1. INTRODUCTION
This paper is designed to provide insight on social capital. It will therefore examine what entails social capital. In order to achieve this objective, the paper is divided into various sub-titles.
This paper will first of all attempt to explain the definition of social capital with reference to various scholars. It will then embark on scope and historical background of social capital.
The components of social capital will also come in handy . Putman (2000) argument will provide all the required needs in this regard.
We shall then embark on exploring the social capital is relative to other social aspects of human life. For instance, we shall have a look at social capital and civil society, social capital and the third world and social capital and gender issues.
With the help scholars’ literatures, such as Aldridge and Pantoja, we shall outline the determinants of social capital. The mechanism on how social capital affect outcome will also be discussed. We shall then examine the measurement of social capital.
Finally, we shall conclude our discussion by providing the need to further examine social capital.
2. DEFINITION OF SOCIAL CAPITAL.
Pierre Bourdieu (1972) defined social capital as “aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition”.
James Coleman defined social capital functionally as “a variety of entities with two elements in common: they all consist of some aspects of social structure, they facilitate certain actions of actors within the structure”-- that is, social capital is anything that facilitates individual or collective action, generated by networks of relationships, reciprocity, trust, and social norms.
According to Robert Putnam, social capital “refers to the collective values of all ‘social networks’ and the inclinations that arise from these networks, to do things for each other”
Francis Fukuyama described social capital as the existence of a certain (i.e. specific ) set of informal values or norms shared among members of a group that permit cooperation among them.
Patrick Honout and the Social Capital Foundation have suggested that social capital is a set of attitudes, and mental dispositions that favour cooperation within society and that it equals the spirit of community.
Nan Lin’s concept of social capital , has more individualistic approach : “Investment in social relations with expected returns in the market place”.
Bourdieu and Wacquant (1992): social capital is the sum of the resources, actual and virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition.
Wendy Stone and Jody Hughes in “what role for social capital in family policy- and how does it measure up?” (July 2000) state: social capital can be understood quite simply as networks of social relations characterized by norms of trust and reciprocity. The essence of social capital is quality social relations. Thus, social capital can be understood as a resource to collective action, which may lead to a broad range of outcomes, of varying scale.
SCOPE OF SOCIAL CAPITAL
Social capital, referring to connections within and between social networks, is a core concept in business, economics, organizational behaviour, political science public health and sociology. Though there are in fact a variety of inter-related definitions of this term, which has been described as “something of a cure-all” for the problems of modern society, they tend to share the core idea “that social networks have. Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual a collective), so too social contacts affect the productivity of individual and groups”.
HISTORICAL BACKGROUND OF SOCIAL CAPITAL
The concept that underlies social capital has a much long history; thinkers exploring the relation between associational life and democracy were using similar concept regularly by the 19th century, drawing on the work of earlier writers such as James Madison (the federalist papers), Alexis de Tocqueville (Democracy in America) to integrate concepts of social cohesion and connectedness into pluralist tradition in America political science. John Dewey may have made the first direct mainstream use of “ social capital “ in the school and society in 1899, though he did not offer a definition.
However, social capital did not really hit the mainstream pop-political science culture until to 1969 hit movie “Easy Rider”. Many believe that this was to dawn of social capital.
Some scholars trace the modern usage of social capital to Jane Jacobs in the 1960s. Political scientific Robert Salisbury advanced the term as critical component of interest group formation in his 1969 article “An Exchange Theory of Interest Groups” in the Midwest Journal of Political science. Pierre Beurdieu used the term in 1972 in his outline of a Theory of Practice. James Coleman adopted Glenn Loury`s 1977 definition in developing and popularizing the concept. In the late 1990s, the term gained popularity, serving as the focus of a World Bank research Programme and the main subject of several mainstream books, including Robert Putman`s Bowling Alone.
5. COMPONENTS OF SOCIAL CAPITAL
Putman (2000) speaks of two main components of the concept:
5.1 Bonding social capital – this refers to the value assigned to social networks between
Homogeneous groups of people for instance, criminal gangs.
5.2. Bridging social capital - this refers to that of social networks between social
Heterogeneous groups for instance choirs and bowling clubs.
6. SOCIAL CAPITAL AND CIVIL SOCIETY.
The Third Sector definition of civil society: “Private organizations that are formed and sustained by groups of people acting voluntarily and without seeking personal profit to provide benefits for themselves or for others”. Thus civil society refers to voluntary association and organizations outside the market and state.
According to such authors as Walzer, Alessandni, Newtown, Stolle and Rochon, Foley and Edward, and Walters it is through civil society, that individual are able to establish and maintain relational network. Then voluntary associations also connect people with each other, build trust and reciprocity through informal, loosely structured associations and consolidate society through altruism without obligation. It is “this range of activities, services and associations produced by civil society” that constitutes the sources of social capital.
The idea that creating social capital (i.e. creating network) will strengthen civil society, underlies, current Australian social policy aimed at bringing deepening social divisions. The goal is to reintegrate those marginalized from the reward, of the economic system into the community.
A number of intellectual in developing countries have argued that the idea of social capital, particularly when connected to certain ideas about civil society is deeply implicated into contemporary modes of donor, and NGO driven implications and that it functions, primarily, to blame the poor for their conditions.
SOCIAL CAPITAL AND THE THIRD WORLD
Many authors suggest that third world communities lack the social capital networks and associations found in Western developed communities but this underestimates the nature of social capital building traditional societies. For example many of the “potlatch” activities in which, rather than accumulating wealth, it is distributed widely, are better understood as form of investment in social capital. Indeed the rate of return on this investment in social capital can be much higher than investment in any form of economic activity, as distributive relationships may establish forms of interpersonal obligations that are permanent and cannot easily be discharged.
In Papua New Guinea for example, the moka cycles, whereby, pigs are raised for distribution of pig’s meat in communal feasts are found widely through the Highlands and the ability to organize and coordinate such events is a major way in which “bikmen” achieve social status.
8. DETERMINANTS PF SPCOA; CAPITAL.
Aldridge Halpern (2002) suggested that the main determinants of social capital include: History and culture; whether social structures are flat or hierarchical; the family;
Education; the built environment; residential mobility; economic inequalities and social class; the strength and characteristics if civil society; and patterns of individual consumption and personal values.
Pantoja (1999) identified a different set again, including: family and kinship connections; wider social networks of associational life covers the full range of formal and informal horizontal arrangements; networks; political society; institutional and policy framework which includes the formal rules and norms that regulate public life; and social norms and values.
9. MECHANISMS FOR HOW SOCIAL CAPITAL AFFECT OUTCOMES
Narayan and Pritchett (1997), described five mechanism for how social capital affects outcomes. They are:
- Improve society’s ability to monitor the performance of government either because government officials are more imbedded in the social network or because monitoring the public provision of services is a public good;
- Increase, possibilities for co-operative action in solving problems with a local common property element;
- Facilitate the diffusion of innovations by increasing inter-linkages among individuals;
- Reduce information imperfections and expand the range of enforcement mechanism, thereby increasing transaction in output, credit, land and labour markets;
- Increase informal insurance (or informal, safety nets) between households, thereby allowing households to pursue higher returns but more risky, activities and production techniques.
10. MEASUREMENT OF SOCIAL CAPITAL
Measurement attempts are flawed by problems with separating form, source and consequences. An example is trust, which is commonly seen as a component of social capital. Some authors equate trust with social capital (Sukuyama 1995; 1997), some see trust as source of social capital (Putnam 1993), some see it as a form of social capital (Coleman 1988), and some see it as a collective asset resulting from social capital construed as a relational asset (Lin 1999).
Some authors have applied various indicators of social capital in different contexts. Examples include:
Trust (Cox and Caldwell 2000, Falk and Guenther 1999);
Membership (Baum and Ziersch 2003; O’Connell 2003);
Membership and trust (Veenstra 2002; Lappe 1997; Lockney 2003);
Membership, trust and norms of reciprocity (Isham 2002; Staveren 2003);and
Network resources (Zhao 2002)
Cavaye (2004) described the development of consistent frameworks and that there are no best indicators, rather some key characteristics that guide the choice of indicators such as:
· Specificity targeted to the variable to be measured,
· Measurability – ease of measurement,
· Comprehensiveness- measures of a range of social characteristics,
· Reliability and vigor, and
· Continuity ability to translate across situations and be consistent in local state or national frameworks
The challenge is to develop consistent indicators that can allow conclusions to be
Drawn across local, state and national frameworks (Cavaye2004).
A useful distinction is the classification into proximal and distal groupings. Proximal indications of social capital are in fact outcomes of social capital related to its core components (networks, trust and reciprocity). Distal indicators are outcomes that are not directly related to its key components and thus may not be valid measures of social capital itself.
Stone (2001, p6) stated that by linking social capital measurement directly to theoretical understandings of the concept we are able to:
· First, recognize that social capital is a multidimensional concept, comprising social networks, norms of trust, and norms of reciprocity;
· Second, understand social capital properly as a resource to action; and
· Third, empirically distinguish between social capital and its outcome” this provides a sound basis for developing a measurement framework but much work is required to ensure the indicators relate to this theoretical understanding.
It is concluded that there is presently no suitable measure of social capital and thus no suitable measure for application to natural resource management.
11. GENDER ISSUES IN SOCIAL CAPITAL THEORY.
One area social capital literature is weak on is gender (kilby, 2002)
Silvery and E1mhirst (2003) argued that for a more complete picture of social capital, specifically one that includes attention to the gendered and intergenerational conflicts and matriarchies within social networks, and the broader context of gender different within which social networks are forged. The authors also posted that social capital that exists within a broader context of gender inequality can exacerbate women’s disadvantages, as women remain excluded from the more powerful networks of trust and reciprocity that exist among men.
12. TYPES OF SOCIAL CAPITAL.
Aldridge Halpern (2002) identified Bonding and Bridging as the main types of social capital. Bonding is horizontal, among equals within a community, whereas bridging is vertical between communities. Wallis (1998) and Wallis and Crocker (1998) referred to bonding capital as localized which he defined as being found among people who live in the same or adjacent communities, and bridging capital, which extends to individuals and organizations that are more removed. Bridging social capital is closely related to thin trust, as opposed to the bonding (splitting) social capital of thick trust (Anheier and Kendall 2002).
