International Non-profits
One of the topics in the reading was about the merits (or demerits) of foreign aid. One side of the issue, presented by William Easterly claims that foreign aid is a failure. Easterly made several good points in the video. One is that foreign aid (in this case the Worldbank) can be a bureaucratic nightmare. Not only does the Worldbank have many administrative shortfalls but so too does the government of the poor countries. Both the poor countries and the Worldbank don't have the capacity or the incentive to track the aid efficiently. Some of the problems that Easterly talked about was lack of feedback between the poor countries and the Worldbank, the lack of accountability, and the lack of transparency. I found Easterly's article to be true in some respects but utterly flawed in others.
Easterly's article frames the Worldbank as the model of all foreign aid, which clearly shouldn't be the case. The Worldbank and the IMF can be failures when requiring economies to restructure and open themselves up to multi-national corporations The problem is not that they give foreign aid it's the loops they require the developing countries to jump through. Therefore, Easterly's primary problem with foreign aid is not systemic but administrative (http://www.heritage.org/research/reports/2003/09/imf-and-world-bank-intervention-a-problem-not-a-solution). Should it be administered in the proper way, as it was with Spain, it can be a success. In 1986 Spain received 10 billion dollars in foreign direct investment (FDI) aid in exchange for liberalizing their economy (among other things). Prior to the aid Spain's economy was in shambles – a closed “backwards” economy. The aid allowed Spain to build up its infrastructure and reinvigorated it's domestic industries. There are clear administrative differences between the way the EU gave aid and the way the Worldbank did that need to be understood. The FDI in Spain was well coordinated between the Spanish government and European investors and it's success was a win-win for both parties (http://wehner.tamu.edu/mgmt.www/NAFTA/spring99/Groups99/bunny/final.htm)
Foreign aid can work as Ngozi Okonjo's article explains, there just needs to be structural changes in how it is administered. I don't think that anyone would argue that foreign aid is a panacea – pouring money into the problems alone is not the solution. Rather foreign aid can be as Ngozi claims can be a facilitator, a catalyst for growth, as it was in Spain. Ngozi claims that when you give people aid they are going to be productive in the economy, from an economic standpoint if so many African people weren't sick or debilitated they could give back to the economy. Therefore aid is more than just humanitarian, it is economical. The failure of the Worldbank aid as I'm sure Easterly could agree was the lack of coordination between the two parties. Had there been more coordination, and had the aid been administered in more economically catalytic ways – such as infrastructure or empowering women (as Ngozi argues), it could have been more of a success.
The website for the Mercycorps was really interesting. I feel like Mercycorps is a really good organization that has a lot to offer, it's also pretty cool that its headquartered in Portland. One of the goals for Mercycorps is to help with indoor air pollution. Environmental health problems to these third world countries is not CO2 emissions but things as fundamental as indoor air pollution – something that doesn't really effect first world countries. According to the World Health Organization indoor air pollution is responsible for 1.6 million death every year (http://www.who.int/mediacentre/factsheets/fs292/en/index.html). This is because people have to rely on wood, dung, crop waste or coal for cooking and heating (without chimneys) and the particles from that result in pollution and severe health problems. The “energy crisis” for first world countries is declining oil reserves while for the third world it's finding wood or fuel for survival. Mercycorps helps by providing clean cooking stoves, helping people build mud stoves, and providing more efficient ways of cooking/heating. The result is that there is less pollution in these developing countries while at the same time there is a reduced exposure to smoke which leads to improved health for women and children.
I feel like it is difficult to measure the effects of foreign aid as it comes from a variety of sources. Humanitarian aid may alleviate problems but not stimulate economic development for example. It may be effective during disaster but hinder economic development by destabilizing a free-market economy. I feel like while the large scale programs from government have conditions these are important to make sure development occurs in the right way. While there are externalities the aid is overwhelmingly positive. Structural adjustment programs could maybe occur gradually but in the end these reforms are needed. Easterly really makes the point that aid can have harmful results but we need to begin somewhere and at some point we need to provide stimulus.
ReplyDeleteI thought it was interesting that you mentioned indoor health pollution from the Mercy Corps website. It is important to point out how housing options are not widely available to those in the third world who must live on less. Led paint and coal heating as just two examples. I feel like education would be a good policy or non-profit help like Mercy corps giving a hand to fix problems
I was glad that you questioned Easterly’s generalizations. I myself, knowing little about the real nature of international aid and economics of international interaction, I took Easterly’s statements with little doubt in recognition of the personal experience that I lack. Your point of the importance of an acknowledgment of the economic side of international aid is another aspect of nonprofit work that is overlook with dire consequence. I believe many become blinded by a drive to do good for others, and this leads to the establishment of ill-informed advisers and broken administrations, that fall into inefficiency and give the entire sector of aid a bad name
ReplyDeleteThe article you included regarding the World Bank and the IMF brought up a lot if interesting points. I especially liked the line: "Just as a cake cannot be made with just eggs and a hot oven, prosperity cannot happen with only privatization and some deregulation". It highlights the complex and multi-faceted nature of development, stressing that it is not something that can be achieved with one or two quick fixes. I also agree with the article that reforming the World Bank and the IMF should be a priority. It can be argued that the money they are distributing as "aid" accomplishes nothing, and is thus a waste of time and resources that could be utilized much more efficiently.
ReplyDeleteI feel that the role of international nonprofits in fixing the ineffectiveness that is often associated with the World Bank and the IMF is to advocate and get the word out. Additionally, nonprofits can provide alternate, more effective methods with which to help communities and countries develop, using practices that will last long after aid has ran out.
You give the example of Mery Corps and mud stoves, which is a very good one. Mercy Corp is not simply using their money to buy communities stoves, but they are teaching them how to make them with resources that are readily available (and mud is free!). They are also taking it a step beyond that by educating people on how the new mud stoves use less resources and avoid pollution. So, not only are they lessening human and environmental harm via pollution, but they are doing it in a way that the communities respect because it helps them to expend less energy and resources to cook their food.
I also visited Mercy Corps' website and was very impressed with the work they do. They document and post so much about what their causes that it was often overwhelming to sift through so many links. I was also unaware that they were headquartered in Portland, Oregon, which is fantastic! I'm glad that such a recognizable organization is Northwest born and grown!
ReplyDeleteYou could also say that Spain's emergence from its 1970's economic crisis (in which oil prices soared through the roof), was a result of capitalist reformation. While Felipe González Márquez was literally a socialist, his administration began with a substantial campaign for the partial or complete privatization of 200 state enterprises and several hundred subsidiary companies (http://www.worldlingo.com/ma/dewiki/en/Felipe_Gonz%C3%A1lez). So adopting a form of capitalism (while still regarded as mostly socialist in the United States), did revamp Spain's economy. Sadly, they are back in the same spot they were in thirty years ago.
I disagree with your view on how Professor Easterly sees foreign aid and the putting World Bank as the model of all foreign aid, though I agree with how all these foreign aren't being as effective because of bureaucracy. World bank and IMF requiring these loops are true of any organization from the US. Its mainly how you see it, US controls/influence the World Bank and IMF, thus the multinational corporation seems understandable. Also, try looking at foreign aid nonprofits that does NOT come from the US or any Western countries, they look at aid differently. Yes, there needs to be structural changes but it ultimately comes down to who's in control, which is the USA. So your win-win situation applies to Spain because it helps the EU's economy and such. African countries don't help the US, thus the there isn't really any big change, in other terms, keep the rich rich, the poor poor.
ReplyDelete