommendations of the World Bank. We also need to note that even if some of the ’globalising’ economies produced substantial growth, that growth proved to be vulnerable in the subsequent financial crises of the second half of the nineties. The crisis sweeping through the world economy badly affected relatively successful, export-oriented countries like Mexico, Argentina, Brazil, Chile, Thailand, Malaysia, Indonesia and even the more developed East-Asian countries like South-Korea. Higher exposure to crises has to be seen as a side-effect of ’economic growth brought along by globalisation’.
Although recently the World Bank is willing to acknowledge that there is some truth in the criticism according to which globalisation does not solve the problem of poverty, increases inequalities and causes environmental damage, so an opening of the economy cannot replace development politics but can only be part of it, it still argues that globalising countries can still show better performance, withstanding all the problems, than those who close up. Even the ahistoric, de-contextualised country reports and the statistical comparisons that hide a lot can only prove that it is better to live in many globalisng countries than in some closed, dictatorial civil war torn states. This may be rue, but the argument is not really convincing. There may be a lot of bad alternatives to the present form of globalisation, but the real question is what do we actually consider development and what problems or opportunities does globalisation offer relative to that.
So, according to the neoliberal view, open or more quickly opening countries have better results than those who are less open or open more slowly (see for example World Bank 2002). However, it is also important to see that the countries the World Bank tags ’globalising’ and that actually had success with economic growth did not closely follow the recipee of the Washington consensus. They only opened their markets after they had built up their own industrial capacities, keeping protectionism and other market restrictions in place. So, we cannot state at all that it would have been the liberalisation of trade that fostered the development of ’globalising’ countries. It is possible that the eradication of poverty preceded the process of growth, and it is not at all obvious that economic opening was the reason for growth, moreover, some data show that first came economic growth and the development (conscious developing) of local industry, then came international integration. As Dani Rodrik summarised it: 'when authors argue that the link between the liberalisation of trade and the decrease in poverty is positive, they base that more on belief than evidence'.

The reasons of the crisis
Although the post-Washington consensus cannot be seen as a unified theory, it does bring attention to a few important mechanisms causing the crisis. Learning from the strengths and weaknesses of the theories of modernisation, those of dependencies, the alternative development theories and the post-Washington consensus, we can summarise the most important causes that underly the symptoms of inequalities and ecologic unsustainability.
The failure of the neoliberal development model. The programme of the 'new international economic order' which was on the agenda until the seventies and was meant to improve the chances of southern countries by global structural adjustment disappeared from the development discourse and the global expansion of free market took its place. In the meantime, in the eighties it was exactly those countries that had the most spectacular economic success that did not follow the orthodoxy of the Washington consensus. Far-Eastern countries coupled gradual liberalisation with selective industrial politics, which allowed the strenthening and the successful global integration of the local economy. The countries following rapid liberalisation (like for example Russia or certain Latin-American states) were dragged into a serious economic and social crisis. More and more data and evidence are proving that the growth of the economy does not automatically lead to the eradication of poverty, does not lead to the improvement of the quality of life (think of the Human Development reports of the UN, or the World Bank's participative poverty study, Voices of the Poor) and does not take us closer to sustainability. We have to re-think the idea of development itself, escaping from the trap of focusing on growth and the piling of products.
The weakening of the nation state. Since capital is flowing freely through national borders, nation states are less and less capable of influencing economic processes. The time after the Second World War was characterised by the success of the claims of organised workforce, embodied in the strengthening of the welfare state and health care, followed by the protection of the consumer and the environment. Since the representation of the free market and capital is a lot stronger in the international establishment than that of either the environment or social rights, globalisation has tightened the tensions that were more or less eased by the regulations on a nation state level. This is true for both Northern and Southern countries. This is important from the point of view of international development because the states' capabilities and tools to nourish development have also shrinked, which can be put right by global regulation or the localisation of the economy. The rules of the international economic institutions cut space for industrial politics too, apart from welfare interventions. The developing countries of our time do not have an opportunity to pursue an industrial development strategy like their predecessors, the European countries or the newly industrialised Far-Eastern countries did.