The other important distinction of social capital developed by Norman Uphoff and wijayaratna (2000) spans the range from structural manifestation of social capital to cognitive ones. Structural social capital facilitates mutually beneficial collection action through established roles and social networks supplemented by rules, procedures and precedents. Cognitive social capital, which includes shared norms, values, attitudes and beliefs, predisposes people towards mutually beneficial collective action. Cognitive and structural forms of social capital are commonly connected and mutually reinforcing.
There are numerous other examples in the literature for example, whether its ties are strong (intensive and repeated) or weak (temporary and contingent); vertical (operating through formal hierarchical structures) or horizontal (in which authority is more decentralized); open (civically engaged and exercising open membership) or closed (protective and exercising closed membership); geographically dispersed or circumscribed; and instrumental (memberships as social collateral for individual wants) or principled (membership as bonded solidarity) (Heffron 2000).
13. CREATING (AND DESTROYING) SOCIAL COPITAL.
Falk and Kilpatrick (1999) argue that the accumulation of social capital is the outcome of the process of learning interactions. Quality learning interactions include an historical context, external interactions reciprocity, trust, shared norms and values. The planning and implementation of community projects may be one such learning interaction.
Sabel (1994) argue that social capital builds up as a result of all actors committing themselves to ongoing negotiations on shared understanding of common goals. Hechter (1987) suggest a multistage process for building group solidarity. Having joined together members must devise rules and procedures, which get institutionalized overtime. Internalizing rules and procedures, members moderate their behaviour so that these correspond to the expectations others have.
It is argued by a number of practitioners that people’s participation rarely happens spontaneously, but rather involves social preparation (Albee and Boyd, 1997). This is a process of supporting people to:
Gather information about their circumstances and resources;
Analyze the situation;
Prioritize action they wish to pursue;
Join together into a group or an organization of their own choosing and
Work out the means to implement these actions.
14. DISADVANTAGES OF SOCIAL CAPITAL.
Disadvantages of social capital include:
- fostering behaviour that worsens rather than improves economic performance;
- Acting as a barrier to social inclusion and social mobility;
- Dividing rather than uniting communities or societies;
- Facilitating rather than reducing crime, education underachievement and health damaging behaviour. (Aldridge 2002).
The kinds of groupings and associations which can generate social capital always also carry the potential to exclude others (Hunter 2000; Marrow 1999 and Szreter 2000)
Social capital can become a constraint to individual’s actions and choices (Wall 1998). For example, there is a particular high risk of negative social capital in urban poverty situations (Small 2002).
An example of the complexities in calling other forms of social capital “bad” is the example of how gangs might develop in places where social capital is lacking but that they sometimes provide integral functions for the communities they arise in. This might be extrapolated to include the governmental hosting of terrorist groups that serve some positive function the society regardless of their overtly negative connotations.
15. EMPIRICAL LITERATURE REVIEW
Some multi-dimensional measures have been undertaken by various studies. These include:
15.1. Narayan and Pritchett (1997) constructed a measurement of social capital from survey of 87 villages in rural Tanzania, which examined social capital and “village level outcomes”;
15.2. Onyx and Bullen (1997) sought to measure social capital in five localities in New South Wales using a 68-questions survey;
15.3. Barr (1999) used experimental game theory techniques to measure trust and familiarity in selected black communities in Zimbabwe; and
15.4. Putnam (2000) developed the following indicators of social capital for the United States:
15.4. 1Measure of community or organizational life:
v Percentage of individual who revel on a committee of a local organization in the last year (0.88a),
Percentage of individual who served as an officer of some club or organization in the last year (0.83)
Civic social organizations per 1000 population (0.78)
Mean number of club meetings attended in the last year (o.78)
Mean number of group memberships (0.74)
15.4.2 Measure of engagement in public affairs:
· Turnout in presidential elections, 1988 and 1992 (0.84),
· Percentage of individuals who attended public meeting on town or school affairs in last year (0.77).
15.4.3 Measure of community volunteerism
· Number of non-profit organization per 1000 population (0.82)
· Mean number of times worked on a community project in last year (0.65)
· Mean number of time did volunteer work last year (0.66).
15.4.4 Measure of informal sociability:
· Percentage of individuals who agree that “ I spend a lot of time visiting friends” (0.73),
· Mean number of times entertained at home last year (0.67).
15.4.5 Measures of social trust:
· Percentage of individuals who agree that “most people are honest” (0.84)
· Percentage of individuals who agree that “most people can be trusted” (0.92)
The figure in bracket indicates the items coefficient of correlation with the final constructed measure across the individual states of the United States.
16. CONCLUSION
Lack of a single agreed upon definition of social capital, reduces it popularity.
From the foregoing discussion, one can further conclude that social capital is neither available to all nor created equally. The consequences of social capital are numerous however the most noted one are exclusion of outsiders, excess claims on members, restrictions on individual freedom and downward leveling norms.
Lack of a single agreed method of measuring social capital, weaken it further. For instance there is no true quantitative way of determining the level of cohesiveness. It is entirely subjective. This is a clear testimony that most of the indicators used by different scholars are subjective hence they lack objectivity in them.
However despite of the several weaknesses of social capital, as instituted by different scholars, it still provides the explanation on how people benefit out of the interaction. Continued study of the subject, we believe will provide the solution to most uncovered questions.
17. REFERENCE
1. Narayan (1997). Voices of the poor: Poverty and social capital in Tanzania, World Bank, Washington DC, USA
2. World Bank (2000). What is social capital? From www.worldbank. org/poverty
3. Putnam, Leonard and Nanethi (1993). Making Democracy work: Civic Traditions in Modern Italy, Princeton University Press, and Princeton, U.S.A.
4. Schuller, T. Baron, S. & Field, J. (2000). Social capital: A review and Critic. Oxford: Oxford University Press.
Sunday, October 19, 2008
POVERTY, WHAT IS IT?
INTRODUCTION
In an attempt to explore the question “Poverty, what is it?” This paper will be divided into four major headings, that is, theoretical literature review, empirical literature review, Tanzania policy on poverty and the conclusion.
Under theoretical literature review, this paper will examine the meaning of poverty as given by various authorities, types of poverty, historical background of poverty, traditional attitudes toward poverty, causes of poverty and effect of poverty. Under empirical literature review, the paper will explore the question by examining poverty in developing countries, poverty in developed countries, poverty in developing countries, poverty in Tanzania and the most recent world Bank report on poverty.
The paper will then further explore the question by trying to look at Tanzania policy on poverty as stipulated in the National strategy for Growth and Reduction of poverty (NSGRP).
Finally, the paper will give out the conclusion by offering the personal opinions and recommendations.
2. THEORITICAL LITERATURE REVIEW.
2.1 Definition of Poverty.
According to Encyclopedia Britanica, Poverty is a condition that exists when people lack the means to satisfy their basic needs. The basic needs may constitute (i) those necessary for survival and (ii) those reflecting the prevailing standard of living in the community. The first one covers people who are near the borderline of starvation or death from exposure whereas the second one would extend to people whose nutrition, housing and clothing, though adequate to preserve life, do not measure up to those of the population as a whole.
According to the World Bank, poverty is a state of living on less than $ 2, a day. Poverty can also represent a lack of opportunity and empowerment, and bad quality of life in general.
Wikipedia see poverty as a condition in which a person or community is deprived of or lacks the essentials for a minimum standard of living of well being and life.
Thomas J. Corbett, writing for Encarta encyclopedia 2004, saw poverty as a condition of having insufficient resources or income. In its extreme form, poverty is a lack of basic human needs, such as adequate and nutrition food, clothing, housing, clean water and health services.
2.2. TYPES OF POVERTY.
2.2.1. Cyclical poverty.
This may be widespread throughout the population with limited duration. In developing continues, it may be caused by temporary lack of food caused by natural phenomena or poor agricultural planning. In developed countries, the level of life is related to fluctuations in the ability of business, industry and government to sustain high levels of employment and adequate wages.
2.2.2. Collective Poverty.
This involves relatively permanent insufficiency of means to secure basic needs. It may be either generalized collective poverty as it is in developing countries or concentrated collective poverty as it is in developed countries. These types of poverty can be transmitted from generation to generation, fathers passing their poverty on to their sons hence creating cycle of poverty.
2.2.3. Case Poverty.
This refers to the inability of an individual or family to secure basic needs even in social surrounding; a collection known as relative poverty. In developing countries, relative poverty often is measured as having a family income less than one-half of the median income for that country. Absolute poverty or destitution is extreme poverty which threatens people’s health or lives. In developing country it means having a household income of less than US $ 1 per day.
2.3 HISTORICAL BACKGROUND OF POVERTY
Poverty has been a concern in societies since before the beginning of recorded history. According to sociologists and anthropologists, social stratification was a defining characteristics of the earliest civilization. The rulers and other powerful or wealthy members of these civilization frequently mistreated the poor, sometimes subjecting them to hard labour or enslaving them.
Babylonian, Talmudic and early Christians, codified relationships between the poor and non poor into law, as was done in Babylonia, that is, Hammurabi. The present-day welfare systems of the United Kingdom, the United states, and Canada evolved from a 17th Century British legal act known commonly as the poor laws.
The rise of civilizations also led to stratification among nations and territories around the globe. Powerful and wealth nations maintained and increased their power and wealth and built empires by using the labour and resources of less powerful regions. This dynamic manifested itself more during colonial era. Colonizers variously sought to acquire new resources and productive land, to spread religion, to find religious freedom, and to gain positions against rival nations in political and military confrontations.
The unequal distribution of wealth and resources generated in the colonial period has become even more pronounced in the postindustrial or information age. Members of societies with access to good educational opportunities and advanced technology profit more for the emerging global economy than do members of less developed societies.
