2044 – Some 30 years into the future: Whats happening now?

7:17 pm. I gather my things as I prepare to head home after a long day of work. As I drive along the Boulevard Mitterrand, I regretfully observe the wastelands of the once vibrant capital of Côte d’Ivoire, Abidjan. I check my watch. 7:44 pm. I slightly accelerate and exit the boulevard. I check my watch again. 7:49pm. I speed through the empty streets of the Bingerville municipality, as I finally approach the garage of my apartment building. 7:56 pm. Just in time. Relief fills my heart. Upon entering my apartment, I quickly remove my coat and rush to the window. As I look down from the 7th floor, I see the soldiers patrol the roads. Had I been caught at a red light, I might’ve incurred a penalty for not respecting curfew.

It is Friday April 8th, 2044. The BRICS have achieved considerable power and today 64% of the worlds total GDP can be attributed  to them. Several countries and major cities of the 2010s no longer exist. The population is now 9.2 billion. The world suffers from major unemployment and high crime rates. We are largely living in an environmental wasteland.

“What went wrong?” people ask themselves. “How could things have gotten this bad?” What went wrong? I’ll tell you what went wrong. We forsook our ideals. We deserted the well being of our planet, and ultimately gave up on ourselves. What happened is that we abandoned sustainable development for accelerated economic growth.

In a bid to join the ‘superpower club’, BRICS made extensive use of primary resources at their disposal to increase their exports and revenue. Poor farming and grazing practices resulted in the degrading of lands, and the incidence of illegal logging which governments, such as Brazil, were allegedly sanctioning, greatly increased (a practice which is, in today’s world, punishable by death).

Global superpowers of the late 2010s, reluctant to let these rapidly developing nations join the superpower clubs, invested increased time and money into the search for oil wells and the extraction of oil all around the world, putting a heavy strain on our planet. A bill passed by the now disbanded United Nations (as increased competition between member states eventually divided the organisation) in 2019 , stated that increased efforts would be made to reduce oil dependency and turn to more sustainable energy practices. However, the exact opposite happened, and despite the technology being largely sufficient for these sustainable practices to occur, cars today are virtually the same as they were 30 years ago. It wasn’t until about two years ago that the world superpowers realised that their oil resources were reaching their limit, and that the effort to invest in alternative, and sustainable sources of energy would have to truly take off.

But by then, the environmental damage was already done. Global temperatures had risen by 2˚C since the 2010s, and the increase in sea level had led to the disappearances of nations such as Bangladesh, Cape Verde and the Netherlands. Tropical storms and hurricanes are much more frequent than they were back in my teenage years, and are causing even bigger problems.

Unemployment rates and poverty are extremely high as a result of the damages caused by natural disasters, and the planet is having difficulties supporting the 9 billion people which currently reside on it, with damaged lands inhibiting the growth of crops and cattle pasture. Additionally, the mass migration of displaced people from flooded areas to safer countries is causing increased conflicts and crime rates within nations. Death rates are rising yearly due to both hunger and crime. Situations in some countries may be described as anarchic.

In order to control populations, governments have now recently placed curfews on populations, prohibiting them to roam outside between the hours of 8 pm and 6:30 am. Anyone who breaks curfew will be subject to persecution. Life has become increasingly restricted by the degrading environment, and I blame this unfortunate outcome on unsighted, and greedy government officials, who placed their interests above that of the international community, and who’ve essentially traded planet earth for economic development.

Several projects to ‘rehabilitate’ the government are being put into action, however. Governments are aiming to finally abolish gas based transportation models and provide clean transport worldwide, to reforest, provide clean energy and to educate nations in sustainable activities, among other things, all of which are half-century old projects which are just starting to reemerge. Over the past 30 years, I’d say the human civilisation has regressed, if anything.

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Is Non-Financial Aid Undermining Local Economies in Africa?