Unjust global economic governance. The injustices coded into the present global trade system make it impossible for the countries of the global South to take a considerable step forward to eradicate poverty. The trade regime has a much more significant, quantifiable effect on living standards than the main tool of international development politics, aid. Agriculture is still dominant on the labour market of the poorest countries, three quarters of the poor work in the agricultural sector. Trade restrictions of industrialised countries cause 20 billion dollars of loss to developing countries in agriculture only, according to conservative estimates, which is almost half of all the aid flow. So, the protectionist agrarian systems and the dumping maintained by the EU and the USA cause enormous losses for the agrarian producers of the South. So, in turn for the libearalisation of services most developing countries demand access for their agricultural products to markets but neither the USA, nor the EU has been willing so far. These agricultural systems do not only wreck the producers of developiong countries through dumping prices which are a fraction of the production costs, but they are also ecologically unsustainable, since most of the subsidies are related to the quantity produced, conserving mass production, industrial style agro-business instead of small-scale sustainable agriculture. Another field very important for the South, where the developed countries have also introduced a serious set of protectionist tools is that of labour intensive processed prdoucts, first of all clothing and the textile industry. As a result of clothing and textile related customs and subsidies developing countries lose another yearly 30 billion of income. The loss suffered in these two areas exceeds the amount of aid transferred to the Third World.

Vision: values and principles
Can we make do with the new development politics by Stiglitz and his peers? Apart from the discourse of the post-Washnigton consensus making the failure of neoliberlaism obvious, and so marking an important change in approach, we still cannot be satisfied. The bisases of the present form of globalisation can and have to be changed partly by global regulation, partly by strengthening national governance, partly by supporting local economic processes. It is time that the neoliberal policy of development gave place to the development policy of global justice. This politics has to bring change in four dimensions.
Sustainable human development instead of neoliberalism. We have to free the assessment of social and economic institutions from the trap of commodity fetishism. How many goods a country produces does not tell us anything about how free and self-sufficient its citizens are, how much they are able to use their capacities creatively, and to what extent they allow future generations the opportunity of freedom. The product is not the aim in itself, but the satisfaction of need available by the product. Are we able to live long, are we able to live healthily, are we able to write, take part in the division of labour, etc. ? These are the abilities that determine our freedom. Economic growth in itself does not result in the expansion of freedom in this sense. For that we need appropriate state policies and redistribution. Public policies and the institutions of redistribution have to concentrate on these abilities. If this interpretation of freedom is in the focus of development politics, the improvement of the quality of life will be the aim instead of the piling of products, and so a move towards sustainability could also be possible. Strengthening local, decentralised economic processes serving social capital and sustainability is also an important part of this new paradigm. The existence of market failures, the freedom-restrictive and development-prohibitive effect of inequalities and the huge environmental burden of globalised capitalism point to forms of state and community action beyond the market. This new paradigm has to rule national (eg. Development agencies) and multilateral (eg. The World Bank, IMF) development politics institutions.
Global environmental justice instead of ecological exploitation. Industrialised countries exert a disproportionate burden on the Earth's ecosystem, that is they monopolize an unfair share of the available ecosystem-services. The sustainable human development of the Global South is unconcievable without the North reducing its ecological footprint. This may be the greatest task the industrialised countries can do in order to forward global well-being. Global climate change has made it obviuos to each of us that our civilisation is presently putting so much strain on natural resources that it is not sustainable. Since most of this strain is coming from the region presently called 'developed', these countries can no longer be seen as the pioneers of development. The path they have gone down is not possible to walk any more. Industrialized countries have to therefore be pioneering in decreasing their environmental strain, reducing their ecological footprint until they reach a just and fair share. Development politics does not make sense without global environmental justice, and that starts where international development has not been looking so far: in the centre states of the world economy.
A just global economic architecture. What is given generously by development policy is taken back twice by trade policy. We have to break with the international development politics which aims at partially covering the damages caused by trade policy. We have to make markets available for the producers of the South in sectors important to them, first of all in textiles and agriculture, which Northern economies are presently protecting with high customs and subsidies. Besides that, trade rules have to allow more room for applying policies in order to support economic development. The present system of intellectual property rights has to be reframed so that a freer flow of knowledge and technology can become possible, since without that the transition to more complex production methods and breaking raw material export dependency is inconceivable. During the negotiations on the trade in services it has to be kept in focus that the space and quality of the public services that correct the failures of the market and carry out redistribution should not lessen, respecting the social political autonomy of the copuntries of the Global South.
