Development Aid: Evolving Conventional Wisdoms and the Case of Rwanda

Shranna Jaggernath, Elana Pal, and Saeed Selvam

On his final day as the UK’s International Development Secretary, Andrew Mitchell reinstated 16 million pounds of development aid to Rwanda despite concerns over Rwandan President Paul Kagame’s human rights record and a recent UN report alleging that the Rwandan government is arming a rebellion in Congo, which has committed human rights abuses and displaced close to 500,000 people. At the time, the UK was the only country to reconsider its aid to the Rwandan regime; the EU, US, Sweden and Germany have been committed to their withdrawal.  However, the UK government was reluctant to withdraw the aid, citing strong economic growth, anti-corruption efforts, and poverty alleviation efforts in the country. The UK also argued that the Rwandan government has efficiently managed and disbursed the development aid within the country, and the people of Rwanda should not “suffer” due to the allegations. The government of Rwanda depends on foreign aid for almost half of its budget. On November 30 2012, International Development Secretary Justine Greening again suspended the UK’s aid to Rwanda based on the evidence of the UN report, thus negating her predecessor Mitchell’s decision. This case highlights one of the challenges that donor countries face when using aid as a lever for development: Under which conditions should aid be provided?

Development assistance policies have evolved over time, often characterized as a process of “learning-by-doing, on the basis of trial and error…which has played out against the background of major changes in international relations” (Pronk, 2001, p. 612-613). The theory of development assistance and its application has changed with respect to how aid should be distributed, by whom, to whom, and under what conditions, also known as ‘Conventional Wisdoms’. This has sparked much of the debate found in a body of literature referred to as ‘the economics of aid’ (Pronk, 2001, p.612).

In his paper, “Was Development Assistance a Mistake?” William Easterly (2007) describes the changing Conventional Wisdoms found within the field of development economics. Starting in the 1950s, development aid was aimed at mobilizing and guiding capital investment in public infrastructure, and it was the state’s role, guided by development experts, to make that happen. However, these policies resulted in unsustainable debt accumulation for middle- and low-income countries, culminating in the 1980s debt crisis.

The next Conventional Wisdom came as a response to the success of the East Asian Tigers, which was driven by a focus on exports and macroeconomic stability. This led to development aid in the form of Structural Adjustment programs from international financial institutions, such as the International Monetary Fund and The World Bank, and policies in line with the “Washington Consensus.” These Conventional Wisdoms considered certain economic policy reforms as necessary preconditions for development aid (Pronk, 2001). However, the conditionality associated with Structural Adjustment programs and the “Washington Consensus” was not able to replicate the same development success as the East Asian Tigers and often resulted in debt accumulation and little or no growth (Easterly, 2007; Pronk, 2001). Second Generation reforms followed, which stressed the importance and conditionality of certain institutions in development assistance, such as property rights, democratic accountability, and freedom from corruption (Easterly, 2007).

The Conventional Wisdoms for development assistance each provide a different notion of how to distribute development aid. Fitting into this broad discussion about who should receive aid and under what conditions is the case of Rwanda and the recent controversy over conditions that are and should be tied to their development funds.

In the ‘New Millennium’ of development aid, current Conventional Wisdoms—good economic policies and the emphasis on select institutions—are necessary, but not sufficient. That is not to say that we should add conditions to the already long list of requirements for development aid. What we argue here is that we need to use the country case of Rwanda to guide the evolution of Conventional Wisdoms to one where, despite evidence of good governance, anti-corruption efforts, and poverty alleviation, there are certain preconditions, such as social harmony, political stability and peace (Pronk, 2001) and to that we add adherence to UN conventions, that serve as the moral determinants of aid. These preconditions must be included in the package of good measures used by donor governments as criteria for aid recipients.

Ethics matter in the development aid story, not just for the recipients, but also for the donors. When a famine strikes, governments know that the right thing to do is to help those who are dying from starvation. When a natural disaster occurs, governments of developed countries respond accordingly with haste. Few would disagree with such moral international actions. But what are the moral responsibilities of donor governments to aid recipients, especially when recipients are allegedly committing human rights violations? It is understandable that the UK was reluctant to withhold aid, especially given that Rwanda is the UK’s development aid success story. But even the positive impact of aid can be counteracted by bad government behavior (Pronk, 2001).

However, this does not mean that aid should be completely eliminated. Development aid donors can instead refocus their attention on the poor individuals in recipient countries rather than looking to transform poor societies through direct government funding. Easterly concludes that “aid could finance piecemeal steps aimed at accomplishing particular tasks for which there is clearly a huge demand,” such as infrastructure reconstruction, clean water provision, reduction of health related fatalities and so on (Easterly, 2007, p.331). This view supports a continuation of funding for Rwanda’s NGOs, which was the case for the 8 million pounds Andrew Mitchell approved going to educational and agricultural projects run by non-governmental organizations. Aid going to Rwanda’s government should be conditional on their adherence to UN conventions—a new Conventional Wisdom that includes a humanitarian and overall ethical condition.

Shranna Jaggernath is a second year MPP candidate at the University of Toronto’s School of Public Policy and Governance.  Shranna holds a BA in Business and Society from York University and has spent the summer working for the United Way Toronto researching urban issues.  She is interested in policy and program evaluation, as well as health and social policy at both the national and global levels. 

Elana Pal is a second year MPP candidate at the University of Toronto’s School of Public Policy and Governance.  Elana holds a Bachelors of Commerce in Finance and International Business from McGill University and worked in Europe’s financial services sector. She has also been working for the Federal Government on Aboriginal issues since the summer.  She is interested in economic and social policy at both the national and global levels.

Saeed Selvam is a second year MPP candidate at the University of Toronto’s School of Public Policy and Governance. He is the Executive Director of The SPARK Initiative and a Fellow at Massey College.

References

Easterly, W. (2007). Was development assistance a mistake? American Economic Review, 97, no.2: 328-332.  Retrieved from: http://williameasterly.files.wordpress.com/2010/08/50_easterly_wasdevelopmentassistanceamistake_prp.pdf

Pronk, J. (2001). Aid as a catalyst. Development and Change. 32, no.2: 611-629.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s