2.4 TRADITIONAL ATTITUDES TOWARDS POVERTY
In Scotland the Rev. Thomas Chalmers expressed the belief of many when he declared in 1823 that the “four fountain of charity” were ”frozen or locked up by the hands of legislation". These fountains were the frugality of the poor themselves, the kindness of relatives, the sympathy of the wealthy for the poor and the sympathy of the poor for one another.
Laissez-faire theory added economic justifications to the attitudes of those who favoured only minimal assistance. It proclaimed that if progress were to occur, economic life would be regulated only by the natural market processes of supply and demand. Adam Smith pointed out in 1776 that the propertied classes must ultimately pay wages high enough to assure the subsistence and reproduction of the labour force. Failure to do this would lead to the downfall of the system.
Thomas Malthus’ Essay on the Principle of populations, published in 1798, furthered this general attitude. Malthus contended that since an increase of a population’s food supply is more than consumed by the consequent increase in population, the only antidote was the limitation of population by war, diseases and famine later. Economists took up Malthusian ideas and declared flatly that attempts to interfere with “natural” processes by helping the poor could only lead to perpetuating destitution by maintaining them in too large numbers.
Much of late 18th and 19th century Protestant theology was dominated by the concept of predestination. Material success and the accumulation of wealth were indications that one was favoured in God’s eyes.
In 19th century Social Darwinism in Biological evolution believed that unfit individuals and inadaptable species died or became extinct leading to vigorous species and the eventual emergence of man.
English sociologist, Herbert Spencer also coined the phase “survival of the fittest”, unregulated competition among men had led to social and economic progress and the rise of the most able to position of power and eminence.
2.5. CAUSES OF POVERTY
Poverty has many causes, some of them very basic. In most cases, the causes and effect of poverty interact, so that what makes people poor also creates conditions that keep them poor. Primary factors that may lead to poverty include.
2.5.1 Environmental degradation
In many parts of the world, environmental degradation – the deterioration of the natural environmental, including the atmosphere, bodies of water, soil and forests is an important cause of poverty. Environmental problems have led to shortage of food, clear water, materials for shelter and other essential resources. As forests, land, air and water are degraded, people who live directly off these natural resources suffer most from the effects.
2.5.2. Lack of appropriate education and technology.
Illiteracy and lack of education and poor technology are common in poor Countries. Governments of developing countries often cannot afford to provide for good public schools, especially in rural areas. Without education, most people cannot find income-generating work. Poor people also often forego schooling in order concentrate on making a minimal living. They also do not comprehend rapid changing technology in order to cope up with global trend.
2.5.3. Lifestyle linked conditions
The lifestyle linked conditions may include unemployment, underemployment, migration, displacement and social enmity.
In developing countries, unemployment rates may be very high. When people do not have work, they do not make any money; thus, high unemployment leads to poverty. Availability of employment also tends to fluctuate, particularly agriculturally – related jobs.
Migration, displacement and social enmity is a common phenomenon in war – torn region of the third world. Displacement has also been witnessed in urban centers particularly in the slums for the purpose of development by municipal councils.
2.5.4. Over population.
Over population, the situation of having large numbers of people with too few resources and too little space is closely associated with poverty. In countries where people live primarily by means of simple farming, gardening , herding, hunting and gathering, even large areas of land can support only small numbers of people because these labour-intensive subsistence activities produce only small amount of food.
2.5.5. Global Distribution of Resources.
Many experts agree that the legacy of colonialism accounts for much of the unequal distribution of resources in the world economy. Many developing countries lack essential raw materials and the knowledge and skills gained through formal education and training. They often lack the infrastructure provided by for example, transportation systems and power generating facilities. Because these things are necessary for the development of industry, developing countries generally must rely on trade within developed countries for manufactured goods, but they cannot afford much.
2.5.6. Individual responsibility and laziness.
Some people believe that the poor intentionally behave in ways that cause or perpetuate their poverty. For instance, if people voluntarily choose to use drugs and thus leads them to poverty, it can be argued that they are to blame for their situation. Idleness and failure to engage in any meaningful economic activity leads to shire poverty.
2.5.7 Cultural beliefs and practices.
In most developing countries people have failed to move from their traditional form of production to modern form of production. The use of hoes, axe and slices is still common in agricultural sector with little mechanization hence production remain to be low.
2.5.8. Ill health.
The ill health due to lack of medical facilities and practitioners in developing countries, many people experience high rates of infectious diseases. Inadequate shelter or housing creates conditions that promote disease. Without decent protection, many of the poor are exposed to severe and dangerous weather as well as bacteria and viruses carried by other people and animals hence rendering them more poor.
2.5.9. Poor governance.
Most of the political leaders in developing countries engage in activities which either cause or perpetuate poverty. Such practices include corruptions, lack of transparency and accountability. Some leaders accepted multiparty system as a matter of principle but not as a matter to be practiced. And in the course of this, the ruling party fail to work is partnership with opposition parties hence experiencing political monopoly and discrimination. This factor leads to misallocation of resources.
2.5.10. Micro-economic structures.
Micro-economic condition may be a cause of poverty in most developing countries. Such structures may include infrastructure such as roads, railways, electricity ad water; social services such as medical facilities, schools and police posts; Communication which may include telephones, e-mail, telex, fax or post offices; Polices which fail to be implemented; institutions such as ministries and departments and finally market whether perfect or imperfect.
2.5.11. Other causes
Other causes of poverty are bureaucratic practices which encourage selfishness, corruption ad favouritism; lack of capital; foreign debts, and political conflicts.
2.6 . EFFECTS OF POVERTY.
Poverty has wide-ranging and often devastating effects. These effects may include:-
2.6.1. Malnutrition and starvation.
In developing countries, the poorest people cannot obtain adequate calories to develop or maintain their appropriate body weight. Children and adult a like may suffer from protein-energy malnutrition, severe vitamin and mineral deficiencies. Prolonged malnutrition can lead to starvation and death.
2.6.2. Infectious diseases and exposure to the elements.
In most developing countries inadequate shelter or housing creates conditions that promote diseases. without decent protection many of the poor are exposed to severe and dangerous weather as well as to bacteria and viruses carried by other people and animals. The poor are also more likely to become infected with diseases carried by insects or rodents. Developing countries also have shortages of doctors.
2.6.3. Mental illness and drug dependence.
The most common disorders associated with poverty are depression and anxiety disorders. Many poor people develop low self-esteem and feelings of worthlessness. Because the poor experience high rates of severe mental illness, they also have high rates of suicide.
Mentally ill and drug-dependent people tend to have trouble holding steady jobs and maintaining relationships, causing them to fall into poverty.
2.6.4. Crime and violence.
Anger, desperation, and the need for money for food, shelter and other necessities may all contribute to criminal behavior among the poor. Other problems associated with poverty are often linked to crime. For example, to obtain money some poor people commit the crime of selling illegal drugs; others may steal to obtain the money to buy drugs on which they are dependant.
2.6.5. Long term effects.
Poor people are at disadvantage in things such as education. Studies have shown that people who grow up in persistently poor households experience more difficulties throughout their lives than those raised in households that are above the poverty level. In many cases, those who had poor parents are poor themselves, earning lower than average incomes hence the vicious circle of poverty.
3. IMPERICAL LITERATURE REVIEW
3.1 Poverty in Developing countries
According to Thomas J. Corbett many developing nations experience severe and widespread poverty, which often leads to diseases, epidemics, starvation, and deaths. As recently as 1998, almost one person in four (23 percent) residing in developing countries lived on less than $ 1 a day.
Africa includes some of the poorest countries in the world. During the late 20th century, desertification contributed to famines in a number of African nations, including Somalia, Ethiopia and Mali. Political instability and wars in many sub-Saharan countries have also contributed to poverty.
In 1998 Asia accounted for about two-thirds of the world’s 1.2 billion poorest people. These people lived on less than $ 1 per day. China has very large numbers of poor due to the great size of its rural population. South east Asia countries as Vietnam, the Philippines and Indonesia also rank among the world’s poorest.
It is estimated that slightly more than 60 million people in Latin America lived in extreme poverty in 1998. The poorest people are commonly, Native American, people of African ancestry and Mestizos (persons of mixed Native American and European ancestry). Political instability has contributed to poverty in many Latin American Countries, including Chile, Cuba, Nicaragua Panama and Haiti. Brazil has the greatest number of people living in poverty in all of Latin America.
Many countries formerly part of the communist bloc, including those of the former soviet Union, have relatively high level of poverty. Since the fall of communism in 1989, poverty in much of Eastern Europe and Central, Asia has increased.
3.2. POVERTY IN DEVELOPED COUNTRIES.
Corbett writes, in 2001 census Bureau reported about 33 million residents living in poverty in the United States, or about 12 per cent of the total population. Higher percentages of people are poor in southern and western part of the country than North east and mid west.
The great ethnic and racial diversity of countries such as Australia, Canada and the United Kingdom Contribute to high poverty rates because minority groups tend to have low social and economic status. The Scandinavian countries, which have the lowest poverty rates of all developed countries, have fairly homogeneous population.
Differences in history and scope of social welfare systems among developed countries also may contribute to differences in their poverty rates.
3.3. POVERTY IN TANZANIA
This can be divided into the following categories.
3.3.1. INCOME POVERTY
Vice President’s office (2005) reporting on National strategy for growth and Reduction of Poverty (NSGRP),writes, according to the House hold Budget, Survey (HBS) of 200/01 the proportion of the population below the national food poverty line is 18.7 per cent and that below the national basic needs poverty line is 35.7 percent.
3.3.1.1. Geographical disparities
The authors report that the indicators of income poverty, human capabilities, survival and nutrition and the human development Index (HDI), clearly shows growing rural-urban divide. There are also disparities across and within regions and districts in poverty status. Disparities are explained by the Patten in the distribution of population, endowment in natural resources, climatic conditions as well as in the distribution of infrastructure such as transport, schools and health facilities.