Cultural autonomy instead of development arrogance. We have to get rid of the cultural approach which considers the present centre-countries of the world economy the champions of development. The self-conceited politics of the lifting out of poverty, of showing the way out is just as oppressive as was the politics of colonialism. We have to make it possible that societies imagine their own future, we have to make it possible that alternative modernities be born, we have to make autonomy available for every culture. The politics of international development in the past fifty years relied on the notion that 'underdeveloped' countries can climb the ladder of evolution by copying the leading USA, Europe and Japan. If nothing else, then the ecological crisis made it clear in the meantime that the way of modernisation followed by the 'leading' is a dead end. Industrialised countries cannot go on behaving as if only they knew which is the way forward. So global justice is just as important in the dimensions of consciousness and culture as in the environment and the economy.

Reform of the traditional toolkit of development politics
In the following I collect and elaborate on those points which line out the way for international development to the vision described above. I added to this general public policy reform proposal some European and Hungarian peculiarities.
1. Guaranteeing coherence
The most important task during the reform of the system of international development is ensuring policy coherence. The coherence between trade and development politics is of utmost importance (in a wider environment we cannot forget the effect of the global financial and investment regime on development goals), and it is not only an issue of activist so sensitive to moral questions. The expression itself comes from the Development Aid Committee of the OECD from 1991. In their definition: ’policy coherence for development’ means that the needs and interests of the developing countries have to be taken into account when forming the global economy. It means a pursuing of mutually helpful policy activities crossing over different ministries and government institutions, thus creating the synergies needed to reach development goals. ' UN memeber states reinforced the need for policy coherence in the Millennium Declaration (Point 8., Global partnership for development) in 2000, and further in 2002 in the development summit in Monterrey. But Hungary has a stronger obligation as well: The 3rd paragraph of the Treaty of the EU states: 'The Union assures the coherence between its foreign policy activities and between foreign policy and other policies too.' The two most important fields where coherence is essential are is international trade and environmental politics. Without going into details, we have to highlight the most important connections, withouth which the development politics of global justice is unimaginable and unachievable.
The Doha ministerial declaration stated that the priority of the trade policy delegates should be the eradication of poverty. But there is no real performance behind the rhetorical skill and nice words. The practice of trade policy affects development activities in many dimensions. First, we have to re-assess the propagation of rapid liberalisation. The sudden liberalisation of import may cause a more than appropriate decline of national production sector. The principle of gradualism serves development goals better. Export subsidies also have an important effect on development. European and American subsidised agrarian export gives the producers of the third world serious disadvantage. Agrarian and textile customs and quotas also cause a considerable loss. Export subsidies are very difficult to reconcile with the concept of sustainable agriculture, but a minimal level of customs protection can be reasonable, especially if the production of the country in question is built on ecological and social exploitation. The rules of multi-lateral trade politics, the agreements of the WTO also have a negative effect on development, primarily by narrowing the space for development politics. The TRIPS agreement makes the adaption of advanced technologies difficult by the over-protection of intellectual property rights; the GATS agreement conatins too strong restrictions in the field of the regulation of services and can promote and cement the controversial privatisation of public services; and the TRIMS agreement prevents the application of important industrial policy instruments (a compulsory local share in big investments, local application rules, R&D obligations) which were central to the development strategies of the Far-Eastern countries considered 'successful globalisers'.
The injustices of international trade policies signal the faults of the whole global economic governance. The role of the World Bank and the IMF in economic development was quite contradictory. Structural adjustment loans, which were provided by both institutions, made the economies of the recipient countries fragile, contributing to the formation of a dual structure. It is partly a result of this that global inequalities increased in the past two or three decades. Without the reform of global economic governance, including financial regulations and the refrom of trade politics, the achievement of development goals is not viable.
2. A gradual increase of the sum of development aid.
The Millennium Development Goals set out in 2000 need a lot more aid than today to be achieved. The Pearson report published at the end of the 1960s prescribed 0,7 of the GNI to be spent on development aid. This goal still has not been achieved today, looking at the OECD average. Moreover, the ratio and total value of development aid both decreased considerably in the nineties. Although the situation has got better, the 0,7% target is still a distant dream for most donor countries. Only Denmark, Norway, Sweden, Holland and Luxembourg spends at least this much on international development . The donor countries reaffirmed their committment to a 0,7% development ratio at the conference in 2002 in Monterrey. The EU-15 undertook to reach this goal by 2015, while they expect the Eastern-European countries who joined later to reach 0,33% by the same deadline. In the meantime, Hungary spent 50% less on development aid than a year before, so we are not closer but considerably further from the 2015 target.
