Equal partnership between non-OECD and OECD countries

From the HR&S point of view, it seems that it is the countries that are accepted as members in OECD that will have the true capacity to develop. OECD countries meets regularly and develop joint plans and strategies that will benefit the members...but not necessarily the non-members. HR&S claims further that traditional development aid is and was never pure altruism.

Thus it is necessary to, from now on, make it clear how both sides must benefit, for a partnership to be successful and sustainable. HR&S claims that creating social enterprises targeting cross-cultural innovation between non-OECD and OECD country stakeholders will improve livelihood both sides.

 

 

History of development aid and OECD

 

Development aid
Foreign aid structures began 100 years ago, with the European colonialism. Rich countries started giving money to poorer countries in the 19th century, and in 1930, countries like Germany, France and Britain were providing regular aid to their colonies in Africa, Latin America and Asia. Colonial powers used their money to build infrastructure, such as ports, roads and railway.  Also wealthy American industrialists were involved in development aid through the Ford and Rockefeller Foundations. Foreign aid continued even after the colonies gained their independence, still focusing on economic development. There was a general idea that Western Europe and countries like Australia, Canada and North America were “developed” and represented societies that countries in Africa, Latin America and Asia should strive to become similar to. The general assumption during this time was that the former colonial powers would gradually phase out their direct financial aid as the colonies became independent and multilateral organisations like the United Nations, the World Bank and the International Monetary Fund took over development work.

After the Second World War the USA became the world’s biggest aid donor, starting with the Marshall Plan to help Europe rebuild. Then, with the Cold War (1945 - 1991), came a shift in political, economic and moral perspectives. The “Western countries” (Western Europe, Australia, Canada and USA) started to use a terminology that divided the world into three categories: the “First World”, which consisted of the Western countries; the “Second World” which was the Soviet Union and its Communist satellites; and the “Third World”, which were the former colonies and countries that had come under imperial influence. As the Cold War developed, the two super powers, USA and the Soviet Union, and their allies, would use aid to encourage political allegiances.

During the 1960s the character of the aid programmes changed and became a more definite commitment. It was recognised that there was still a massive poverty in aid recipient countries, and that the investment in economic infrastructure did not necessarily improve the livelihood of the poor. It became a common target that countries should donate 0.7 per cent of national income as foreign aid. The idea was humanitarian; to use donor-funded programmes to reduce poverty by meeting people's basic needs such as health, education, water and sanitation. The northern European donors like Sweden, which historically had not had colonies, so it didn't have the reason to be giving money to ex-colonies in the way that the UK and France did, started to recognise the need for aid on humanitarian grounds and so also adopted these targets and developed aid programmes in particular focus countries.

In the 1980s many former colony countries became heavily indebted as a result of the global recession related to the oil shock of the 1970s. Donor countries lent money to the former colony countries so that they could manage their debts, and at the same time requested them to restructure their economies. Such restructuring included to conclude providing social services to the population, and thus the basic needs of poor people was not a target as before. It shall be noted that the first countries that were able to pay back their debts were those that had borrowed from commercial markets and not from aid agencies. Countries that had borrowed from commercial banks were able to do deals in the late 1980s and early 1990s where essentially the commercial banks would replace old debt for new debt at 70 per cent of the face value, or

50 per cent or 30 per cent, it varied by country. But for loans that were made by donor governments, and by the World Bank and the IMF, it took until the late 1990s until those donors were willing to recognise that they were going to have to write their debts down. Most of the really poor former colony countries that had built up a lot of debt, have now had that debt removed and only a few countries are remaining with large debt burdens; including Somalia, Sudan and Zimbabwe.

During the 1990s non-government organisations and wealthy philanthropists increased their participation in development projects.

Over the past decade some former aid recipient countries have become important economic and political powers, such as China. China has had a different approach to aid, and has created activities in Africa that they describe as “development cooperation on the basis of mutual self-interest”. China provides economic infrastructure and supports social development, and in return becomes the privileged buyer of African raw materials for China's own growing economy. These new stakeholder claims that the corporation is horizontal, and is not the previous vertical relationship that the former colonial powers had with their former colonies, who are now aid recipients. Still observers are arguing that these programmes are not different from what the old donors were doing in the 1960s when they emphasised support for economic development.

