Development aid

Development aid or development cooperation (also development assistance, technical assistance, international aid, overseas aid or foreign aid) is aid given by governmental and economic agencies to support the economic, social, and political development of developing countries.

Definitions

First, development aid must be distinguished from humanitarian aid. Humanitarian aid strives to alleviate suffering in the short term, while “development aid,” is aimed at alleviating poverty, through economic development, in the long term.

Development aid comes from developed or developing country governments as well as from non-governmental organizations (NGOs) such as the World Bank.

Forms of development aid

• Financial and technical assistance should be aimed exclusively at promoting the economic and social progress of developing countries and should not in any way be used by the developed countries to the detriment of the national sovereignty of recipient countries.
• Aid may be bilateral, given from one country directly to another; or it may be multilateral, given by the donor country to an international organization such as the World Bank or the United Nations Agencies (UNDP, UNICEF, UNAIDS, and so forth) which then distributes it among the developing countries.
• It is largely unimportant whether the “development aid” has any political implication (apart from impeding the national sovereignty of recipients) attached to it. There are two reasons for this statement:

1. Firstly, the non-governmental organizations (NGOs), such as the World Bank, European Bank for Reconstruction and Development (EBRD), African Development Bank (ADB), Aga Khan Foundation, Soros Foundation, and so forth, claim that they are (or theoretically should be) above politics and their only reason is to increase the well-being of the people in the world at large.
2. Secondly, every short or long-term “development aid” politicizes the recipient country society anyway, simply because the distribution goes along (or it is directly controlled by) the indigenous political channels, and so only deepens the original political and social distribution in there. Besides, as in the largest instance of development aid, the Marshall Plan (1947 – 1950), the political dangers and clouds over the rest of Europe, not already in the Soviet influence sphere, were already clear. Although originally offered to all European countries devastated by World War II, inclusive of the USSR, Poland, Czechoslovakia, and others, the Cold War politics of the USSR pulled those countries under the Kremlin dictate out of the Plan (Davenport, 1967).

Important terms that should be recognized in any type of aid:

• Donors denote any developed or developing country that will provide, to the greatest extent possible, an increased flow of, either, aid on a long-term and continuing basis which we termed “development aid” or any short term “humanitarian aid” aimed at immediate alleviation of natural or political catastrophes and consisting mainly of money, consumer goods, and skilled people who will organize the actual the remedial actions in the stricken country. A good example of short-term “humanitarian aid” evolved from a natural disaster is “Tsunami relief” to the countries devastated by the results of a Tsunami and post-Tsunami material and moral destruction.
• Recipients are defined as any (developed or developing) country that becomes a final destination of any short (humanitarian) or long-term (development) aid. Development aid should come from a foreign country, sponsored and distributed either by their government or a non-governmental organization.
• Society and Country are similar, but only as long as that country means the territory of a nation that we represents a nation-state. In other words, country refers to the the politically and territorially sovereign entity of a nation-state and society refers to the people and their political organization within that nation-state.
• Development cooperation, a term used, for example, by the World Health Organization (WHO), is used to express the idea that a partnership should exist between donor and recipient, rather than the traditional situation in which the relationship was dominated by the wealth and specialized knowledge of one side.

History

While the concept of development aid goes back to the colonial era, that origin of modern development aid is rooted in the context of Post-World War II and the Cold War: Launched as a large-scale aid program by the United States in 1948 the European Recovery Program, or Marshall Plan, was concerned with strengthening the ties to the West European states to contain the influence of the USSR. This political rationale is well summarized in the Truman Doctrine, in which United States president Harry Truman stated the anti-communist rationale for U.S. development aid in his inaugural address of 1949, which also announced the founding of NATO:

In addition, we will provide military advice and equipment to free nations which will cooperate with us in the maintenance of peace and security. Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people (Truman, 1949).