Over the past few decades, states and other development actors have become increasingly involved in a worldwide effort to promote development, notably in African countries. It is safe to say, however, that despite some successes, the results have largely been underwhelming. Nearly $1 trillion in development aid was transferred to Africa in the past 60 years but despite that, per-capita income today is lower than it was in the 70s. Additionally, over the course of the past 20 years, the proportion of the African population living on under $2 a day nearly doubled, with over half of the population in this situation today (Moyo, 2009). These statistics are epitomised by the fact that more than a quarter of the countries in sub-Saharan Africa are poorer now than they were in 1960 (Acemoglu and Robinson, 2014).

Development in Africa – Not looking too good

There are several factors which I believe have contributed to these figures, notably faulty economic policies promoted by international institutions such as the IMF and World Bank, conflicts within states and environmental disasters such as famines. But could ‘well-intentioned and admirable’ aid have played a part in the current discouraging development situation of African countries? My answer is yes, and in numerous ways. Aid, especially financial has played a starring role in fuelling the corruption of African government officials and its abundance has increased African reliance on foreign assistance. However, in this article, I aim to focus on the impact of non-financial aid on local economies in Africa, as I believe that it’s undermining of these economies has played a large part in stalling development in the region.

As economist Carl Schramm interestingly states, “with the best of intentions, we’ve often inflicted the worst of outcomes on unwitting people.” (Schramm, 2011) I agree that foreign aid is largely well meaning and it comes in many different forms from NGOs, IGOs, people and states who are for the most part hoping to help reduce poverty, increase development, and essentially improve the quality of life of people in developing countries.

However as Schramm states, these good intentions can often lead to unwanted results. A prime example of this is what I believe to be aid’s detrimental effect on African local economies.Non-financial aid, which I define as non-monetary based assistance such as food aid and clothes aid, is a massive contributor to the undermining of these economies. Using the case of food aid, western governments tend to purchase food products from commercial farmers within the country, ship these products to Africa, and then donate them to aid groups, as the U.S.A does. These aid groups then sell these products for cheap prices, which in turn, helps fund their programs. A win-win situation? Not in the slightest.

Food Aid – Not the right policy?

As a result, the economies of these African countries end up getting flooded with cheap goods exhibiting prices which local farmers are unable to compete with. The income of farmers in turn decrease, and they become unable to provide for their families and contribute to the growth of the local economy. Farmers may ultimately give up farming and look for other sources of income, consequently leading to increases in unemployment rates. 

The same chain of events occurs with clothes, with cheap second-hand clothes continuously getting shipped to Africa as a form of charitable aid, and being sold cheaply by charities. Sure, these goods are more affordable to the population than domestically produced goods. However, they inhibit the development of the local textile industries and in turn the local economy. A report in 2006 provided figures which revealed that in Ghana, textile and clothing employment fell by a staggering 80% from 1975 to 2000 and that in Zambia, the number of workers declined by at least 15,000 from the 1980s to 2002, falling from 25,000 to under 10,000 (Traub-Merz, 2006).

Largely as a result of cloth donations, textile industries are failing in Africa

You know how your local buying local activist always nags you about buying local when you cross him in the streets on the way home from work or school in your local town (emphasis on local)? Well, you probably don’t have one of those, and neither do I, but if by some miracle you do, the point they’re trying to get across is that buying local does not only benefit the local workers who’s jobs are threatened by the presence of a Whole Foods or Toys “R” in their town, it also benefits the community as a whole. Studies have shown that buying locally promotes economic growth as more money stays within the community. One study, for example, has found that for every $100 spent at local businesses, 68$ remains in the Chicago economy, in contrast to only $43 remaining in the economy from the same amount being spent at a chain. The study also showed that for every square foot occupied by a local firm, the local economic impact is $179, while that figure drops to $105 for chain firms. (Andersonville Development Corporation, 2004)

When looking at Africa, when I say locally, I mean on the national scale or even the continental scale, as developmental circumstances are different. Additionally local businesses and workers aren’t nearly as protected in Africa as they are in Chicago, so they suffer much more if their clientele decreases—and so does the local economy. Non-financial aid is promoting the purchasing of goods produced outside of African countries because of their competitive prices, leading to local African consumers preferring these products to more expensive domestically manufactured product. This severely damages the local economy, as it leads to loss of jobs and bankruptcy of local business. Non-financial aid is essentially doing the opposite of what it was intended to do —develop.

