John Mc Arthur, economist and a Visiting Fellow with the Brookings Institution, has done an interesting calculation. In his blog post How Much Aid is Required to End Extreme Poverty? he came to the conclusion that required funds to meet basic services for the extreme poor of the world have dropped from 450 bn USD in 1990 to 200 bn USD in 2010. And those requirements will drop further. This is his graph:
Figure 1: Rough estimation of ODA amounts required to meet basic services for extreme poor
(Graph from John McArthur)
Required fund are decreasing because more and more people are getting out of poverty. To quote a recent UN-Report on the Post-2015 Development Agenda
“The 13 years since the millennium have seen the fastest reduction in poverty in human history: there are half a billion fewer people living below an international poverty line of $1.25 a day. Child death rates have fallen by more than 30%, with about three million children’s lives saved each year compared to 2000. Deaths from malaria have fallen by one quarter.”
In my understanding this has become true because of increased global exchange and specialisation – more globalized value chains, more networked information systems, the spread of knowledge society, the spread of communication society, and the like.
We are witnessing a big success story which we are not always aware about. Global economic development has become possible! What we take for granted today actually wasn’t so two or three decades ago.
The end of development aid?
John Mc Arthur continues “The end of extreme poverty should not be confused with the end of aid.” Yes, I agree.
But what will come first? The end of development aid or the end of poverty?
To my understanding, aid has to come down first. Because as long as aid processes are in place, sustainable and viable structures to tackle poverty simply aren’t possible.
Why should the administration of a country like Mozambique reach out to the countryside when official donor agencies and NGOs are competing to do so? Why should local doctors go out to the real poor when international NGOs are already there? How can you possibly build sustainable local health structures or maintenance structures for infrastructures when aid funded organizations are all around?
More often than not donor agencies and NGOs are doing good and decent jobs. But they do this on the basis of aid money. Aid money doesn’t require reciprocates in return. No reciprocates mean that there is no incentive to build local structures. Even when local governments have the best intentions to tackle poverty, as long as there is no price to pay no own resources will be allocated and viable structures can’t emerge.
There is an inner contradiction between aid and sustainability. Both simply can not come together. – The more donors and aid workers actually talk about sustainability and aid effectiveness, the more they prove this contradiction true. It’s like hunting the moon.
Good intended aid always targets to make itself redundant.
I am afraid, but we have to talk about a phasing out of development aid.
And this has to be part of the post-2015 development agenda.