The Marshall Plan

At the end of the war, the United Nations (UN), whose founding Charter was signed in San Francisco in June 1945, provided aid in various ways to the European countries ruined by the war. Europe was faced with serious food shortages and had to maintain various rationing schemes. It was also short of dollars and therefore had to limit imports of civil and military equipment. The United Nations Relief and Rehabilitation Agency (UNRRA), founded in November 1943, brought emergency individual aid packages to the European countries, especially humanitarian aid. But this program was haphazard and would not have much impact on the economy of the entire region. Intra-European trade was hindered by a lack of foreign exchange and required an international authority capable of effectively organizing trade worldwide. The United States, whose interests lay in promoting such trade in order to increase its own exports, decided to help the European economy via a large-scale structural recovery program. However, the United States’ desire to give Europe massive economic aid was also politically motivated: The fear of Communist expansion in Western Europe during the Cold War was undoubtedly a decisive factor, as important as the conquest of new markets.

In 1947, then Secretary of State, George C. Marshall, called on America to "do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace" (Marshall, 1947). The U.S. Congress approved Marshall's long-sighted proposal in 1948, and by 1952 the United States had channeled some $13 billion in economic aid and technical assistance to 16 European countries. During the program's four years, participating countries saw their aggregate gross national product rise more than 30 percent and industrial production increase by 40 percent over prewar levels.

The Marshall Plan, as it came to be known, was not just an American program. It was a joint European-American venture, one in which American resources were complemented with local resources, one in which the participants worked cooperatively toward the common goals of freedom and prosperity. Many have been generous in their praise of the Marshall Plan, but perhaps none more than Sir Winston Churchill, to whom it represented "the most unsordid act in history" (Jenkins, 2002).

OECD and UN Pledge

The nations of the Organisation for Economic Co-operation and Development (OECD), made up of the developed nations of the world, have committed to providing a certain level of development assistance to underdeveloped countries. This is called Official Development Assistance (ODA), and is given by governments on certain concessional terms, usually as simple donations. It is given by governments through individual countries' international aid agencies (bilateral aid), through multilateral institutions such as the World Bank, or through development charities such as Oxfam.

The donor governments promised to spend 0.7 percent of GNI (Gross National Income) on ODA (Official Development Assistance) at the UN General Assembly in 1970. The deadline for reaching that target was the mid-1970s. By 2015 (the year by when the Millennium Development Goals are hoped to be achieved) the target will be 45 years old. This target was codified in a United Nations General Assembly Resolution:

In recognition of the special importance of the role which can be fulfilled only by official development assistance, a major part of financial resource transfers to the developing countries should be provided in the form of official development assistance. Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 percent of its gross national product at market prices by the middle of the decade (UN, 1970).

Those limits seriously lagged behind the target—only Luxembourg, Netherlands, Norway, and Denmark hit the target with approximately 0.80 percent of GNI, while the rest of the 16 OECD countries' aid ranged from 0.53 percent to 0.16 percent of GNI. As a result, a new collective pledge was made in May 2005 by the European Union to spend 0.56 percent of GNI on poverty reduction by 2010, and 0.7 percent by 2015 (Hirvonen, 2005).

Problems

There have been many problems with development aid. In addition to the failure to produce the target in quantity of aid, there have been problems in quality as well as effectiveness:

Recent increases [in foreign aid] do not tell the whole truth about rich countries’ generosity, or the lack of it. Measured as a proportion of gross national income (GNI), aid lags far behind the 0.7 percent target the United Nations set 35 years ago. Moreover, development assistance is often of dubious quality. In many cases, aid is primarily designed to serve the strategic and economic interests of the donor countries or to benefit powerful domestic interest groups. Aid systems based on the interests of donors instead of the needs of recipients' make development assistance inefficient. Too little aid reaches countries that most desperately need it, and, all too often, aid is wasted on overpriced goods and services from donor countries (Hirvonen, 2005).

Quality

The 1968 Michenzani apartment blocks in Zanzibar were part of East German development assistance and brought a Soviet-style of living to rural Africa. The apartments were unpopular and only 1,102 out of the 9,992 planned buildings were built . Still used today, they stand as a failed relic of donor-driven (supply-driven) development aid.