Interesting Reads:

Robyn Curnow and Teo Kermeliotis, CNN – Is your old t-shirt hurting African economies?

Dambisa Moyo, The Wall Street Journal – Why Foreign Aid Is Hurting Africa 

Celia W. Dugger, The New York Times – Charity finds that U.S food aid for Africa hurts instead of helps

Bibliography

  1. Acemoglu, D. and Robinson, J. (2014), Why foreign aid fails – and how to really help Africa, Available: http://www.spectator.co.uk/features/9121361/why-aid-fails/, last accessed 14 January 2015
  2. Andersonville Development Coorporation (2004), The ANDERSONVILLE STUDY of Retail Economics, Chicago: Civic Economics. 1
  3. Curnow, R .and Kermeliotis, T. (2013), Is your old t-shirt hurting African economies?, Available: http://edition.cnn.com/2013/04/12/business/second-hand-clothes-africa/, last accessed 15th January 2015
  4. Dambisa, M. (2009), Why Foreign Aid Is Hurting Africa. Available: http://www.wsj.com/articles/SB123758895999200083, last accessed 14th January 2015
  5. Dugger, C. (2007), Charity finds that U.S. food aid for Africa hurts instead of helps, Available: http://www.nytimes.com/2007/08/14/world/americas/14iht-food.4.7116855.html?pagewanted=all, last accessed 14th January 2015

Structural Adjustment Programmes: More Harm Than Good for African Development? – An Analysis of the Much-Maligned World Bank and IMF Program

What are Structural Adjustment Programmes (SAPs)?

SAPs are economic policies for developing countries which were introduced by the World Bank and the IMF in the 1980s in response to a debt crisis in Africa in the 1970s. These programmes mainly consist of conditional loaning. Countries are able to get loans from the IMF or the World Bank if they accept conditions given by these entities, which usually consist of policy reforms intended to boost economic development.

Are World Bank and IMF policy reforms impeding development?

How did they intend to fuel development?

SAPs have recognisable neoliberal features, which are reflected in the tendency of their conditions to favour free-market capitalism.

These conditions were similar for the majority of developing African countries. Listed below are typical conditions for SAP loans along with their wanted effect.

Reduction in government spending – to lower public deficit, including through privatisation of public companies

Large-scale trade liberalisation – to induct countries into the global market, increasing exports and competitiveness of local companies (which in turn increases the incentive to cut costs and increase efficiency), effectively increasing income

Large-scale privatisation of public services and companies– to decrease government expenses while increasing efficiency of services provided by these companies

Deregulation of economic policies (which includes stopping the provision of social subsidies and labour market deregulation) – to reduce public deficit, and increase private competitiveness through lower production costs employment

Replacing import substitution with export production – Export production to increase government’s income and international competitiveness of local companies, and the limiting of import substitution to reduce import prices 

However, in spite of these programmes, a great number of African countries are still struggling to develop at a steady pace. Why is that? And to what extent can it be attributed to the introduction of SAPs?

How have SAPs affected Africa?

Despite the difficulty of exclusively exploring the effect of SAPs on Africa (because of external factors such as conflict and corruption), it is today a widely known fact that SAPs have dScreen Shot 2015-01-15 at 07.07.33one a lot more harm than good to African countries. Put more tactfully, SAPs have largely contributed to the increases in income inequalities (locally and internationally), increases in unemployment, decreases in quality of social services, increases in debt, and collapse of domestic manufacturing. The table below gives a more comprehensive understanding of how SAP policies led to further developmental problems for African countries and their citizens.

