Thursday, June 21, 2007

The Famished Government

In the beginning there was a river. The river became a road and the road branched out to the whole world. And because the road was once a river it was always hungry.

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Now, anyone who's been reading the Ramble will know I’m not capable of prose of that quality. They’re the first lines of The Famished Road, by Ben Okri (if you’ve not read this, shame on you. After you’ve finished the Wretched of the Earth, go buy a copy of it).

They came to mind when I was discussing one particular aspect of the aid relationship. I’ve Rambled previously about why Governments don’t just reject aid that isn’t designed to carefully match it’s priorities. Back then, my focus was primarily on what it is about Government’s relationship with donors that makes it very difficult to reject aid. Put briefly, it was because we are worried about alienating the same donors who will be bankrolling the vast majority of our budget come July. Recently, though, we’ve been discussing this inability to say no to aid frequently in our meetings, and I’ve come to realize that there’s a much more basic (and, as ever, controversial) issue that remains unresolved.

One ‘truth’ in development that has remained more or less unquestioned in the last ten years, as development has come to occupy a more prominent role in international politics, has been that it is massively under-funded. Most of what you read concerns this: Gordon Brown’s plan for Africa, NGOs fund-raising, those ludicrously unhelpful statistics like ‘people spend more on cosmetics each year than would be required to eradicate world hunger’ (really? For how long?).

This is also reinforced by the tenor of most development economics, which argues by omission that the socio-economic fundamentals for a successful economy are in place, and what is now needed is fine tuning to make things run efficiently. Developing countries have now bought into this, aided by the persistent sidelining of the heterodox economics. The practical result is that many developing country Governments spend more time chasing funds than thinking about how best to use them. We spend our time in meetings with donors finding out what reforms would persuade them to give us more money, more directly. We spend weeks drafting strategies for these reforms and months or even years implementing them. Behind all of this is the desire for more money.

More money wouldn’t be a problem. But the process of chasing it is. We may have a team of six competent people working full time on trying to unlock the extra hundred million dollars available if we were at the cutting edge of financial management practices. But the same kind of effort is rarely spent on trying to work out what it is about the distribution of land, capital and other assets that is retarding the capitalist development that should be at our fingertips, with so much cheap labour available. This should be what we spend our time on first; and then we should start thinking about reforming all of our systems to suit donors. Actually, many of the most important reforms for stimulating capitalist development don’t require much money at all. What they require is political will and the willingness and ability to make unpopular choices.

Ultimately, let’s be serious. In a world without aid, where would Government’s efforts be going? Economic governance – accounting, audit, budgeting? Nope. Not for a long time. First up would be private sector development, increasing incomes across the board, increasing taxation. Only after all of this has been achieved and a significant volume of domestic revenue was being raised would the economic governance side of things be pursued with any vigour. I highly doubt that in the midst of the industrial revolution or during Japan’s initial boom in the inter-war period, anyone said ‘well, this is all good and well, but before we develop the economy, we should have a world-class accounting system’.

I do understand that donors need to account for where their resources go. Their electorate, that of a much more developed country, demands this. That is precisely why developing countries should stop chasing aid, and start rejecting it. We need some, especially humanitarian aid. But it cannot be allowed to remain the focus of Government activity.

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There’s another, very different impact of the focus on the under-funding of development in the Western media. It fosters the idea among those who donate money or are concerned about international development that it is something that we can throw money at to solve. As I’ve said above, this is not true in the least. Live 8 and similar events were amazing in the way they encouraged so many people to consider the problems of development. But they would have been so much better if they’d focused more on the substansive problems underlying development and not the need to give money to buy a treadle pump for a village somewhere.

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Quick poll, if anyone cares: if I had the choice to introduce a number of people to a new film that they might not otherwise see, should I choose Shanghai Triad or I Vitelloni? Advice gratefully accepted.