Today we operate in a multi-polar world where aid can no longer be used to win over former colony countries into spheres of political influence. Without the Cold War, the believed altruism is no longer supplemented by political ideology.

During the 2000s an idea was introduced to address poverty alleviation by introducing entrepreneurship and small scale businesses. One idea has been to establish micro-credit programmes and introduce them through the NGOs structure. Government aid agencies and multi-lateral donor institutions followed the trend to support micro-credit programs financially and technically. Yet, sustainable economic development specialists concluded that micro-credit programmes have not been significantly successful, as poverty alleviation challenges still persist. Another approach to alleviate poverty was to combine aid with trade. USAID introduced “Aid for Trade” and “Trade through Capacity-Building”. The Canadian International Aid Agency (Cida) merged with the Ministry of Foreign Affairs and Trade and the USA also combined the two sectors and incorporated its development aid agency under its foreign affairs agency.  Some may call this “streamlining” others “aligning government’s investment interests”.

Lately, a new philosophy of funding social entrepreneurship has been proposed, thus allowing poverty alleviating institutions to benefits from entrepreneurship models and absorb private sector principles. There are a variety of reasons, including that incorporating entrepreneurship practices leads to innovation, and thus smarter solutions in poverty alleviation.

 

 

 

 

OECD
According to HR&S, the traditional development shall be analysed while acknowledging the parallel development of OECD.

The Organisation for European Economic Cooperation (OEEC) was established in 1948 to run the US-financed Marshall Plan for reconstruction of Europe that was ravaged by war. By making individual governments recognise the interdependence of their economies, it paved the way for a new era of cooperation that was to change the face of Europe. Encouraged by its success and the prospect of carrying its work forward on a global stage, Canada and the USA joined OEEC and the Organisation for Economic Co-operation and Development (OECD) was officially born in 1961. Other countries joined in, starting with Japan and today 35 OECD member countries worldwide regularly turn to one another to identify problems, discuss and analyse them, and promote policies to solve them. The track record is striking. The US has seen its national wealth almost triple in the five decades since the OECD was created, calculated in terms of gross domestic product per head of population. Other OECD countries have seen similar, and in some cases even more spectacular, progress.

So, too, have countries that a few decades ago were still only minor players on the world stage. Brazil, India and the People's Republic of China have emerged as new economic giants. The three of them, with Indonesia and South Africa, are Key Partners of the OECD and contribute to its work in a sustained and comprehensive manner. Together with them, the OECD brings around its table 40 countries that account for 80% of world trade and investment, giving it a pivotal role in addressing the challenges facing the world economy. The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world.

The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems. OECD works with governments to understand what drives economic, social and environmental change. The organisation measures productivity and global flows of trade and investment as well as analyses and compares data to predict future trends. OECD sets international standards on a wide range of things, from agriculture and tax to the safety of chemicals, and also looks at issues that directly affect everyone’s daily life, like how much people pay in taxes and social security, and how much leisure time they can take. OECD compares how different countries’ school systems are readying their young people for modern life, and how different countries’ pension systems will look after their citizens in old age. Drawing on facts and real-life experience, OECD recommends policies designed to improve the quality of people's lives. The organisation work with business, through the Business and Industry Advisory Committee to the OECD (BIAC), and with labour, through the Trade Union Advisory Committee (TUAC). OECD has active contacts as well with other civil society organisations. The common thread of the work is a shared commitment to market economies backed by democratic institutions and focused on the wellbeing of all citizens. Along the way, OECD also sets out to make life harder for the terrorists, tax dodgers, crooked businessmen and others whose actions undermine a fair and open society. Before that, good governance and institution building emerged as the solution for poverty alleviation because good governance and strong institutions would empower people to reduce poverty, according to World Bank and OECD research.

HR&S reflections
None of the former colonies in Africa (except South Africa) are members of OECD.