Screen Shot 2015-01-15 at 06.39.09

There are plenty of statistics that demonstrate the detrimental impacts of SAPs in Africa. Five years after SAP policies were implemented, several countries experienced severe unemployment, such as Uganda, who lost over half of their civil service (170, 000) and Zaïre, who lost 300, 000 civil workers.

Additionally, currency devaluation in Africa post-SAP undermined the foreign exchange value of exports in several countries. For example Zimbabwe, who’s export foreign exchange value had increased by 9% before the implementation of SAPs, began declining annually by 2.7% after the introduction of SAPs.

The educational sector was particularly hit hard by SAP policies, with African illiteracy rates increasing after showing sharp decreases in previous  years. The cutbacks in government spending on public services coupled with the increase in debt led to the Zambian government spending 35 times more on debt repayment than on primary school education between 1990 and 1993.

Screen Shot 2015-01-15 at 07.08.19Increased high volume loaning by the World Bank and IMF has led African countries into a debt cycle, in which they need further loans to repay debt, making them unable to use much of the loans for development. These countries usually end up having to reimburse much more than they initially borrowed because of the interest rates. A striking example of this is the case of Nigeria. In 1978, Nigeria had borrowed $5 billion. However, by 2000, they had payed back $16 billion but still owed $31 billion.

SAPs have undoubtedly been unproductive and held back African economies. However this still leaves the question; despite similarities with several of today’s prospering economies, why weren’t SAP policies effective in promoting development in Africa?

Why Haven’t SAPs Worked?

There are several theories which may be able to explain SAP failures. Firstly, economists argue that, despite theoretical evidence which suggests that SAP policies should accelerate development, African countries weren’t ready to implement these measures yet. Historically, today’s richest countries built up their economies through protectionism and only really opened up their economies when their domestic market was solid enough to compete internationally. That way, these countries were able to benefit from increased imports, while retaining a strong domestic economy. Additionally, these countries gave a central role to the state in economic activity. In contrast, SAPs are promoting methods for development which are forcing African countries into free-market capitalism (mainly through the removal of protectionist policies and state presence in economics) with domestic economies which aren’t ready for international competition, causing economic decline.

Corruption may also be to blame for the inability of African countries to steadily develop. American economist and professor Joseph Stiglitz said in an interview in 2001 “Rather than object to the sell-off of state industries, national leaders happily flogged their electricity and water companies. ‘You could see their eyes widen at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billions off the sale price of national assets”. Corrupt government officials easily altered their actions when money for them was involved. Corrupt governments have also used international loans to pursue conflict, for arm deals and other interest, which meant that the majority of these loans couldn’t be used towards development. Some argued that these illegal uses of loans were no secret to rich nations, who supported these countries for their own national interests, especially during the Cold War.’

A third possible reason for the ineffectiveness of these loans may be related to the fact the the IMF and World Bank are largely influenced by their largest donors due to their ‘one dollar, one vote’ system, whichScreen Shot 2015-01-15 at 07.09.57 benefits rich countries such as the UK, USA and France. For example, the US controls 17% of the voting power at the IMF. Until November 2010, an 85% majority was required  for a decision, meaning that the U.S had veto power in the IMF. It can be argued that SAP policies opened up African markets to create a cheap source of important raw commodities for rich Western countries, while also allowing them to sell their products to African consumers with little competition from domestic industries. It this controversial argument, SAPs were essentially implemented (under the supervision of the World’s superpowers) to further develop Western countries at the expense of untapped African economies.