Development aid is often provided by means of supporting local development aid projects. In these projects, sometimes no strict code of conduct is in force. In some projects, the development aid workers do not respect the local code of conduct, such as the local dress code as well as social interaction. In developing countries, these matters are regarded highly important and not respecting it may cause severe offense, and thus significant problems and delay of the projects.

There is also much debate about evaluating the quality of development aid, rather than simply the quantity. For instance, tied aid is often criticized as the aid given must be spent in the donor country or in a group of selected countries. Tied aid can increase development aid project costs by up to 20 or 30 percent (Jepma, 1991). There is also criticism because donors may give with one hand, through large amounts of development aid, yet take away with the other, through strict trade or migration policies.

Aid effectiveness

There is significant disagreement about the degree of effectiveness of development aid. Many econometric studies in recent years have supported the view that development aid has no effect on the speed with which countries develop. Negative side effects of aid can include an unbalanced appreciation of the recipient's currency (known as Dutch Disease), increasing corruption, and adverse political effects such as postponements of necessary economic and democratic reforms (Kaufmann, 2009).

Dissident economists such as Peter Bauer and Milton Friedman argued in the 1960s that aid is ineffective:

Aid is a phenomenon whereby poor people in rich countries are taxed to support the lifestyles of rich people in poor countries (Bauer, 1979).

A good example of this is the former dictator of Zaire, Mobuto Sese Seko, who lost support from the West after the Cold War had ended. Mobuto, at the time of his death, had a sufficient personal fortune (particularly in Swiss banks) to pay off the entire external debt of Zaire (Kaufmann, 2009).

Besides some instances in which only the president (and/or his close entourage) receives the money from development aid, the money obtained is often badly spent. For example, in Chad, the Chad Export Project, a oil production project supported by the World Bank, was set up. The earnings of this project (6,5 million dollars per year and rising) were used to obtain arms. The government defended this purchase by stating that "development was not possible without safety". However, the Military of Chad is notorious for severe misconduct against the population (abuse, rape, claiming of supplies and cars) and did not even defend the population in distress (e.g. in the Darfur conflict). In 2008, the World Bank retreated from the project that thus increased environmental pollution and human suffering.

Another criticism has been that Western countries often project their own needs and solutions onto other societies and cultures. In response, western help in some cases has become more 'endogenous', which means that needs as well as solutions are being devised in accordance with local cultures. For example, sometimes projects are set-up which wish to make several ethnic groups cooperate. While this is a noble goal, most of these projects fail because of this intent.

It has also been argued that help based on direct donation creates dependency and corruption, and has an adverse effect on local production. As a result, a shift has taken place towards aid based on activation of local assets and stimulation measures such as microcredit.

Aid has also been ineffective in young recipient countries in which ethnic tensions are strong: sometimes ethnic conflicts have prevented efficient delivery of aid.

In some cases, western surpluses that resulted from faulty agriculture- or other policies have been dumped in poor countries, thus wiping out local production and increasing dependency.

In several instances, loans that were considered irretrievable (for instance because funds had been embezzled by a dictator who has already died or disappeared), have been written off by donor countries, who subsequently booked this as development aid.

In many cases, Western governments placed orders with Western companies as a form of subsidizing them, and later shipped these goods to poor countries who often had no use for them. These projects are sometimes called 'white elephants'.

According to Martijn Nitzsche, another problem is the way on how development projects are sometimes constructed and how they are maintained by the local population. Often, projects are made with technology that is hard to understand and too difficult to repair, resulting in unavoidable failure over time. Also, in some cases the local population is not very interested in seeing the project to succeed and may revert to disassembling it to retain valuable source materials. Finally, villagers do not always maintain a project as they believe the original development workers or others in the surroundings will repair it when it fails (which is not always so).

A common criticism in recent years is that rich countries have put so many conditions on aid that it has reduced aid effectiveness. In the example of tied aid, donor countries often require the recipient to purchase goods and services from the donor, even if these are cheaper elsewhere. Other conditions include opening up the country to foreign investment, even if it might not be ready to do so.