3.3.1.2. Perspective of agriculture and other productive and service sectors
Agriculture is the lead sector, accounting for 45 percent of GPD and about 60 percent of export earnings in the past three years. It is the source of food and raw materials for industries. It also provides to 82 percent of the population. The constraints to rural growth are largely related to those in the agricultural sector, broadly defined to include livestock and bee-keeping.
The industrial sector grew by 8.6 percent in 2003 compared to 8 per cent in 2002 (Economic survey, 2004); but the increase has not been uniform across industrial establishments.
.
3.3.1.3. Urban poverty, formal and informal sectors.
Urban poverty is evident in households with low and unreliable income, the unemployed, urban vulnerable groups and those in the informal sector. Trade liberalization has prompted an influx into urban areas of a vast number of petty traders mainly youth aged 20 -29 with primary level of education and no formal training. The informal sector also includes men and women engaged in sand mining, quarrying and lime making to support the growing construction industry.
3.3.1.4. Infrastructure, science and technology
Levels and quality of transport and communications and energy service are generally poor and this constrains growth. Rural areas lack road network and rural telecommunications which in turn limit creation of new opportunities for markets, employment and trade (domestic and foreign).
Problems of access to information and Communication Technologies (ICTS) include low literacy rates, low incomes and limited number of service providers. The recent rise in the use of (CTS including mobile telephone is still dominantly urban-oriented
3.3.2. Employment status.
Unemployment stands at 2.3. Million equivalent to 12.9 per cent of the labour force. Employment – to – population ratio is 76 per cent nationally. The ratio is lower in urban areas (58 per cent) than in rural areas (81 per cent). Unemployment is worse among the youth, including the educated youth. Employment opportunities for people with disabilities are limited and special support for them in the work place is frequently lacking.
3.3.3. NON – INCOME POVERTY
3.3.3.1. Education and illiteracy
Enrollment rate in primary schools reached 106.3 per cent in 2004 and Net Enrolment rate (NER) reached 90.5 per cent in the same year. But the pace of transition to secondary schools is low, despite the growth of private secondary schools.
Illiteracy remains high. About 28.6 per cent Tanzanians can not read ad write in any language. There is more illiteracy among women (36 per cent) than man (20.4 per cent).
3.3.3.2. Health services.
The 1990s health services shows successes in immunizations coverage of children, in TB treatment and in the accessibility to contraceptive. There have been steady improvements in vaccination rates since 2000, with an impressive coverage of 90 per cent by 2002, thus surpassing PRS targets.
3.3.3.3. Survival and nutrition.
No substantial progress was made in the reduction of infant and under – five mortality and maternal mortality.
As for nutrition, Tanzania has identified four nutritional disorders as being of public health concern; (i) Protein energy malnutrition (PEM) (ii) Nutritional anaemia (iii) Iodine deficiency disorders (IDD) and (iv)Vitamin A deficiency (VAD). Other nutritional disorders include obesity; chronic diet related non – communicable diseases and deficiencies of some vitamins and minerals.
3.3.3.4. Hiv and aids.
An increase in HIV and AIDS prevalence, over the last decade has further aggravated the health status by eroding the Human Development Index (HDI) and future prospects of Tanzanians. It has therefore undermined the foundations for development and attainment of the Millennium Development Goals and national target.
3.3.3.5. Water and environmental health.
Improved rural water supply coverage has increased to 53 per cent in June 2003. About 47 percent of rural households still use unprotected sources of drinking water. Long distance to source of drinking water in rural areas entail heavy work load on woman and children. Majority of rural households have latrines, but they lack proper hygienic use and maintenance.
Urban water supply coverage increased to 73 percent in June 2002 especially in unplanned urban settlements.
3.3.4. Vulnerability.
According to Tanzania Participatory Poverty assessment (TZ PPA) (2002/03) and Policy and service satisfaction survey (PSSS), impoverishment are grouped into six categories, namely economic, environmental, governance, socio – cultural, health and life cycle factors. Respondents frequently referred to wrong policies and effects on environment, bad governance and macro economy as the cause of poverty.
3.3.5. Cross-cutting issues.
Cross-cutting issues relate to the factors that cut across sectors and social groups (often) negatively impacting on income and non-income poverty. Such factors include imbalance in gender relations, environmental issues and HIV and AIDS.
3.4. THE WORLD BANK GROUP REPORT ON POVERTY (SEPTEMBER 2007).
* About 1 billion people – one fifth of the world’s population – live on less than $ 1 a day. Poverty incidence has decreased from 29 percent of global population in1990 to 18 per cent in 2004.
* At current trends, the poverty millennium Development Goal (MDG) of reducing extreme poverty by 50 per cent from its 1990 level by 2015 will be achieved at global level, 12 percent of the population in developing countries will be $ 1 a day or less in 2015.
* The decline in poverty is highly uneven across regions. In East Asia and the Pacific, by 2015 the percentage of people living on $1 a day will drop than 3 per cent. However a still significant 15 percent share will be below the $ 2 a day poverty line indicator. At the other extreme is Sub-Saharan Africa is projected to have a $ 1 a day poverty rate of 36 percent in 2015.
4. POLICY ON POVERTY IN TANZANIA.
The Government is determined to stay the course of economic and social reforms and maintain improved macroeconomic stability. In the course of the National strategy for Growth and Reduction of poverty (NSGRP), real Gross Domestic Product (GDP) is expected to reach the average growth rate of 6 – 8 per cent per annum between 2005 /06 and 2009/10 consistent with the aspiration of vision 2025.
4.1POVERTY ALLEVIATION STRATEGY
According to the National strategy for growth and reduction of poverty (NSGRP) (2005). Poverty would be reduced by applying the following strategies (i) growth and Reduction of income poverty (ii) improvement of quality of life and social well being (iii) governance and accountability .
4.1.1Growth and Reduction of income poverty
Poverty reduction requires sustained high growth rate of GDP of at least 6-8 percent per annum over the next decade.
.
4.1.2 Improvement of quality of life and social well being.
The Government recognizes the central role of social service sectors in achieving the goal of improving quality of life ad social well-being.
4.1.3 Governance and accountability.
The NSGRP aims at achieving four broad outcomes.
· Good governance and the rule of law are ensured
· Leaders and public servants are accountable to the people.
· Democracy, political and social to tolerance are deepened and
· Peace, political stability, national unity and social cohesion are cultivated and sustained.
4.2 IMPLEMENTATION ARRANGEMENT
The outcome-based approach adopted in NSGRP bring too the fore issues of cross-section collaboration, inter-linkages and strategies in achieving priority outcomes. The key local actions that will implement the strategy include central government ministries and LGAs, Independents and agencies (MDAs), Private sector, Civil society organization (CSO) and communities. Parliament will play an oversight role over the government in the implementation process. Likewise, the Development Partners (DP) will play a supportive role in the implementation of NSGRP.
.
4.3 MONITORING AND EVALUATION OF THE STRATEGY
Evaluation will be done at three levels. First, Internal evaluation will continue through the production of the poverty and human Development Reports (PHDR) and the Public expenditure Review (PER) Process. Second, additional space will be created for on – going evaluation mechanisms through Participatory Poverty Assessments, particularly of the reform programmers. Third, a comprehensive review, informed by annual progress reports produced under national consultative processes, will take place at the end of the NSGRP period in 2010.
5. CONCLUSION:
The war against poverty requires collective effort from various organization which support antipoverty programs in developing countries. Such organization may include (1) International government organizations, such as UN (2) Aid agencies run by developed countries (3) Non governmental organizations (NGOs) and (4) Private development banks.
Through there are already antipoverty programs from the above mentioned organization in Tanzania but there is need to change the attitude of people on poverty.
The developing countries, including Tanzania, need to develop the attitude that “we can change our own situation. The situation towards our problem is within our hand”. With this kind of attitude, we shall reduce the dependency on foreign aids and grants.
Finally, the success, of various antipoverty programs in Tanzania also lies in good governance and accountability as it is put by National strategy for growth and reduction of poverty (NSGRP). The implementation, monitoring and evaluations of such strategy should also be followed strictly.
REFFERENCE:-
Burkey, S (1988), People first: “A guide to self-reliant participatory rural development,” Zed Books, London, chap 1 and 2.
Corbett, J (2004), Poverty Encerta wikipedia.
The United Republic of Tanzania (2005) National strategy for Growth and Reduction of Poverty (NSGRP), Dar es Salaam.
Encyclopedia Bretanica (1986).
In an attempt to explore the question “Poverty, what is it?” This paper will be divided into four major headings, that is, theoretical literature review, empirical literature review, Tanzania policy on poverty and the conclusion.
Under theoretical literature review, this paper will examine the meaning of poverty as given by various authorities, types of poverty, historical background of poverty, traditional attitudes toward poverty, causes of poverty and effect of poverty. Under empirical literature review, the paper will explore the question by examining poverty in developing countries, poverty in developed countries, poverty in developing countries, poverty in Tanzania and the most recent world Bank report on poverty.
The paper will then further explore the question by trying to look at Tanzania policy on poverty as stipulated in the National strategy for Growth and Reduction of poverty (NSGRP).
Finally, the paper will give out the conclusion by offering the personal opinions and recommendations.
2. THEORITICAL LITERATURE REVIEW.
2.1 Definition of Poverty.
According to Encyclopedia Britanica, Poverty is a condition that exists when people lack the means to satisfy their basic needs. The basic needs may constitute (i) those necessary for survival and (ii) those reflecting the prevailing standard of living in the community. The first one covers people who are near the borderline of starvation or death from exposure whereas the second one would extend to people whose nutrition, housing and clothing, though adequate to preserve life, do not measure up to those of the population as a whole.
According to the World Bank, poverty is a state of living on less than $ 2, a day. Poverty can also represent a lack of opportunity and empowerment, and bad quality of life in general.
Wikipedia see poverty as a condition in which a person or community is deprived of or lacks the essentials for a minimum standard of living of well being and life.
Thomas J. Corbett, writing for Encarta encyclopedia 2004, saw poverty as a condition of having insufficient resources or income. In its extreme form, poverty is a lack of basic human needs, such as adequate and nutrition food, clothing, housing, clean water and health services.