Bibliography

  1. Heidhues, F and Obare, G. (2011), Lessons from Structural Adjustment Programmes and their Effects in Africa, Quarterly Journal of International Agriculture, 50 (1), 55-64
  2. Jauch, H. (2012), How The IMF-World Bank and Structural Adjustment Program(SAP) Destroyed Africa, Available: http://newsrescue.com/how-the-imf-world-bank-and-structural-adjustment-programsap-destroyed-africa/#axzz3IhiFrD7R, last accessed 23rd October 2014
  3. Moussa Dembele, D. (2014), The International Monetary Fund and World Bank in Africa: A ‘disastrous’ record, Available: http://www.pambazuka.net/en/category/features/24816, last accessed 2nd November 2014
  4. Shah, A. (2015), Structural Adjustment—a Major Cause of Poverty, Available: http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty, last accessed 2nd November 2014
  5. Trade, foreign policy, diplomacy and heath – Structural Adjustment Programmes (SAPs), Available: http://www.who.int/trade/glossary/story084/en/, last accessed October 18, 2014

What Is Development?

At the present time, no  widely recognised definition truly exist for development. Views on development and its true definition vary from theorist to theorist and there isn’t one definition that overwhelmingly stands out. Despite this, development is constantly measured. There exists several development indicators, which include GDP per capita, literacy rates, gender equality, infant mortality rates, and the environmental performance index among others. As shown by these indicators, we tend to relate development to concepts such as social justice, economic growth, poverty reduction, personal well-being, and environmental health. In essence, a developed country will have, for example, a thriving economy, low levels of poverty, and high levels of gender equality, while an underdeveloped country will have just the opposite. As Robert Chambers said and as shown by the above information, development gives connotations of ‘good change” (Chambers, 1997). Therefore, I’d argue that we could vaguely define development as good change. However that brings up a further question: what is good change?

Are the MDGs an accurate representation of good change?

The answer to the question ‘what is good change?’ depends on a few important factors: what change matters, where and when the change is taking place. Good change in one place and at a certain time may not necessarily mean ‘good change’ in a another place and time. Therefore it is not a universal value as it is subject to other factors. For example, several development projects run by different nations and organisations in African countries focus on economic growth. These projects are considered to promote ‘good change’ by these entities, as they are believed to be the change several of these countries require at this time. However these same projects would not particularly be considered as ‘good change’ in a country such as China, because China doesn’t currently need help stimulating their economy. Perhaps in the 1960s, these projects would’ve been considered ‘good change’ in China because of their past economical frailty, however, today they are the world’s second largest economy. When describing development as good change, we can safely say that development does not have an absolute definition, but rather a relative one.

There are some that argue that development isn’t essentially good change due to the adverse effects of development-promoting projects that have previously been put into place. One of those is development theorist Gilbert Rist. Rist believed that development should be defined by its impacts and consequences rather than what we ‘want to believe’ it is. He defined development as “the general transformation and destruction of the natural environment and of social relations in order to increase the production of commodities (goods and services) geared, by means of market exchange, to effective demand” (Rist, Gilbert 2007) 

Rist on Development – “the general transformation and destruction of the natural environment and of social relations in order to increase the production of commodities (goods and services) geared, by means of market exchange, to effective demand”

He believed that the very word ‘development’ was a political tool more than anything else, and that development couldn’t be referred to something as good due to the way its been carried out and advertised for alternate purposes.

However I believe that development should be defined by what is believed it should be: vaguely, ‘good change’. Actions taken for development may lead to adverse effects however this isn’t always the case.  ‘Development’ isn’t always coupled with adverse effects which are the direct cause of itself, as Rist implies in his definiton. A perfect example of this would be the Ivorian economic ‘miracle which took place between the 1960s and 80s. There are too many other factors involved to be able to plainly say that development ultimately leads to unwanted results. Development can therefore be defined as good change specific to space and time, and anything else can not explicitly be referred to as development.

Bibliography:

  1. Chambers, Robert (1997) ‘Responsible Well-being: A Personal Agenda for Development’, World Development, Vol. 25(11):1743-1754
  2. Rist, Gilbert (2007) ‘Development as a buzzword’, Development in Practice, 17: 4, 485-491