All of these problems have made that a very large part of the spend money on development aid is simply wasted uselessly. According to Gerbert van der Aa, for the Netherlands, only 33% of the development aid is successful, another 33% fails and of the remaining 33% the effect is unclear. This means that for example for the Netherlands, 1.33 to 2.66 billion is lost as it spends 4 billion in total of development aid (or 0,8% of the gross national product).

For the Italian development aid for instance, we find that one of their successful projects (the Keita project) was constructed at the cost of 2/3 of 1 F-22 fighter jet (100 million $), and was able to reforest 1,876 square miles (4,900 km²) of broken, barren earth, hereby increasing the socio-economic wellbeing of the area. However -like the Dutch development aid- again we find that, the Italian development aid too is still not performing up to standards. This makes clear that there are great differences between the success of the projects and that budgetary follow-up may not be so strictly checked by independent third parties.

An excerpt from Thomas Dichter's recently published book Despite Good Intentions: Why Development Assistance to the Third World Has Failed reads: "This industry has become one in which the benefits of what is spent are increasingly in inverse proportion to the amount spent - a case of more gets you less. As donors are attracted on the basis of appeals emphasizing "product", results, and accountability…the tendency to engage in project-based, direct-action development becomes inevitable. Because funding for development is increasingly finite, this situation is very much a zero-sum game. What gets lost in the shuffle is the far more challenging long-term process of development."

Effectiveness of development aid can be argued to be uncoordinated and unsustainable. Development aid tends to be put towards specific diseases with high death rates and simple treatments, rather than funding health basics and infrastructure. Though a lot of NGO's and funding have come forth, little sustainable outcomes have been made. This is due to the fact that the money doesn't go towards developing a sustainable medical basis. Money is given to specific diseases to show short-term results, reflecting the donor's best interests rather than the citizens' necessities. It is evident that many development aid projects are not helping with basic and sustainable health care due to the generally high numbers of deaths due to preventable diseases. Development aid could do more justice if used to generate general public health with infrastructure and trained personnel rather than pin-pointing specific diseases and reaching for quick fixes.

Research has shown that developed nations are more likely to give aid to nations who have the worst economic situations and policies (Burnside, C., Dollar, D., 2000). They give money to these nations so that they can become developed and begin to turn these policies around. It has also been found that aid relates to the population of a nation as well, and that the smaller a nation is, the more likely it is to receive funds from donor agencies. The harsh reality of this is that it is very unlikely that a developing nation with a lack of resources, policies, and good governance will be able to utilize incoming aid money in order to get on their feet and begin to turn the damaged economy around. It is more likely that a nation with good economic policies and good governance will be able to utilize aid money to help the country establish itself with an existing foundation and be able to rise from there with the help of the international community. But research shows that it is the low-income nations that will receive aid more so, and the better off a nation is, the less aid money it will be granted

• Aid effectiveness refers to the degree to which development aid works, and is a subject of significant disagreement. Economists such as Peter Bauer and Milton Friedman argued in the 1960s that aid is ineffective. Many econometric studies in recent years have supported the view that development aid has no effect on the speed with which countries develop.

Negative side effects of aid can include an unbalanced appreciation of the recipient's currency (known as Dutch Disease), increasing corruption, and adverse political effects such as postponements of necessary economic and democratic reforms. There is also a lot of debate about which form development aid should take in order to be effective. It has been argued that a lot of government-to-government aid was ineffective because it was merely a way to support strategically important leaders.

A good example of this is the former dictator of Zaire, Mobuto Sese Seko, who lost support from the west after the cold war had ended. Mobuto, at the time of his death, had a sufficient personal fortune (particularly in Swiss banks) to pay off the entire external debt of Zaire.

• Another major point of criticism has been that western countries often project their own needs and solutions onto other societies and cultures. As a result of this criticism, western help in some cases has become more 'endogenous', which means that needs as well as solutions are being devised in accordance with local cultures.