2.2. TYPES OF POVERTY.
2.2.1. Cyclical poverty.
This may be widespread throughout the population with limited duration. In developing continues, it may be caused by temporary lack of food caused by natural phenomena or poor agricultural planning. In developed countries, the level of life is related to fluctuations in the ability of business, industry and government to sustain high levels of employment and adequate wages.
2.2.2. Collective Poverty.
This involves relatively permanent insufficiency of means to secure basic needs. It may be either generalized collective poverty as it is in developing countries or concentrated collective poverty as it is in developed countries. These types of poverty can be transmitted from generation to generation, fathers passing their poverty on to their sons hence creating cycle of poverty.
2.2.3. Case Poverty.
This refers to the inability of an individual or family to secure basic needs even in social surrounding; a collection known as relative poverty. In developing countries, relative poverty often is measured as having a family income less than one-half of the median income for that country. Absolute poverty or destitution is extreme poverty which threatens people’s health or lives. In developing country it means having a household income of less than US $ 1 per day.
2.3 HISTORICAL BACKGROUND OF POVERTY
Poverty has been a concern in societies since before the beginning of recorded history. According to sociologists and anthropologists, social stratification was a defining characteristics of the earliest civilization. The rulers and other powerful or wealthy members of these civilization frequently mistreated the poor, sometimes subjecting them to hard labour or enslaving them.
Babylonian, Talmudic and early Christians, codified relationships between the poor and non poor into law, as was done in Babylonia, that is, Hammurabi. The present-day welfare systems of the United Kingdom, the United states, and Canada evolved from a 17th Century British legal act known commonly as the poor laws.
The rise of civilizations also led to stratification among nations and territories around the globe. Powerful and wealth nations maintained and increased their power and wealth and built empires by using the labour and resources of less powerful regions. This dynamic manifested itself more during colonial era. Colonizers variously sought to acquire new resources and productive land, to spread religion, to find religious freedom, and to gain positions against rival nations in political and military confrontations.
The unequal distribution of wealth and resources generated in the colonial period has become even more pronounced in the postindustrial or information age. Members of societies with access to good educational opportunities and advanced technology profit more for the emerging global economy than do members of less developed societies.
2.4 TRADITIONAL ATTITUDES TOWARDS POVERTY
In Scotland the Rev. Thomas Chalmers expressed the belief of many when he declared in 1823 that the “four fountain of charity” were ”frozen or locked up by the hands of legislation". These fountains were the frugality of the poor themselves, the kindness of relatives, the sympathy of the wealthy for the poor and the sympathy of the poor for one another.
Laissez-faire theory added economic justifications to the attitudes of those who favoured only minimal assistance. It proclaimed that if progress were to occur, economic life would be regulated only by the natural market processes of supply and demand. Adam Smith pointed out in 1776 that the propertied classes must ultimately pay wages high enough to assure the subsistence and reproduction of the labour force. Failure to do this would lead to the downfall of the system.
Thomas Malthus’ Essay on the Principle of populations, published in 1798, furthered this general attitude. Malthus contended that since an increase of a population’s food supply is more than consumed by the consequent increase in population, the only antidote was the limitation of population by war, diseases and famine later. Economists took up Malthusian ideas and declared flatly that attempts to interfere with “natural” processes by helping the poor could only lead to perpetuating destitution by maintaining them in too large numbers.
Much of late 18th and 19th century Protestant theology was dominated by the concept of predestination. Material success and the accumulation of wealth were indications that one was favoured in God’s eyes.
In 19th century Social Darwinism in Biological evolution believed that unfit individuals and inadaptable species died or became extinct leading to vigorous species and the eventual emergence of man.
English sociologist, Herbert Spencer also coined the phase “survival of the fittest”, unregulated competition among men had led to social and economic progress and the rise of the most able to position of power and eminence.
2.5. CAUSES OF POVERTY
Poverty has many causes, some of them very basic. In most cases, the causes and effect of poverty interact, so that what makes people poor also creates conditions that keep them poor. Primary factors that may lead to poverty include.
2.5.1 Environmental degradation
In many parts of the world, environmental degradation – the deterioration of the natural environmental, including the atmosphere, bodies of water, soil and forests is an important cause of poverty. Environmental problems have led to shortage of food, clear water, materials for shelter and other essential resources. As forests, land, air and water are degraded, people who live directly off these natural resources suffer most from the effects.
2.5.2. Lack of appropriate education and technology.
Illiteracy and lack of education and poor technology are common in poor Countries. Governments of developing countries often cannot afford to provide for good public schools, especially in rural areas. Without education, most people cannot find income-generating work. Poor people also often forego schooling in order concentrate on making a minimal living. They also do not comprehend rapid changing technology in order to cope up with global trend.
2.5.3. Lifestyle linked conditions
The lifestyle linked conditions may include unemployment, underemployment, migration, displacement and social enmity.
In developing countries, unemployment rates may be very high. When people do not have work, they do not make any money; thus, high unemployment leads to poverty. Availability of employment also tends to fluctuate, particularly agriculturally – related jobs.
Migration, displacement and social enmity is a common phenomenon in war – torn region of the third world. Displacement has also been witnessed in urban centers particularly in the slums for the purpose of development by municipal councils.
2.5.4. Over population.
Over population, the situation of having large numbers of people with too few resources and too little space is closely associated with poverty. In countries where people live primarily by means of simple farming, gardening , herding, hunting and gathering, even large areas of land can support only small numbers of people because these labour-intensive subsistence activities produce only small amount of food.
2.5.5. Global Distribution of Resources.
Many experts agree that the legacy of colonialism accounts for much of the unequal distribution of resources in the world economy. Many developing countries lack essential raw materials and the knowledge and skills gained through formal education and training. They often lack the infrastructure provided by for example, transportation systems and power generating facilities. Because these things are necessary for the development of industry, developing countries generally must rely on trade within developed countries for manufactured goods, but they cannot afford much.
2.5.6. Individual responsibility and laziness.
Some people believe that the poor intentionally behave in ways that cause or perpetuate their poverty. For instance, if people voluntarily choose to use drugs and thus leads them to poverty, it can be argued that they are to blame for their situation. Idleness and failure to engage in any meaningful economic activity leads to shire poverty.
2.5.7 Cultural beliefs and practices.
In most developing countries people have failed to move from their traditional form of production to modern form of production. The use of hoes, axe and slices is still common in agricultural sector with little mechanization hence production remain to be low.
2.5.8. Ill health.
The ill health due to lack of medical facilities and practitioners in developing countries, many people experience high rates of infectious diseases. Inadequate shelter or housing creates conditions that promote disease. Without decent protection, many of the poor are exposed to severe and dangerous weather as well as bacteria and viruses carried by other people and animals hence rendering them more poor.
2.5.9. Poor governance.
Most of the political leaders in developing countries engage in activities which either cause or perpetuate poverty. Such practices include corruptions, lack of transparency and accountability. Some leaders accepted multiparty system as a matter of principle but not as a matter to be practiced. And in the course of this, the ruling party fail to work is partnership with opposition parties hence experiencing political monopoly and discrimination. This factor leads to misallocation of resources.
2.5.10. Micro-economic structures.
Micro-economic condition may be a cause of poverty in most developing countries. Such structures may include infrastructure such as roads, railways, electricity ad water; social services such as medical facilities, schools and police posts; Communication which may include telephones, e-mail, telex, fax or post offices; Polices which fail to be implemented; institutions such as ministries and departments and finally market whether perfect or imperfect.
2.5.11. Other causes
Other causes of poverty are bureaucratic practices which encourage selfishness, corruption ad favouritism; lack of capital; foreign debts, and political conflicts.
2.6 . EFFECTS OF POVERTY.
Poverty has wide-ranging and often devastating effects. These effects may include:-
2.6.1. Malnutrition and starvation.
In developing countries, the poorest people cannot obtain adequate calories to develop or maintain their appropriate body weight. Children and adult a like may suffer from protein-energy malnutrition, severe vitamin and mineral deficiencies. Prolonged malnutrition can lead to starvation and death.
2.6.2. Infectious diseases and exposure to the elements.
In most developing countries inadequate shelter or housing creates conditions that promote diseases. without decent protection many of the poor are exposed to severe and dangerous weather as well as to bacteria and viruses carried by other people and animals. The poor are also more likely to become infected with diseases carried by insects or rodents. Developing countries also have shortages of doctors.
2.6.3. Mental illness and drug dependence.
The most common disorders associated with poverty are depression and anxiety disorders. Many poor people develop low self-esteem and feelings of worthlessness. Because the poor experience high rates of severe mental illness, they also have high rates of suicide.
Mentally ill and drug-dependent people tend to have trouble holding steady jobs and maintaining relationships, causing them to fall into poverty.
2.6.4. Crime and violence.
Anger, desperation, and the need for money for food, shelter and other necessities may all contribute to criminal behavior among the poor. Other problems associated with poverty are often linked to crime. For example, to obtain money some poor people commit the crime of selling illegal drugs; others may steal to obtain the money to buy drugs on which they are dependant.
2.6.5. Long term effects.
Poor people are at disadvantage in things such as education. Studies have shown that people who grow up in persistently poor households experience more difficulties throughout their lives than those raised in households that are above the poverty level. In many cases, those who had poor parents are poor themselves, earning lower than average incomes hence the vicious circle of poverty.
3. IMPERICAL LITERATURE REVIEW
3.1 Poverty in Developing countries
According to Thomas J. Corbett many developing nations experience severe and widespread poverty, which often leads to diseases, epidemics, starvation, and deaths. As recently as 1998, almost one person in four (23 percent) residing in developing countries lived on less than $ 1 a day.
Africa includes some of the poorest countries in the world. During the late 20th century, desertification contributed to famines in a number of African nations, including Somalia, Ethiopia and Mali. Political instability and wars in many sub-Saharan countries have also contributed to poverty.
In 1998 Asia accounted for about two-thirds of the world’s 1.2 billion poorest people. These people lived on less than $ 1 per day. China has very large numbers of poor due to the great size of its rural population. South east Asia countries as Vietnam, the Philippines and Indonesia also rank among the world’s poorest.
