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close this book The Courier N°137 January-February 1993 Dossier: Development and Cooperation - Country Reports Mauritania
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View the document Development and cooperation
View the document Three decades of development
View the document Toward an ethic for development
View the document An interview with DAC Chairman Alexander Love
View the document Development as a pledge of financing
View the document Can development be measured?
View the document Development and poverty: the case of Latin America
View the document Can development be left to the economists?
View the document The informal sector: development at the grassroots
View the document An interview with Michel Relecom, Chairman of UNIBRA
View the document Trade reform: impacts for the North and the South
View the document AASM then ACP... what next?
View the document Aid and development- where the twain shall meet
View the document Is development aid harmful to development ?
View the document Development aid in the 1990s

Aid and development- where the twain shall meet

by Jean-Jacques GABAS

Development. An ordinary word which, opinions notwithstanding, common sense once said meant improving the production of goods and thereby raising the standard of living with better education, better health and so on. But the ways to it vary widely, from the highly 'economistic' method to the more human approach. Development is, in fact, the first term of an incomplete sentence and its pioneers saw it as developing a market economy - boosting trade between operators, developing the division of labour within a society and ushering in the reign of the commodity market. Even today, after more than 30 years of development policies, it embraces a concern with a return to balance, be it economic, financial, ecological, political or even demographic. So the dynamics of development have a clear purpose to them.

The history of nations and dominations in particular suggests that one country could help ease another's path to l achievement of this much talked-about I economy (essentially based on trade and ' the market) in this controllable vision of a socio-economic unit's process of change. l No society is cut off from other societies. There are influences, a whole series of I them, and F. Braudel's work has amply i illustrated that trade relations completely overturned economic units in Europe. ' The market encouraged producers, tradesmen and consumers to forge relations with each other. There were goods to I trade, the value of these goods was i gradually fixed and the trade created income. Prices were fixed, of course, in the light of relations of strength and of the value which individuals set on them.

Currency circulation is only the visible tip of a much further reaching process of; relations between the different operators. There has always been trade, as Jacques Austruy puts it, 'but it is episodic, being allied to consumption in pre-stone age societies, probably, with the display of wealth linked to surplus, not just because the one was behind the other, but also, of course, because, via a magical kind of emulation, the one called for reconstitution of the other. From this point of view, it is a sign of power which gives and thereby forces both other people and nature to yield. But this power is based on a provisional surplus and cannot be institutionalised. The agricultural product, on the other hand, will make for constant trade by demystifying surplus and revealing its use. Agricultural surplus, a condition of trade, will make for theoretical trade advantages, first of all with the peasant farmer, then with other producers and then with the craftsman.' Aid makes relations between the different operators seem complex. Does this mean that it provides the possibility of releasing a surplus which will be the basis of trade ? Aid identifies with money, but how can it help shape this system of relations? External influences themselves are not to blame, but it would be wise to look at the following.

- The fact that aid is disconnected from production and trade is often to the detriment of the producers. Has this aid, which is very important for a large l number of countries in Africa and Asia I alike, set up this much-desired economy of production ? Has it encouraged trade ?

- The way this money finds its way to the operators. How does it get through to the people themselves? How does the 'transplant' take?

- In many cases, it is rejected, but sometimes the external message is received in a very special way, according to the individual logic of the society or possibly the family.

- How can change be backed up? What are the changes and organisation/dis-organisation in question? Is this not a phase of economic acculturation or a phase of adoption of economic messages, economic influence (through the value of goods imported and exported, changes in the relative values of goods and services) in a process which is by no means what was originally imagined?

Gradual installation of an economy of transfers

 

External aid flows are large. They represented more than 20% of GNP in the vast majority of the countries of sub-Saharan African in 1990. How were these resources used?