• It has also been argued that help based on direct donation creates dependency and corruption, and has an adverse effect on local production. As a result, a shift has taken place towards aid based on activation of local assets and stimulation measures such as microcredit.

In fact, all these negative side-effects and occurences have a common denominator that can be expressed on theoretically derived graphs and simple algebraic propositions ( using the real-world data bases.) A simplified form of the “Donor-Recipient System Model” will be explained in the following part.

Summarizing the effect, the aid effectiveness was analyzed by William Easterly, who put it like this:

“…….A tragedy of the world’s poor has been that] the West spent $2.3 trillion on foreign aid over the last five decades and still had not managed to get twelve-cent medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still had not managed to get four-dollar bed nets to poor families. The West spent $2.3 trillion and still had not managed to get three dollars to each new mother to prevent five million child deaths.… It is heart-breaking that global society has evolved a highly efficient way to get entertainment to rich adults and children, while it can’t get twelve-cent medicing to dying poor children…..” ( Easterly, 2006)

Corruption

While development aid is an important source of investment for poor and often insecure societies, aid's complexity and the ever expanding budgets leave it vulnerable to corruption, yet discussing it remains difficult as for many it is a taboo subject. Corruption is very hard to quantify as it is often hard to differentiate it from other problems, such as wastage, mismanagement and inefficiency, to illustrate the point, over $8.75 billion was lost to waste, fraud, abuse and mismanagement in the Hurricane Katrina relief effort.

Often a lack of understanding of the process by those meant to be receiving aid leads to cynicism and belief that greed and corruption are the key failures. Non-governmental organizations have in recent years made great efforts to increase participation, accountability and transparency, humanitarian assistance remains a poorly understood process to those meant to be receiving it—much greater investment needs to be made into researching and investing in relevant and effective accountability systems.

However, there is little clear consensus on the trade-offs between speed and control, especially in emergency situations when the humanitarian imperative of saving lives and alleviating suffering may conflict with the time and resources required to minimise corruption risks. Researchers at the Overseas Development Institute have highlighted the need to tackle corruption with, but not limited to, the following methods:

1. Resist the pressure to spend aid rapidly.
2. Continue to invest in audit capacity, beyond simple paper trails;
3. Establish and verify the effectiveness of complaints mechanisms, paying close attention to local power structures, security and cultural factors hindering complaints;
4. Clearly explain the processes during the targeting and registration stages, highlighting points such as the fact that people should not make payments to be included, photocopy and read aloud any lists prepared by leaders or committees.

Analysis of the Problems

”Donor-Recipient Model”

We shall start with en excerpt from the New York Times. There we read :

“….Within the last fifty years the so called international aid has neither helped the economic growth nor saved the great number of poor societies from bankruptcy, decline and chaos …..”( CATO Institute Report, 1997 )

To introduce the simplified version of the model, a few definitions and assumptions should be introduced first. Here, we shall mention only bare bones of the paradigm, more detailed explanations can be found e.g. in ( Karasek, 2005. )

Definitions and Assumptions

*(1) We are assuming that qualitative socio-political model of every society can be allocated onto the quantitative ladder ( by using “conversion tables”; see e.g. Karasek, 1885 ) of two clashing socio-political environments: Legitimacy ( of the democratic society ) vs. Oligarchy and that these societies can to be mapped on a hyperbolic D-curve on EXHIBIT 1 and compared quantitatively. Also, for the sake of simplicity , we postulate that the levels of these phenomena would be on the interval of ordinal numerals < 1, 9 > ; i.e. 1, 2, 3, ……9.

*(2) The paradigm, utilising the causal chain: intra-society heterogeneity ( i.e. mess among the political, legal, cultural ( also: legal culture ) and ruling aspirations of elements of a investigated society ) —> inter-society heterogeneity, then follows with these premises:

(2.1) The donor ( with its long history of democracy, built-in ethical and legal conduct that is easily enforceable, a cultural tradition encompassing these traits ) is, by definition, a society on the upper-left side of the D-curve.