It is estimated that slightly more than 60 million people in Latin America lived in extreme poverty in 1998. The poorest people are commonly, Native American, people of African ancestry and Mestizos (persons of mixed Native American and European ancestry). Political instability has contributed to poverty in many Latin American Countries, including Chile, Cuba, Nicaragua Panama and Haiti. Brazil has the greatest number of people living in poverty in all of Latin America.
Many countries formerly part of the communist bloc, including those of the former soviet Union, have relatively high level of poverty. Since the fall of communism in 1989, poverty in much of Eastern Europe and Central, Asia has increased.
3.2. POVERTY IN DEVELOPED COUNTRIES.
Corbett writes, in 2001 census Bureau reported about 33 million residents living in poverty in the United States, or about 12 per cent of the total population. Higher percentages of people are poor in southern and western part of the country than North east and mid west.
The great ethnic and racial diversity of countries such as Australia, Canada and the United Kingdom Contribute to high poverty rates because minority groups tend to have low social and economic status. The Scandinavian countries, which have the lowest poverty rates of all developed countries, have fairly homogeneous population.
Differences in history and scope of social welfare systems among developed countries also may contribute to differences in their poverty rates.
3.3. POVERTY IN TANZANIA
This can be divided into the following categories.
3.3.1. INCOME POVERTY
Vice President’s office (2005) reporting on National strategy for growth and Reduction of Poverty (NSGRP),writes, according to the House hold Budget, Survey (HBS) of 200/01 the proportion of the population below the national food poverty line is 18.7 per cent and that below the national basic needs poverty line is 35.7 percent.
3.3.1.1. Geographical disparities
The authors report that the indicators of income poverty, human capabilities, survival and nutrition and the human development Index (HDI), clearly shows growing rural-urban divide. There are also disparities across and within regions and districts in poverty status. Disparities are explained by the Patten in the distribution of population, endowment in natural resources, climatic conditions as well as in the distribution of infrastructure such as transport, schools and health facilities.
3.3.1.2. Perspective of agriculture and other productive and service sectors
Agriculture is the lead sector, accounting for 45 percent of GPD and about 60 percent of export earnings in the past three years. It is the source of food and raw materials for industries. It also provides to 82 percent of the population. The constraints to rural growth are largely related to those in the agricultural sector, broadly defined to include livestock and bee-keeping.
The industrial sector grew by 8.6 percent in 2003 compared to 8 per cent in 2002 (Economic survey, 2004); but the increase has not been uniform across industrial establishments.
.
3.3.1.3. Urban poverty, formal and informal sectors.
Urban poverty is evident in households with low and unreliable income, the unemployed, urban vulnerable groups and those in the informal sector. Trade liberalization has prompted an influx into urban areas of a vast number of petty traders mainly youth aged 20 -29 with primary level of education and no formal training. The informal sector also includes men and women engaged in sand mining, quarrying and lime making to support the growing construction industry.
3.3.1.4. Infrastructure, science and technology
Levels and quality of transport and communications and energy service are generally poor and this constrains growth. Rural areas lack road network and rural telecommunications which in turn limit creation of new opportunities for markets, employment and trade (domestic and foreign).
Problems of access to information and Communication Technologies (ICTS) include low literacy rates, low incomes and limited number of service providers. The recent rise in the use of (CTS including mobile telephone is still dominantly urban-oriented
3.3.2. Employment status.
Unemployment stands at 2.3. Million equivalent to 12.9 per cent of the labour force. Employment – to – population ratio is 76 per cent nationally. The ratio is lower in urban areas (58 per cent) than in rural areas (81 per cent). Unemployment is worse among the youth, including the educated youth. Employment opportunities for people with disabilities are limited and special support for them in the work place is frequently lacking.
3.3.3. NON – INCOME POVERTY
3.3.3.1. Education and illiteracy
Enrollment rate in primary schools reached 106.3 per cent in 2004 and Net Enrolment rate (NER) reached 90.5 per cent in the same year. But the pace of transition to secondary schools is low, despite the growth of private secondary schools.
Illiteracy remains high. About 28.6 per cent Tanzanians can not read ad write in any language. There is more illiteracy among women (36 per cent) than man (20.4 per cent).
3.3.3.2. Health services.
The 1990s health services shows successes in immunizations coverage of children, in TB treatment and in the accessibility to contraceptive. There have been steady improvements in vaccination rates since 2000, with an impressive coverage of 90 per cent by 2002, thus surpassing PRS targets.
3.3.3.3. Survival and nutrition.
No substantial progress was made in the reduction of infant and under – five mortality and maternal mortality.
As for nutrition, Tanzania has identified four nutritional disorders as being of public health concern; (i) Protein energy malnutrition (PEM) (ii) Nutritional anaemia (iii) Iodine deficiency disorders (IDD) and (iv)Vitamin A deficiency (VAD). Other nutritional disorders include obesity; chronic diet related non – communicable diseases and deficiencies of some vitamins and minerals.
3.3.3.4. Hiv and aids.
An increase in HIV and AIDS prevalence, over the last decade has further aggravated the health status by eroding the Human Development Index (HDI) and future prospects of Tanzanians. It has therefore undermined the foundations for development and attainment of the Millennium Development Goals and national target.
3.3.3.5. Water and environmental health.
Improved rural water supply coverage has increased to 53 per cent in June 2003. About 47 percent of rural households still use unprotected sources of drinking water. Long distance to source of drinking water in rural areas entail heavy work load on woman and children. Majority of rural households have latrines, but they lack proper hygienic use and maintenance.
Urban water supply coverage increased to 73 percent in June 2002 especially in unplanned urban settlements.
3.3.4. Vulnerability.
According to Tanzania Participatory Poverty assessment (TZ PPA) (2002/03) and Policy and service satisfaction survey (PSSS), impoverishment are grouped into six categories, namely economic, environmental, governance, socio – cultural, health and life cycle factors. Respondents frequently referred to wrong policies and effects on environment, bad governance and macro economy as the cause of poverty.
3.3.5. Cross-cutting issues.
Cross-cutting issues relate to the factors that cut across sectors and social groups (often) negatively impacting on income and non-income poverty. Such factors include imbalance in gender relations, environmental issues and HIV and AIDS.
3.4. THE WORLD BANK GROUP REPORT ON POVERTY (SEPTEMBER 2007).
* About 1 billion people – one fifth of the world’s population – live on less than $ 1 a day. Poverty incidence has decreased from 29 percent of global population in1990 to 18 per cent in 2004.
* At current trends, the poverty millennium Development Goal (MDG) of reducing extreme poverty by 50 per cent from its 1990 level by 2015 will be achieved at global level, 12 percent of the population in developing countries will be $ 1 a day or less in 2015.
* The decline in poverty is highly uneven across regions. In East Asia and the Pacific, by 2015 the percentage of people living on $1 a day will drop than 3 per cent. However a still significant 15 percent share will be below the $ 2 a day poverty line indicator. At the other extreme is Sub-Saharan Africa is projected to have a $ 1 a day poverty rate of 36 percent in 2015.
4. POLICY ON POVERTY IN TANZANIA.
The Government is determined to stay the course of economic and social reforms and maintain improved macroeconomic stability. In the course of the National strategy for Growth and Reduction of poverty (NSGRP), real Gross Domestic Product (GDP) is expected to reach the average growth rate of 6 – 8 per cent per annum between 2005 /06 and 2009/10 consistent with the aspiration of vision 2025.
4.1POVERTY ALLEVIATION STRATEGY
According to the National strategy for growth and reduction of poverty (NSGRP) (2005). Poverty would be reduced by applying the following strategies (i) growth and Reduction of income poverty (ii) improvement of quality of life and social well being (iii) governance and accountability .
4.1.1Growth and Reduction of income poverty
Poverty reduction requires sustained high growth rate of GDP of at least 6-8 percent per annum over the next decade.
.
4.1.2 Improvement of quality of life and social well being.
The Government recognizes the central role of social service sectors in achieving the goal of improving quality of life ad social well-being.
4.1.3 Governance and accountability.
The NSGRP aims at achieving four broad outcomes.
· Good governance and the rule of law are ensured
· Leaders and public servants are accountable to the people.
· Democracy, political and social to tolerance are deepened and
· Peace, political stability, national unity and social cohesion are cultivated and sustained.
4.2 IMPLEMENTATION ARRANGEMENT
The outcome-based approach adopted in NSGRP bring too the fore issues of cross-section collaboration, inter-linkages and strategies in achieving priority outcomes. The key local actions that will implement the strategy include central government ministries and LGAs, Independents and agencies (MDAs), Private sector, Civil society organization (CSO) and communities. Parliament will play an oversight role over the government in the implementation process. Likewise, the Development Partners (DP) will play a supportive role in the implementation of NSGRP.
.
4.3 MONITORING AND EVALUATION OF THE STRATEGY
Evaluation will be done at three levels. First, Internal evaluation will continue through the production of the poverty and human Development Reports (PHDR) and the Public expenditure Review (PER) Process. Second, additional space will be created for on – going evaluation mechanisms through Participatory Poverty Assessments, particularly of the reform programmers. Third, a comprehensive review, informed by annual progress reports produced under national consultative processes, will take place at the end of the NSGRP period in 2010.
5. CONCLUSION:
The war against poverty requires collective effort from various organization which support antipoverty programs in developing countries. Such organization may include (1) International government organizations, such as UN (2) Aid agencies run by developed countries (3) Non governmental organizations (NGOs) and (4) Private development banks.
Through there are already antipoverty programs from the above mentioned organization in Tanzania but there is need to change the attitude of people on poverty.
The developing countries, including Tanzania, need to develop the attitude that “we can change our own situation. The situation towards our problem is within our hand”. With this kind of attitude, we shall reduce the dependency on foreign aids and grants.
Finally, the success, of various antipoverty programs in Tanzania also lies in good governance and accountability as it is put by National strategy for growth and reduction of poverty (NSGRP). The implementation, monitoring and evaluations of such strategy should also be followed strictly.