3. Harmonising the priorities of aid with the Millennium Development Goals and sustainable human development.
The increase of the amount of aid does not serve the eradication of poverty and sustainability if it is not spent in the appropriate fields. Services that build human capital should be handled as a field with priority (education, health care, basic social services), since they promote a more equal share in the gains of economic growth and the eradication of economic exclusion directly. The strengthening of sustainable economy should also be handled as a priority, above all ecological rural development (agricultural cooperatives, community supported agriculture, organic farming) and small scale projects that reach the poor best (intermediary technologies, like rainwater collecting; locally investing micro enterprises; different forms of micro-financing, like micro credit, community banks, savings cooperatives or local money). Thirdly, it would be worthwile to re-think who the partner countries should be, more strongly targeting the poorest countries, and applying the principle of targetting instead of our own economic and foreign policy interests.
4. Sustainable security: cutting military spending to the benefit of development cooperation.
It is more and more obvious, that the security threats of our time (pandemics, environmental risks, terrorism, migration) cannot be dealt with using the traditional military tools, since these are closely linked to extreme poverty, to an inadequate quality of life and to sharp global inequalities. However, this recognition is not reflected in the budgets. Every dollar spent by OECD countries on international development is twinned by ten dollars spent on the military. Cutting military spending and seeking multilateral political solutions instead of improving military infrastructure could release serious resources for international development goals, which serve sustainable security in the long term.
5. Finding innovative forms of financing
There are a lot of opportunities to finance international development goals beyond budget financing. One of them is the International Financing Facility (IFF) proposed by the UK, which would allow the immediate increase of development aid by releasing bonds, without the governments having to reach for cash immediately. Other proposals refer to different kinds of global taxes. One of the most well-known is the Tobin tax, which would achieve two goals at the same time by taxing short-term speculative flow of money: it would reduce the volatility of international financial markets and thus the chance of sudden financial crises and it would also increase the budget available for development. Belgium has already voted in favour of introducing the Tobin tax if other European countries join in. A similar source could be the international tax on kerosene which, apart from raising funds, could help more sustainable transport an travelling habits develop.
6. Debt relief
A number of developing countrise have accumulated a large sum of debt in the past decades, the interest on which takes scarce money away from actual economic and social development goals. Although some serious advancement has been achieved in the framework of the HIPC initiative in the past two decades, debt is still a heavy burden for developing countries. Hungary has to carry on forgiving bilateral debts in the future for those countrise in need, and has to stand up for further decreasing the debt towards multilateral development institutions.
7. Programme based aid instead of project based aid
It is essential for the efficient use of development aid to be programme-like. Most of Hungary's bilateral international development activity is project based, meaning short term, ad hoc, and the support is outside the budget of the recipient country. Developiong the public services (health care, education, water) to reach the Millennium Development Goals is a long term task, which is not viable if the recipient countries cannot plan ahead for a considerable time and cannot count on the reliable arrival of development sources. Programme based financing also creates more transparency in spending the money, since recipient countries have to create a development strategy to receive the sum. These development strategies (e.g. Poverty Reduction Strategy Papers) also ensure that the money is spent according to the priorities of the recipient country, not on projects reflecting the considerations of the donor countries. Project based aid increases transaction costs as well, thus worsening the efficiency of aid. Parallel structures created to manage projects weaken the government capacity of the recipient country. But programme based financing is done through the budget, and so improves the government's abilities better.
8. Predictability: reducing fluctuation
Programme based aid brings along higher predictability. It is impossible to run long term poverty reduction programmes without a constant and reliable source of finance. At the beginning of the 2000s the inflow of aid fluctuated as much as 10% year by year in some countries. However, improving the education and health care system is a long term financing task, which need aid to flow predictably and reliably.