(2.2) If in the corresponding recipient societies, there exists serious intra-society heterogeneity ( i.e. social and political stratification, oligarchic cliques at helm, no rule of law, etc. ), then we can safely assume that the inter-society heterogeneity among the two societies puts the recipient society low and to the right on the D-curve. Importance of the “overall” culture is made essential by David Landers of Harvard University, who says in his book:

”…..if we learn anything from the history of economic development , it is that culture makes almost all the difference…” ( in: Pfaff, 2001)

(2.3) On this level, dissimilar ( i.e. heterogeneous ) political systems, ethics, legal codes of conduct, and enforcing systems might be very difficult to reconcile. This is also aggravated by the completely different level of political corruptibility in each of the interacting recipient society.

This is crucial because frauds in the sphere of government are hurting the society most, first , because the money has been removed directly from the society's future expenditures and secondly, because part of the same money is used to perpetuate further corruption as illustrated by the statement from the world-wide known Burmese dissident:

“…the real benefits of investments now go to the military regime and their connections . They go to a small , very privileged elite . And the people get very little…” ( Daw Aung Suu Kyi, 2000)

It is therefore axiomatic that there is not much scope for successful exchange of ideas, learning and technology transfer among societies which differ in state ideologies, state philosophy of societal progress, or the philosophy towards the people’s well-being.

(2.4) Then the greater the inter-societal heterogeneity in the donor-recipient system, the probability of complete socio-political disaster ( and thus negation of any potential benefit of the development aid ) we should expect just as the below Proposition states.

The problem is even more serious because to change the society’s attitude based on its history , geography , policy and culture is a problem with time span of several generations . Robert Kaplan puts it quite forcefully:

”…..they can’t deal with complexities such as the tragedy in East Timor or the recent bloodshed in Nigeria , which are directly attributable to democratic elections . Without the (imported) democratization of those societies , you’d have thousands more people alive now ….” ( in: Rose, 2000)

*(3) Easily provable Proposition ( see Karasek 2005 )

Suppose we have two societies: the donor one, Si, and the recipient one, S i+k, k = 1…m-2, on the D-curve. The risk of conflict and expected overall systems disutility – brought by their interaction in development aid between the two dissimilar countries-societies – is then represented by the number of intermediate points S k in between S i and S i+k .

This overall disutility for the donor – recipient system’s transaction depends on the level of inter-societal heterogeneity:

(3.1) System’s disutility increases with choosing the recipient partner, say S i+k , that drops further down farther down and to the right S i+k+j , j = 1…n , n≠m , from the originally assessed on the D-curve. An excerpt makes the following situation clearer:

”….Wahid ( i.e. the Indonesian president ) has inherited from Suharto a .. bureaucracy….largely inept and riddled with corruption …..It is natural that he is proceeding by the only means available : the complex game of palace politics and floating alliances ….the real issue in Indonesia was not whether democracy would slide back into a highly centralized military regime , but whether it would decline into a democracy of money politics……” ( Richardson, 2000 )

(3.2) System’s disutility decreases when the partners are closer to each other on the D-curve ( e.g. either:

(3.2.1) When the recipient society moves up and to the left from her original position because of greater democratization of the society, such as seen in the next report from South Korea under the headline” In South Korea, a Quiet Revolution”:

”……viewed as the most significant political movement in South Korea in more than a decade , the civic action campaign appears to be an overwhelming success among citizens fed up with entrenched and elitist politicians filling many of the seats in the 299-person Assembly . The citizens’ coalition has blacklisted more than 100 politicians , including 67 who hold Assembly seats and more than 40 others regarded as backstage figures who might influence the outcome of the election….” ( Kirk, 2000 ), or

(3.2.2) The recipient country chooses a donor that is closer to its position on the D-curve in Exhibit 1. The following excerpt could be read in the similar vein:

”…societies tend to work smoothly when economic , social and political activities fit well together . But there is obvious mismatch in today’s global economy , where financial life is centralised as never before but political life is increasingly fragmented along ethnic and even tribal lines…” ( Ignatius, 1999 )

File:EXHIIBIT 4.3doc.gif

Graph of the D-curve with with nine different (generic) socio-political levels (S1, S2, ... S9) from Karasek, 2005

Examples and comments on real-life results stemming from Donor-Recipient Model

First of all, the Marshall Plan had been an incredible success in all the countries west of the Iron Curtain. Although it would have been equally successful in some of the East & Central European states that had the similar political, social and, based-on-Napoleon-Code, legal system before the WWII  we talk about Czechoslovakia, Poland, Romania, East Germany and Yugoslavia  the Russian military-based influence pulled them out of the Plan ( see Davenport, 1967. )

The reason why Europe was so easy to accommodate and used the Marshall Plan development aid was that every single society-state was basically on the same spot on the D-curve, as far as social, democratic history, legal ( the conversion of Nazi law in West Germany was not difficult at all, given the history of German society during the last 500 years ) and cognitive traits: German and/or Austrian academics supplied the World with new ideas for the last 200 years.

On the opposite side, the reason why any of the EU development project has not worked in any former USSR-formed COMECON societies “lies,” again, exactly on the D-curve. Even to this day ( April 2008 ), the Czech Republic did not outlaw the Communist Party - even though Germany outlawed Nazis and, in 1991, Russian president Yeltsin outlawed Communist Party - which means that the Czech Republic, no matter that she is a EU member, has still the Communist constitution with only minor changes and, virtually, everything goes ( in so far the “law and order” is concerned ) there. Even more tragic is the situation of former USSR states, now independent republics, in Central Asia ( and, obviously, in Trans-Caucasus states as well. ) As every republics in the region alleviates any political opposition by: (1) conversion of former Soviet Communist honchos into the tight oligarchy net ( usually family-based ), and (2) pick-up the nationalism-enhanced traits as a reason of building a strong military and police states that are supposed to defend them against the neighbouring foes ( formerly friendly USSR neighbours) exactly as the next excerpt reads:

“…the crowd delusion of persecution , conspiracy , or oppression is ….. a defence mechanism….The projection of this hatred on those outside the crowd serves not so much ,as in paranoia , to shield the subject from the consciousness of his own hatred , as to provide him with a pretext for exercising it …” ( Lindzey, Aronson, 1980.)

This is what the donors' bureaucracies will never understand, and so billions are wasted on the projects which, because donors and recipients lie almost exactly on the opposite ends of the D-curve, can never succeed. The next excerpt claims a similar reason:

“…much of the blame for the collapse in foreign direct investment lies with the investors themselves , who chose to overlook the political and economic realities of the place ( i.e. recipient society, eds. ) …”( The Economist, 2000 )

Conclusion from the Model

We can take claim (3.2) from the above Proposition to become a guiding light in the search for feasible policy vis-à-vis a successful “ Donor-Recipient System’s Utility.”

“….In theory, once the legal and cognitive disparities between the would-be trading nations are done away the unimpeded trade would bring fast economic growth to developing societies and their trading partners alike….” ( Samuelson, 1992)

In practice, some of the countries simply cannot afford to open the door to basic democratic and free-market environment . There are, however, many more developing and/or transitional countries that – their ruling classes’ political position and affiliation notwithstanding – might become the Donors to these countries simply, because the historical affiliation ( language and cultural similarities ), they can open up the door to international trade with all the necessary free-market consequences.

If the Central Asia example could serve as a “generic” solution, then we say that the only chance for these societies to deal successfully with the “development aid” is to deal with somebody closer to them on the D-curve such as another Asian society as, for example, Korea ( in fact, Daewoo has a monopoly in auto industry in Uzbekistan ) or, even better  and this is what virtually every citizen of each Central Asian republic would applaud  with Russia where historical, cultural, language and cognitive similarity had been made ( sometimes by the force ) similar during the 70 + years of` Russian empire. Not to put it mildly, every citizen ( with exception of ruling oligarchy ) had much better living standard under the USSR, then.