REFFERENCE:-
Burkey, S (1988), People first: “A guide to self-reliant participatory rural development,” Zed Books, London, chap 1 and 2.
Corbett, J (2004), Poverty Encerta wikipedia.
The United Republic of Tanzania (2005) National strategy for Growth and Reduction of Poverty (NSGRP), Dar es Salaam.
Encyclopedia Bretanica (1986).
FOREIGN AID
TABLE OF CONTENT
1. Introduction
2. THEORITICAL LITERATURE REVIEW
2.1. Definition of foreign Aid
2.2 . Kinds of aid
2.3. Origin of foreign aid
2.4. Conditionality of foreign aid
2.5. The Role of foreign aid
2.6 . Critical view of foreign aid
2.7. Alternative to foreign aid
3. EMPIRICAL LITERATURE REVIEW
3.1. United states aid program after world war II
3.1.1. The Truman Doctrine
3.1.2 The Marshall plan
3.1.3 The Point four program
3.1.4. USAID
3.1.5. New Directions (1970s to the 1990s)
3.2. Other Donors
3.3. Western donors
3.4. Communist Donors
3.5. Multilateral aid
4. Conclusion
5. Reference
INTRODUCTION
This journal paper will try to examine foreign aid through various sub – sections as stipulated in the above table of content.
In an attempt to define foreign aid, the writings of scholars such as Burnside and Dollar, Thomas J. Dilorenzo will provide some materials. We will also get additional definitions from Britannica Encyclopedia and the British Broadcasting Corporation (BBC) dialogue on the topic.
The paper will also try to explore the kinds of aid by once again revisiting Britannica encyclopedia (1974) page 522 to 525. The same book also will assist us in trying to tress the origin of foreign aid.
The paper will then embark on a brief look of U.S. foreign aid program after World War II. In our effort to explore the sub-section, we shall make consultations to different literatures. Various foreign aid programmes launched by different U.S. president administrations will be of much help in trying to fulfill the material need for the paper.
This paper will not end with U.S. aid programme but will go a head to examine other donors which include western donors, communist donors and multilateral aid donors.
In our effort do find the difficulties associated with obtaining foreign aid, we shall sub-title our work as conditionality of foreign aid. We shall also consult the observations of various scholars and aid practitioner with regard to this.
With regard to the role of foreign aid, this paper will take note of the work of different scholars and practitioners. A former deputy administrator, Carol Lancaster and World Bank economists, David Dollar will contribute much out of their writings.
This paper will also provide a critical view of foreign aid. Some scholars and Practitioners writing will again be of much help. Such scholars and practitioners are Carol Lancaster, Bauer, Edwards and David Osterfield.
We shall then have a look at alternatives to foreign aid as suggested by Britannia encyclopedia.
Finally the paper will give conclusion through providing personal opinion on how we can make foreign aid a success and correct the mistakes of the past.
2. THEORITICAL LITERATURE REVIEW
2.1. DEFINITION OF FOREIGN AID
According to Britannica encyclopedia (1974), foreign aid consist of international transfers of capital, goods or services for the benefit of other nations and their citizens.
British Broadcasting corporation (BBC) Bite size (2007), saw aid as the giving of money, goods and advice by one country to another.
Burnside and Dollar (2000) paper defined aid as the grant element of a aid, excluding the loan component of “Concessional” loans, which are made at extremely low interest rates, a measure of aid that is called “Effective Development” Assistance”. However, the standard definition of aid according to the development assistance committee of the OECD is grants and concessional loans net of repayment of previous aid loans a measure that treats forgiveness of past loans as correct aid.
Thomas J. Dilorenzo (2005) while writing on tsunami disaster, saw foreign aid as “throwing money at the problem” Peter Bauer (Lord Banner) (1991) notes that foreign aid is not ”aid” but a transfer or subsidy. And it is typically not transfer to the poor and needy but to the governments.
2.3. KINDS OF AID
According to Britanica encyclopedia (1974), official foreign aid is offered in two major forms:-
(1) Capital transfers, in cash or kind, either as grants or loans and
(2) Technical assistance and training usually as grants in the form of men and technical equipment.
Development assistance -- in form of loans or grants of capital then assumes the dominant role. In countries that are poor with little industrial development, this assistance commonly takes the form of grants or low-interest – bearing loans (as in U.S. aid to Laos or French aid to African states).
Military assistance - in the form of either equipment or training advisers – as been an extremely important part of aid, both east and west. Sometimes such aid is supplemented by grants of funds for “budgetary support” to poor countries where the donor country has substantial military and political interests (as the United States has had in Taiwan, South Korea and South Vietnam).
Disaster relief is another form of foreign aid; for the United States it has become a method of reducing agricultural surpluses by distributing them to famine stricken countries such as India.
The Millennium Challenge Account (MCA) as pointed out by Roy Prosterman of Rural Development institute notes that the New stepped-up U.S. program to fight global poverty – places basic land rights for the rural poor as a fundamental item on the global AID agenda. MCA says “the committee believes that ownership by the poor of a plot of land, at least sufficient to erect basic shelter and have a garden producing food and income, is fundamental importance for empowerment, livelihood, social stability and the creation of wealth.
2.4. ORIGIN OF FOREIGN AID
Britannica concise encyclopedia (2004), tresses the origin of foreign aid from the 18th century when Prussian subsidized some of its allies. After World War II, foreign aid developed into a more sophisticated instrument of foreign policy. International organizations such as the United Nations Relief and Rehabilitation, were created to provide aid to war-ravaged countries and newly freed colonies.
The International Monetary Fund (IMF) and the World Bank have been heavily financed and influenced by the United States and, prior to the end of the cold war, the government of the soviet bloc generally refused to participates in those organizations.
2.5. ALTERNATIVE TO FOREIGN AID
Britannica encyclopedia points out that most Western governments, wishing to reduce aid costs have turned increasingly to the encouragement of private investment through guarantee schemes and tax concessions.
Private investment is only one of several alternatives to government foreign aid that have been suggested. The others include:
2.5.1 Revising the tariffs of developed countries to give preference to
the manufactured exports of underdeveloped countries.
2.5.2 Guaranteeing bond issues of underdeveloped countries in the
International Capital markets;
2.5.3. Devoting some share of the proceeds from exploiting ocean resources
to economic development;
2.5.4. Establishing international machinery to support the prices of
commodities exported by underdeveloped countries; and
2.5.5. Using special Drawing rights as a source of development finance for
poor nations.
2.6. CONDITIONALITY OF FOREIGN AID
William Easterly: Journal of Economic perspectives (2003), points out that the Aid agencies often place conditions on loans and aid. These conditions typically include.
2.6.1. Macroeconomic stability (low-budget deficits and inflation).
2.6.2. Non interference with market pricing.
2.6.3. Privatization of state-owned enterprises
2.6.4. Openness to international trade.
BBC (BITE SIZE revision) (2007) points out that the problem with a lot of bilateral government aid is that it’s tied and that the receiving country has to buy goods or services from the donor country. A good example is the Pergau Dam in Indonesia – Britain helped to fund the dam on the condition that Malaysia bought £ 1 billion worth of military equipment.
David Sogge while writing on foreign Aid: Does it harm or help, points out that, in case of the U.S, foreign aid was long tied to the nations military and geopolitical strategies as defined by the cold war.
2.7. THE ROLE OF FOREIGN AID
Writing in 1978, Ian J. Bickerton noted that ”foreign aid has enabled former colonial powers, such as the United Kingdom and France, to maintain their historic political, economic and cultural ties with former colonies – it is precisely this network of Atlantic - European domination and Imperialism that forms the basis of the current aid programs”.
Carol Lancaster, a former deputy administration of USAID points to progress in lowering the rate of poverty worldwide, from 28 percent in the late 1980s to 24 percent adecade later, and to the trend of rising living standards in Europe, Asia, the Middle East ad Latin America.
U.S. History Encyclopedia points out that in addition to providing aid to Israel and Egypt, the foreign Military financing (FMF ) funds have been used for detonating mines, fighting narcotics traffic, helping to dismantle nuclear weapons in Russia and integrating Hungary, Poland and the Czech Republic within NATO.
Kimura Hidemi under RIETI report 2007 points out that although the direct effect of foreign aid on growth is not clear, it may still promote the growth of the recipient country indirectly, for example by facilitating domestic investment, physical, infrastructure investment, and Foreign Direct Investment (FDI).
Kimura further notes that Japanese foreign aid has been “good aid” due to its capacity to attract private sector funds with a higher possibility of promoting economic growth.
Carol Lancaster and Michael Edwards, both being scholars of high integrity agree that in sub-Saharan Africa (except in oil-producing countries like Nigeria), political independence has been accompanied by a steady rise in dependence on aid. Virtually, all public development – schools, health centers, roads, and power – is paid for by donors.
According World Bank economists David Dollar, A. Craig Burnside and Paul Collier: aid can help, but it should be concentrated on countries with good macro-economic policy and governments genuinely committed to improving public services and infrastructure, and stamping out corruption.
William Easterly (2003) while writing on “Can foreign Aid Buy growth points out that some proponents have argued that aid could also buy time for reformers to implement painful but necessary changes in economic policies.
The author further points out that the loan offered to Brazilian north east in June 2001 facilitated innovative government - led initiatives in land reform, rural electrification and water supply and a fall in infant mortality. Other sectoral success stories from Uganda, South Korea and Taiwan include the elimination of small pox, the near elimination of river blindness family planning and the general rise in life expectancy and fall in infant mortality, in which foreign assistance played some role.
2.8. CRITICAL VIEW OF FOREIGN AID
Lancaster and Edwards agree that aid has rarely helped and sometimes damage the capacity of Africans to govern their own affairs. Both note that aid has propped up autocratic, winner-take-all, incompetent governments and a violent opposition movement or two.
Lancaster further observes that in more than one African country “the accountability of the government to its people gradually (was) replaced by accountability to its major aid donor” Governments that finance their activities through taxes and fees at least have to negotiate to some extent with their citizens, whereas those that rely on foreign aid focus their attention on the source of that aid. Aid, in other words, helps centralize power.
