Critique on the Development Challenge

Jeffry Sachs

By: FATKHURI (FATUR)

A. Introduction

It is not doubt that there has been any commitment for developed countries to support economic development in low income countries. This is important to note that this project is one of agendas for developed countries to reach the Millennium Development Goals (MDGs) by 2015. U.S. is one of developed countries which joined the Millennium Declaration to cut extreme poverty through giving aid to poor countries. This article provides a critique of Jeffrey Sachs’ paper under the title the Development Challenge. In his paper, Sachs criticizes U.S. aid policy for developing countries. He argues that U.S. aid for low income country is not adequate to cope with poverty in poor countries. Sachs further pointed out that U.S. should add its aid to deal with the poverty. Bearing this in mind, I would argue that poverty can not simply be solved by giving aid to poor countries and that is to say that doubling aid does not necessarily means that we can overcome poverty. In doing so, there are several reasons that should become major attention. First of all, Poverty is not merely a matter of low income in which quantities perspective is the only problem, but this is obviously a matter of the inequality problem to get enough access in politics, social and the like. Secondly, foreign aid is a problem of political interest of the donors which have a purpose to make an influence in poor countries.

As mentioned above, in his article, Sachs argues that the aid which is endowed by U.S in fact is not adequate. According to Sachs, this is not in line with what American people believe and what U.S government promises.

To deal with, Sachs points out that there are several reasons with regard to the above argument. First of all, it is stated the amount of assistance that U.S. endows is giving small contribution and it has nothing to do with long-term development. In addition, small proportion of U.S. bilateral assistance which accounted for $ 6.1 billion is directed at transformational development which only a small part of that transforms to the economies of developing countries. Furthermore, the small sums are driven by political considerations rather than economic need. Finally, the U.S. spends its money on priorities other than development assistance, but theses aims at national security as the military.

For Sachs, four steps should be vigorously made. First of all, U.S should tell to the American people regarding their aid which did not meet with poor countries’ need which in turn led to the low income countries which cannot free from poverty trap. Secondly, government should commit to fulfil the financial needs. Furthermore, U.S. should make partnerships with reliable organisations which guarantee the aid come to the recipients. Finally, government should fix the structure of development assistance programs to play strategic role for national security. In this regard, the analytical capacity and political power should become main consideration to ensure that U.S is a leader to cut poverty and achieve transformational development.

With regards to Sachs argument aforementioned, it is obvious that Sachs attempted to oversimplify the problem of poverty. It is in fact that what Sachs proposes to cope with poverty is only dealing with sort-term impact. In addition, Sachs obviously makes exaggeration in which he mentions that by making additional assistance for poor countries, it will immediately overcome poverty. This argument seems lack of broader context as Sachs only sees poverty as absolute problem. It is worth noting that Aid does not necessarily deal with overcoming poverty as the facts confirmed that in Asia, aid has not had a significant and positive effect on economic development in which Millions of poor people live in India and China, but their economies are growing despite the insignificant role that aid plays in their investments (Fredrik Erixon, 2005:4).

Taking this into account, this proves that aid is not the only ways to cope with poverty. As I argued, it however should be noted that there are other aspects which Sachs overlooked and it is pivotal to address it. First of all, Poverty is not merely a matter of low income, but this is also a matter of the inequality to get access in politics, social and the like. In this regard, poverty should be seen in a comprehensive way rather than in partial manner. Bearing this in mind, other fundamental factors such as social, politics and the like should also be involved. Take politics into example, it is in fact that the inequality to get accesses in political affairs such taking part in policy making, can obviously lead to the poor condition. It is because people do not have adequate opportunity to express their rights and solve their own problems. This condition leads to the diminishing returns in which there are no availability in terms of human skills and the institutional setting which result in ineffectiveness of aid (Tony Killick, 2005). The ineffective of aid can either lead to the much dependence of poor countries or it can lead to corruption in government of recipient countries. Erixon points out that giving aid does not make economic growth emerge and otherwise this makes a bad impact (corruption) in government. He points out that “there is a great danger, even a strong likelihood, that such aid will assist mostly in the corruption of governments that are already doing much harm to their citizens, promoting bad policies and undermining democracy and the rule of law. It is therefore irresponsible, to say the least, to push for increased aid spending without having an idea how to make it useful in growth promotion and how to avoid its many pitfalls” (Erixon, 2005:25)

As a result, poor country can not in turn free from poverty trap as they are heavily relied on aid or donors. To overcome poverty therefore, the program of empowerment of society should be taken into account as possible solution. Society’s empowerment through knowledge and incentive problem should become a concerned to avoid poverty’s trap. This program should become a vanguard to enable society in poor countries to have a better access in education, moral awareness and so forth. This is very important as solving poverty by doubling aid does not result in a good future impact. Keeping this in mind, Unwin points out that to deal with poverty, we have to listen much more closely to the voices of the poor, to their dreams and aspiration and take it upon themselves to help deliver them by creating new systems of consultation to overcome lack of representation (Tim Unwin, 2007). In line with this argument, Erixon argues that the reasons countries are poor is not because of lack of infrastructure, rather it is because they lack of institutions of the free society such as property rights, the rule of the law, free markets, and limited government (Fredrik Erixon, 2005).

Secondly, foreign aid is a problem of political interest of the donors. It means that each aid which donors give cannot be freed from political interests. It takes place as donors intend to create influences to the recipient countries. The best example for this can be traced from what Rai argued that U.S. foreign aid can be categorized as an inducement rather than as a reward or a punishment. Here, Rai highlighted the aid by comparing to other donors (Uni Soviet) in the past which gave the aid in order to give reward or punishment. According to Rai, the American aid has certainly been more effective as an inducement to the recipients to vote similarly with the United States in the period 1967-76, or rather 1970-75 (Kul B. Rai, 1980). It is true as the assistance upon which U.S. endow was to make an influences to the poor countries. In addition, the aid upon which U.S. based cannot be ignored from the political interest to coin political stability and democracy. For example, Millikan point out that in the underdeveloped countries, some degree of economic growth is a necessary condition for political stability and the strengthening of democracy. He adds that if people’s aspirations for improvement of their lot are frustrated, they are likely to turn to violence and to extremist movements like communism (Millikan, 1957).

In brief, I conclude that discussing poverty needs comprehensive perspective rather economic perspective alone. In this regards, as mentioned previously, there are some fundamental aspects that should be taken into consideration to deal with. These aspects are social, moral and political which obviously lead to poverty as well. Keeping Sachs argument in mind, this is not adequate to solve poverty by giving aid only. This is due to the fact that this only taps the sort term impact and has nothing to do with long terms effect. Doubling aid therefore can not guarantee that poverty will reduce in developing countries.

List of References

Erixon, Fredrik 2005, Aid and development: will it work this time?, International Policy Network, London.

Killick, Tony 2005,’ don’t throw money at Africa’, IDS Bulletin, vol.36 no.3 September, pp. 15.

Millikan-Max, F 1957,’Future of American Foreign Aid’, the Scientific Monthly, vol. 85, no. 2, pp. 86-88.

Rai-Kul, B 1980,’Foreign Aid and Voting in the UN General Assembly 1967-1976’, Journal of Peace Research, vol. 17, no. 3, pp. 269-277.

Unwin, Tim 2007, ‘No end to Poverty’, Journal of Development Studies, July, vol.43, no.5, pp.929-953.