References

ISBN links support NWE through referral fees

• CATO Institute report, The New York Times, June 22 , 1997

• Davenport, Marcia. 1967. Too Strong for Fantasy. New York, NY: Charles Scribener’s Sons. ASIN B007K1BM90

• Daw Aung Suu Kyi, IN: International Herald Tribune, February 17 , 2000 , p.2 ( Q7/A)

• Dopfer, Kurt. 1976. Economics in the Future. The MacMillan Press Ltd. ISBN 978-0333195031

• Easterly, William. 2007. The White Man’s Burden; Why the West’s Efforts to Aid the Rest have Done So Much Ill and so Little Good. Penguin Books. ISBN 978-0143038825

• “Goodnight, Vietnam, “ The Economist, January 8, 2000, p. 65

• Hirvonen, Pekka. 2005. "Stingy Samaritans; Why Recent Increases in Development Aid Fail to Help the Poor", Global Policy Forum. Retrieved October 24, 2013.

• Ignatius, D., “Look Out, ‘the Older Social Structures Are Cracking’,” Internat. Herald Tribune, May 25, 1999, p. 8

• Jenkins, R. 2002. Churchill. New York, Penguin Group. ASIN B00ESDDYCG
• Karasek, Mirek. 1985. The Anatomy of Decision. New York, NY: Vantage Press. ISBN 978-0533062843
• Karasek, Mirek. 2005. “Institutional and Political Challenges and Opportunities for Integration in Central Asia”.
• Kaufmann, Daniel. 2009. Aid Effectiveness and Governance: The Good, the Bad and the Ugly Brookings. Retrieved October 23, 2013.
• Kirk, D., “ In South Korea, a Quiet Revolution, “ Int. Herald Tribune, February 5-6, 2000,

• Leow, R., “ How can globalization become ‘O.K.’ for all?,” Int. Herald Tribune, Febr. 15,

2002, p.9

• Lindzey, Gardner, and Elliot Aronson (eds.). 1986. The Handbook of Social Psychology, Third Edition. Lawrence Erlbaum. ISBN 978-0898597202

• Marshall, G.C., Speech to the graduating class at Harvard University, June 5, 1947

• Nguyen, Tri Q. 1989. Third-World Development: Aspects of Political Legitimacy and Viability. Farleigh Dickinson University Press. ISBN 978-0838633274

• Pfaff, W., “Culture Does Count – and in Africa Today It Counts for a Lot,“ Int. Herald Tribune, Febr. 17-18, 2001, p.6

• Richardson, M., “Dilemma in Jakarta: ‘Money Politics’,“ Int. Herald Tribune, February 4, 2000, p. 1

• Rose, A., “All he is saying is give war a chance,“ National Post, Toronto, March 11, 2000, p. B5

• Samuelson, Paul A., and William D. Nordhaus. 2009. Microeconomics, 19th Edition. McGraw Hill. ISBN 978-0073344232
• Truman, Harry S. 1949. Inaugural Address. Retrieved October 23, 2013.
• United Nations. 1970. “International Development Strategy for the Second United Nations Development Decade,” UN General Assembly Resolution 2626 (XXV), October 24, 1970. Retrieved October 24, 2013.

Credits

New World Encyclopedia writers and editors rewrote and completed the Wikipedia article in accordance with New World Encyclopedia standards. This article abides by terms of the Creative Commons CC-by-sa 3.0 License (CC-by-sa), which may be used and disseminated with proper attribution. Credit is due under the terms of this license that can reference both the New World Encyclopedia contributors and the selfless volunteer contributors of the Wikimedia Foundation. To cite this article click here for a list of acceptable citing formats.The history of earlier contributions by wikipedians is accessible to researchers here:

• Development_aid  ^history

The history of this article since it was imported to New World Encyclopedia:

• History of "Development aid"

Note: Some restrictions may apply to use of individual images which are separately licensed.