9. Reducing conditions
Most of the aid comes to the recipients bound to conditions. In many cases these require public policy reforms which serve 'good governance' in theory. Some of these conditions undoubtedly promote development (e.g. stability, transparency, rolling back corruption), other conditions are the remnants of an outdated economic philosophy however. Experience related to the privatisation of state companies and services, above all public services do not show that these steps would serve sustainable human development. The situation is similar with the liberalisation of trade and capital flow: although autarky is not viable in the long run, successful economies of past decades show that applying selective industrial policies, bringing up certain national success sectors, demanding a national share and gradual liberalisation can be a successful economic policy recipe. Demanding steps contrary to these in conditions bound to aid is not a defendable standpoint. Over-application of conditions worsens the ownerhsip-feeling of the recipient country thus worsens the efficiency of aid. The structural adjustment credits given by the World Bank in the eighties and the nineties are an example of this practice, which the World Bank has reviewed since due to the criticism it got.
10. Rolling back bound aid.
The practice of bound aid means that the donor country prescribes the buying of the products or services of its own companies as a condition of using the aid. Hungary is practising such activities through bound aid. Its most frequent form is technical assistance, which often means travelling, with questionable efficiency. Bound aid can be criticised in many respects. Firstly, it narrows supply which the recipient country can choose from, decreases competition and thus worsens efficiency. Apart from that, it often results in the companies of the donor country gaining market, which can bring along the busting of local enterprises. Services coming from the donor countries are often much more expensive than those from elsewhere or local ones, so a given amount of aid can contribute to less development. According to calculations of the UNDP bound aid reduces aid efficiency by up to 10-30 percent.
11. Donor-coordination
Bilateral development projects coming from different donor countries often put a great burden on the recipient countries. Their weak government capacities have to be spent on managing uncoordinated projects and less energy remains for the activities actually aimed at eradicating poverty. Better coordination of aid can also increase efficiency of development policies.
12. Political institutional strengthening of Hungarian NEFE (international development): law, training, transparency and monitoring
A unified international development law is needed in order to increase its strategic weight, and all stakeholders should be included in the process. A stronger Hungarian presence in international development cooperation is not possible without the expertise and social awarness. The setting up of a Hungarian international development training could help this, covering the expertise need of both government institutions and NGOs, and increasing the presence of the issue in the media. An especially weak point of Hungarian international development is that transparency and monitoring is not guaranteed. Without these it is impossible to assess the efficiency of the Hungarian aiding practice. The spending of funds has to be made transparent, project assessment reports have to be made publicly available.
The development path followed by the industrialised countries of the Euro-Atlantic civilisation is not viable. If the countries presently over-utilising the ecosystem continue their present production and consumption structure, global environmental justice will be violated. But it is equally unsustainable if the 'developing' countries simply try to copy the 'developed' in the name of eradicating poverty. The development policy of global justice has to face this double challenge. Actors of development policy have to actively stand out for the North to decrease its burden on the environment. Increasing efficiency is important in this respect, but not sufficient. Increasing the efficiency of using fossil fuels does not lead to overall cutting of CO2 emissions. Reforming and decreasing the consumption of Northern states is a must. On the other hand, if development politics wants to stand up to global justice, it has to promote a development in poorer countries which skips the energy intensive and highly polluting industrial phase. This 'ecological leap' is possible if bi- and multilateral development agreements support the spread of renewable energies, if they help a production and consumption structure evolve which results in post-industrial economies. Instead of giant dams and coal fired power stations they have to prefer green investments and the increasing of energy efficiency; instead of motorways they have to promote community transport; instead of a green revolution they have to rely on ecological agriculture. This kind of development policy can only be successful if the donor countries do the steps to reduce the burden on the environment on their own doorstep too and pioneer in creating a sustainable economy.
So we need a lot more to reach the goals of international development than good old aid. Coherence and a global structural approach have to be our starting point. Development policy cannot be treated as just another 'sector', the tasks of which can be covered with two conferences, a few publications and a little aid. Although aid and development projects are important, it is much more important that we create a global economic environment, a global set of rules which makes the sustainable human development of the poorest countries possible. We have to take it seriously that economic growth is not enough to guarantee human rights, we need coherent environmental, economic and social efforts. It is about time that the charitable arrogance of development was replaced by the sobriety of global justice. The words of one of the greatest feminists of the 19th century, Mary Wollstonecraft, have not lost any of their relevance: ‘It is justice, not charity that is wanting in the world’.

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