A brief reference to the history of ideas is called for here. It was possible to set the economic machine in motion again, primed with external aid, by doing something about industry or agriculture or infrastructure (the 'decor of development', as J.M. Cour put it) or all the sectors at once. Every form of prescription has been tried, with variations to suit the country concerned. Outside assistance came in the shape of projects, primarily through State companies or, more modestly NGOs. Foreign firms were involved in trade and industry. But, since 1980, this heritage has weighed heavy, extremely heavy. Financial crisis and a lack of confidence in the recipes for development are manifest and the era of so-called structural adjustment has begun. Since the early 1980s, transfers, less and less in the form of projects, have become support for the balance of payments, food aid, budget support and technical assistance. Aid provided outside productive projects accounts for more than 50% of all aid to the Sahel countries 3 and the figures for many other countries in sub-Saharan Africa are very similar. An economy of payments is being set up in much the same way as an economy based on export revenue from a primary product. 4 Aid spending has still to be analysed. How is it used ? By whom ? And along what channels does this external financing flow ? How do the people involved at the various stages in the process obtain the aid?

There are few precise answers, although one or two facts are clear. Support for the balance of payments in the form of Stabex transfers, import financing and food aid are external donations which generate counterpart funds in local currency. What are they used for? To get supply off the ground again ? Or to keep things ticking over? An economy of aid, gradually disconnected from the era of the economy of production, is taking shape.

 

Premature move to a service economy

Hefty growth of services as a percentage of GDP is a sign of both growth of trade, based on imported products, and constantly inadequate agricultural prices when there has been no gain in productivity in preceding decades. Aid does not encourage the constitution of surpluses which is essential for lasting trade. Aid disorganises and does a lot to encourage the flight from the land, by creating imbalances in the prices of farm products and manufactured goods, with farmers not getting paid properly for their output. Supplies to city dwellers have to be at low cost for political reasons, but also because part of the population has to survive. This is the case in Guinea Bissau, Gambia and Benin - 'a country which has never been based on a proper policy of production, but instead on one of services, with commerce always preponderant' perpetuation. It is a well-intentioned economic act which contains its own perverse effects. Instead of reaching the sphere of production and triggering added value, aid is set up on a self-sustaining basis.

 

Encouraging consumption rather than investment

Very little of the money injected into the economic operators gets to the producers, for it flows to the towns, to a population essentially made up of civil servants and tradesmen. This is an economy of demand. Supply is very little affected. So over the past decade, low-income countries have seen their public consumption expand by an average of more than 3% p.a., as against slightly more than 1% for investment and slightly more than 2% for consumption. By way of comparison, the growth of domestic investment was close to an average of 9% p.a. in 1965-1980 and far lower for the other components of the final demand. Is aid not in fact feeding a large part of inter-African trade, which is largely based on re-exports ?

The negative effects of this aid are also apparent in countries at war. Both 7 See the work of John Igué and the Club du Sahel/CILSS on regional spaces in West Africa. Somalia and Liberia received huge amounts of aid in previous decades and we all know what the results were. Obviously, it would be absurd to suggest that the present situation was caused by the development-aid policy alone, but the serious political conflicts cannot be isolated from development strategies adopted in the past or, therefore, from the underlying system of aid.

This brings us to the problem of the birth of money. If operators are to recognise money for what it is, that money has to crystallise their energy. It would be wrong for it to be tied to the dollar or the franc, since this would deprive it of its basis and its creation, which has to be preceded by plans and anticipate results. It also brings us to the problem of grants. Is it possible for an economic flow not to have a counterpart? Something is always expected in return. All these free or virtually free financial resources are in a curious position in a context in which capital is rare. A depressive economic set-up takes shape, with prices artificially low because the economic operators (often the State) are not concerned with reimbursement.

Yet - at the risk of upsetting the deep-seated ideas of some - no development. by definition, is durable or linear. Development has even fewer predetermined stages in the image of a universal de terminism. Development is, per se, Synonymous with change and upheaval causing a greater or lesser degree of hardship. Development inevitably goes hand in hand with imbalance, varying degrees of crisis and more or less success ful adaptation. It is chaos. Change is inherent in every society and African economies change and are not static. This is the important thing to remember when it comes to integrating aid, which is bound to continue over the coming years and has to reflect the demands of the operators. Africa is in no greater need of cultural adjustment here than are our own societies. These flows of finance should not have to be provided just because the international context deems them compulsory.

They should be able to be decreased without the reduction being interpreted as forgetfulness. However, it would be criminal to stop humanitarian relief while the need for food and medicines is so great, particularly among refugees.

J.-J.G.