According to the website globalissues.org “Almost half the world - over three billion people - live on less than $2.50 a day.”
The World Bank’s May 2008 report, Dollar a Day Revisited, notes that 95 percent of the developing world’s population exists on less than $10 a day. This represents almost 80 percent of the world’s total population. And, says the 2007 Human Development Report from the UN’s Development Program, more than 80 percent of the world’s population lives in countries where income differentials are widening.
Why the Rich Stay Rich and the Poor Stay Poor
William Easterly is a senior advisor in the Development Research Group of the World Bank. In 2001, his book The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics was published. In it he asks why do rich countries stay rich, and poor countries stay poor despite the trillions of dollars in foreign?
Easterly says disparities within rich countries might provide a clue. He writes that highly skilled people prefer to live and work with one another in what he calls “Matches.” Each skilled person will be more productive for being around other similar people.
This explains, for example, why areas such as California’s Silicon Valley, once established, continue to prosper. It also explains why low-income, inner city, and rural areas remain depressed – what Easterly calls “Traps.” Enterprise and creative activity nourish each other, while poverty and destructive behaviour also feed each other.
Foreign Aid Programs that Fail
William Easterly details a list of foreign aid tactics that have failed: capital investment (machines, factories, roads), education, birth control, loans, and loan forgiveness. He points out that none of these tactics are bad; they just have little effect in a country that lacks key social, political, and economic infrastructure.
Basic infrastructure is in such poor shape in Africa that it causes many projects to fail. On Dec. 23, 2007, Associated Press reported on a major road in East Africa that starts in the port city of Mombasa.
The road is in such bad condition that bone-jarring journeys along it take weeks, “And the cost makes it cheaper to have a container of corn shipped from Iowa than to truck it 500 miles to western Kenya.”
Aid Money often Diverted by Corrupt Officials
The biggest development project in Africa was an oil pipeline from land-locked Chad to Cameroon on the Atlantic Ocean. This scheme was reported on by MSNBC (Dec. 23, 2007) in an article entitled "Examples of Failed Aid-funded Projects in Africa." It was completed in 2003 at a cost of $4.2 billion and the plan was that the income from the oil would be spent in Chad on development projects under international supervision. But, Chadian President Idris Deby went back on the deal and the oil income flowed into general government expenditures such as the buying of weapons. As MSNBC pointed out, “Deby spends the oil money on regime survival and rigged elections.”
Development Agencies Sometimes don’t Measure up
And, while aid dollars mysteriously get whisked away to bank accounts in places such as Switzerland, the Cayman Islands, and Panama, the lives of the people for whom the money is intended don’t get any better.
The World Bank’s Independent Evaluation Group looked at how well its health department had performed. Not very well, according to Larry Elliott, writing in The Guardian (May 1, 2009). The review of the bank’s health department from 1997 to 2008, found that “despite increasing spending from $6.7 billion in 1997 to $16 billion in 2006, progress had been poor.”
The report criticized the health department saying that a lack of proper monitoring and evaluation had led to “irrelevant objectives, inappropriate project designs, unrealistic targets, and an inability to measure the effectiveness of interventions.”
The report said the performance in Africa was “particularly weak.” As The Guardian states, “Of every 1,000 children in sub-Saharan Africa, 146 die before their fifth birthday, while life expectancy at birth is just 51.”
Rupert Taylor - Rupert Taylor is the editor of a magazine that provides background to current events.
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