The Political Economy of Foreign Aid If foreign aid programs have usually failed, why do they persist? The function of governance to frame and implement policies appears to be related to growth and may also be linked to effective poverty reduction in those high-performing Asian economies that succeeded in balancing growth with a degree of equity to lift large numbers of people out of the poverty trap.
In the case of the former, there can be excessive spending on social priorities driven by populism; in the case of the latter, there can be excessive military spending, resulting in large tax burdens.
Theorists such as Amartya Sen and annual surveys such as the UNDP Human Development Report have helped build an international consensus that the purpose of development is the expansion of human capacity and choice. Some critics of foreign aid programs, like Easterly, argue that such programs can be reformed to work better, while others, like Deepak Lal, argue that foreign aid is fundamentally unreformable and should, apart from emergency humanitarian relief or perhaps targeted military assistance, be scrapped.
Is there any evidence that the U. The decisive ingredient of the East Asian miracle seems to have been the quality of economic governance and institutional arrangements. Moreover, international development agencies now make bold claims link- ing democracy with growth to justify programs of political aid and good gover- nance that intrude on the domestic jurisdiction and national sovereignty of recip- ient countries.
A further 9 studies Political and economic development of canada essay a mix of nonsignificant or positive or negative findings, depending on the model used and the cases included. Finally, the driver of long-term economic growth is not more dams and factories and schools, the objects of most development assistance, but adoption of new technologies, broadly understood to include new ideas about how to organize work forces and production processes.
Recognizing the potential loss of policy influence in ending government-to-government aid, the DAC suggests improved donor coordination, an alignment of all policy instru- ments trade, aid, security, investment and indirect influence on policy reform through internal and external civil society change agents.
These have involved some form of military engagement and the more or less complete recon- struction of systems of government.
Investment has been described as the single strongest predictor of economic growth. A free press acts as an essential early- warning device against impending famine, for instance, by ensuring that there is public debate and prompt state action.
The evidence on the IMF is equally disheartening. Unconstrained dictators cannot make credible commitments, because a dictator can always change his mind: Economic development for Lipset was a necessary, if insufficient, precondi- tion for democracy — it had to be accompanied by the building of political legit- imacy Lipset Reform proposals that remove political criteria from aid decisions are essentially dead on arrival, as there is little incentive for politicians to change a system from which they benefit.
As David Gillies illustrates through an imagined development dystopia, while political institutions can influence economic performance for better or worse, the relationships among political system, policy choice and economic performance are often more complex than the claims of some democracy-promotion boosters.
The real question is, What should these governments not do? The governance agenda is even broader and can cover the spectrum of administrative, legal and, increasingly, security sector reform.
Peter Bauer criticized the effects of U. If a policy is likely to fail, then it should be abandoned.
It seems much more likely that donor governments have their own interests in mind when lending or granting funds to developing country governments. Regimes without legitimacy require repression to rule. This political influence on IMF decisions is even more pronounced in the post than the pre period.
One study reported an inverted-U effect Kurzman, Werum and Burkhart BarroDeterminants of Economic Growth: These can range from foreign policy interests to efficiency and effectiveness arguments to ensure a return on aid investments. Izania has a democratic facade: If the relationship between democracy and economic development is empirically open-ended and indirect, at best, then donors may need to consider how their democracy, rights and governance programs are justified.
It is difficult to draw firm conclusions from the empirical literature as to whether political freedom causes economic freedom, whether the causal rela- tionship is the other way around, or whether there is a feedback effect between political and economic freedom.
James Vreeland has corrected for the fact that market-friendly governments tend to be the ones who seek IMF loans and therefore would grow faster than other governments without IMF loans ; once this correction is performed, he finds that IMF programs actually reduce economic growth by one and a half percentage points for each year the country remains under an IMF agreement.
If anything, the evi- dence that governance and institutions do matter is now conventional wisdom, not just in donor capitals, but also in increasing numbers of developing coun- tries. One of the main problems with aid is that a number of developing country governments have diverted aid to the private bank accounts of government officials.
Redistributive policies addressing social and economic rights shift public resources and inhibit savings essential for rapid economic growth.
Competitive elections generally place a constraint on the most ravenous, destructive kinds of rent-seeking, and Milner and Kubota have found that among developing countries, democracies are more likely than authoritarian regimes, particularly military regimes and personalist dictatorships, to liberalize trade.
Parliament, the press and the few remaining pressure groups were singularly ineffective in engaging the ruling party on the causes of the downturn or the need for policy reform.
Foreign Aid and Economic Development Publicly funded foreign aid is offered in two forms: Martin Doornbos is one commentator who argues that governance no longer has the primacy it did in the early s as either an operational tool or a policy-making concept for aid donors.- Canada's Diverse History This essay analyzes the diversity of Canada's history, geography, climate, economy, cultures and government.
Did you know it is the largest country in the world now that U.S.S.R broke up. For an overview of Canadian international relations, see Petra Dolata's " Canada and the World " review essay in this issue; for Canadian political.
Economic Overview. The Canadian economy - which relies strongly on exports and was hurt by the fall of oil prices and other raw materials in recent years - reached growth of 3% inaccording to Statistics Canada (following a mere % in ), making Canada the fastest-growing economy in the G7.
Staple Theory on Canadian Economic Development Essay Upgrade in the 21st Century with Respect to the Staple Theory Gibril Sallah Abstract Canada is a extremely resourceful country and one of the largest exporters of.
“Democracy and Economic Development” by David Gillies In the first study, David Gillies, who is currently on secondment from CIDA and based at Foreign Affairs Canada, surveys research on the link between democracy and growth, which is often cited by aid donors.
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