The authors also notes that African governments have also suffered from deliberate efforts, at the belief of aid agencies with powers over development dogmas, to “shrink the state” Massive downsizing, the slashing of real wages and the degeneration of working conditions for public servants have deprived millions of Africans of whatever minimal access to health care, schooling and responsive public services they one had. In these circumstances, petty corruption has grown, fostering yet more cynicism and disorder in the relation between governments and their citizens.
Edwards also traces a direct line between the erosion of public sector capacity and the imposition of one-size-fits-all polices of structural adjustment driven by international finance agencies during the Reagan – Thatcher years.
Kimura Hidemi on RIETI report concludes that foreign aid does not promote foreign direct Investment (FDI) inflows either by supplying economic /social infrastructure in the host country (no infrastructure effect), or by providing information on the business environment in the host country (no vanguard effect), nor does it shrink FDI by encouraging unproductive rent-seeking activities (no rent-seeking effect).
U.S. History Britannica encyclopedia notes that in Vietnam era, however, the consensus of support began to unravel. Like the war itself, foreign aid programs were variously attacked as imperialistic, paternalistic, harmful, wasteful, or just plain useless.
Carol Lancaster argues that a new policy of foreign aid, one that emphasizes humanitarian relief, democracy, human rights, and development latter to be limited to the poorest countries is precisely the mechanism to further an American “diplomacy of values”. Such aid will bring “soft power” to the United States, enhancing “the credibility and trust that the US can command in the world.”
Relief worker, Michael Maren (1990s) recalled that “the relief program was probably killing as many people as it was saving, and the net result was that Somali soldiers were supplementing their income by selling food”, even as rebel forces were using it for to further warfare on Ethiopia.
In another ironic example, notes Maren, the U.S supported World Bank and gave $ 16 million to Sudan to fight hunger while Sudan’s government was starving its own people. Foreign aid, then has been attacked by critics for imperialistically exploiting economics, hurting local farmers and peasants, and consolidating the grip of local elites at the expense of the average Third World resident.
First of all, notes Bauer, foreign aid is not “aid” but a transfer or subsidy. And it is typically not a transfer to the poor and needy but to governments. Thus, the predominant effect of “foreign aid” has always been to enlarge the size and scope of the state, which always ends up impairing prosperity and diminishing the liberty of the people. Worse yet, it leads to the centralization of governmental power, since the transfers are always to the recipient country’s central government.
Since foreign aid goes from one government to another, continues Bauer, it inevitably diverts resource from the activity of production to the activity of “rent seeking” or attempts to acquire governmental funds. It creates agiant patronage machine, in other words, with all the attendant corruption that such things have always entailed. Such corruption often leads to armed conflict over the control of the patronage in many Third World countries. And as more and more resources are devoted to rent seeking instead of production and entrepreneurship, the recipient countries become poorer and poorer. If anything, it is foreign aid that causes a “vicious circle of poverty”
Bauer even found that aid-receiving governments intentionally wrecked their own economies as a strategy for acquiring additional millions in foreign aid. Like all forms of welfare, foreign aid also enforces an attitude among aid recipients that circumstances are beyond their own control, and therefore they must depend on begging from foreigners rather than on entrepreneurship. Foreign aid creates a giant moral hazard problem, in other words.
Bauer further points out that if the aid is in the form of say, farm tractors, then the politicians create for themselves yet another opportunity to buy votes (and solicit campaign contributions) with the tax dollars that are used to pay for the American-made tractors. Thus, politicians and tractor manufacturers become the real beneficiaries of the aid.
Food aid, observes Bauer, has at times been disastrous for countries in Africa and elsewhere. Dumping millions of tons of grain and other foods depresses agricultural prices in the recipient countries, driving many of their farmers into bankruptcy, and creating even more dependence on foreign aid. The farmers then migrate to the cities to find work, driving up food prices more, which is often met with price controls on food, which creates even more food shortage and appeals for even more foreign food aid.
As David Osterfeld (page 150) wrote in prosperity vs. planning: there is little or no concern over whether these subsidized investments will benefit consumers and be profitable. They are viewed as a merely a pork barrel, get-rich-quick opportunity for a small number of politically connected people in the recipient country, period. This, foreign aid has funded such things as “double-deck suspension bridge for non-existent rail roads, giant oil refineries in countries that neither produce nor refine oil, giant crop-storage depots that are not accessible to farmers and numerous other white elephants”.
Family, William Easterly (2003) writing on “can foreign aid Buy Growth?”, observes that the governments of the poor countries, through incentive to raise the production potential of the poor, especially when doing so might endanger political activism that threatens the current political elite.
3. EMPIRICAL LITERATURE REVIEW
3.1. UNITED STATES AID PROGRAM AFTER WORLD WAR II
3.1.1. The Truman Doctrine.
One of the first indications of the role that foreign aid was to play in the cold war came with the announcement of the Truman Doctrine on 12 March 1947 by President Harry S. Truman. The Truman Doctrine was a response to the growing influence of communist parties in Greece and Turkey and included the extension of $ 400 million in economic and military aid to the Greek and Turkish governments.
3.1.2. The Marshall plan
This was launched on 6th June 1947 by U.S. secretary of state, George Marshall. It sought to protect Western Europe from any further worsening of the post-1945 economic and political Crisis. The Marshall plan aimed at preventing or containing the appearance in Europe of governments, or groupings of governments, that would threaten the security interests of the United States.
One of the requirements of Marshall Plan was that the bulk of the aid money was to be used to purchase U.S. exports, which provided an important push to the U.S. economy and bolstered trade linkages that favoured U.S. manufacturers.
3.1.3. The Point Four Program.
This was launched on 20th January 1949 by Truman when he delivered his inaugural address at the start of his second term as president. This was also enacted as the International Development Act.
Point one pledged continuing U.S. support for the United Nations. Point two emphasized U.S. support for the world economic recovery, while point three reiterated the U.S. commitment to supporting “freedom-loving nations.” Point four set out a U.S. commitment to providing American technical and scientific expertise and capital to ”underdeveloped’ nations in an effort to improve their living standards.
3.1.4. USAID
As part of its wider emphasis on foreign aid, the president Kennedy administration set up the USAID in 1961 to coordinate government foreign aid initiatives. Established as a semi-autonomous body operating in the state department, it was responsible for disbursing and administering aid in South Vietnam and around the World. A large percentage of the aid was initially disbursed to the Alliance for progress, another ambitions modernizing initiative that Kennedy administration hoped would contain the “communist threat” to Latin America following the revolution in Cuba in 1959.
3.1.5. New Directions (1970s to the 1990s)
This was launched during Nixon era. This led briefly to an emphasis on both the basic needs of the poor and direct grassroots participation in the process of development. Foreign Assistance Act (1961) was amended between 1973 and 1978 to provide for an increased focus on human rights in the disbursement of foreign aid.
In 1980s USAID’s main focus was the Private Enterprise Initiative (PEI), which promoted private sector development and encouraged market-oriented reform. This also saw percentage of foreign assistance going to development - related programs decline and the amount spent or security-related project rise.
Central America was the object of more American economic and military aid during Reagan’s first term than in the entire period from 1950 to 1980.
The Clinton administration outlined four overall goals for U.S. foreign aid in the post-cold war era. USAID was required to set up programs oriented towards building democratic political institutions. A greater emphasis was placed on humanitarian assistance and sustainable development. Foreign aid was also directed increasingly at the former Soviet bloc, again for security reasons.
In the context of the “war on terrorism” initiated in 2001 and the reorientation and increase in foreign aid that has followed, this pattern appeared set to continue.
The 1997 state Development strategic plan outlined the following goals for foreign aid: creating “institutions that support democracy, free enterprise, the rule of law and strengthening civil society”; providing humanitarian aid; and “protecting the United States from such specific global threats as unchecked population growth, disease, the loss of biodiversity, global warning and narcotics trafficking”.
3.2. OTHER DONORS
3.2.1. Western Donors
The former colonial power – France, United Kingdom, Belgium, Netherlands – not only advance relatively large amounts of aid but offer it on generous terms, as grants or low-interest, long-term loans.
Among the smaller donors, Portugal ranked high because of its aid to its African colonies. Several small donors, including Australia, Canada and the Scandinavian nations give much aid in grants, both bilateral and multilateral.
France, Switzerland, Germany and Japan give relatively little through multilateral channels.
Australia, Germany, Japan and Portugal also stress loans rather than grants and lend at somewhat higher than average interest rates which remain below commercial term and conditions.
3.2.2. Communist donors.
The former Soviet Union, Eastern Europe and China offered aid to other communist countries, such as Cuba, North, Vietnam, North Korea and Mongolia. Most of this aid, were given in the form of loans repayable at 2 or 3 percent interests or in locally produced goods.
Communist countries also offer aid to non-communist countries, particularly in strategic areas such as the Middle East.
3.2.3. Multilateral aid.
The World Bank (began 1946) has two financing affiliates: the International Development Association (IDA), founded in 1960, which makes virtually interest-free long-term loans financed by members contributions and by a subsidy from the World Bank and the International finance Corporation (IFC), founded in 1956, which promotes private investment in underdeveloped countries.
There are also three regional development banks each lending funds to underdeveloped countries in its region. They include Inter-American Development Bank founded in 1959, which lends to Latin American countries; The African Development Bank, founded in 1964; the Asia development Bank, founded in 1965.
European Countries, under European Economic Community, established two institutions for multilateral aid – the economic Development fund and the European Investment Bank. These organs extends loans and grants to overseas countries associated with the common market as well as to Greece and Turkey.
The United Nations finances through grants a number of economic aid programs, both directly through the United Nations technical assistance programs and the U.N. special fund – and through specialized agencies, notably UNESCO, the World Health Organization (WHO), and the Food and Agriculture Organization (FAO).
CONCLUSION
True freedom is attainable only through relations with others, since in an interconnected world one can never be safe until he/she is secure, nor can one person be whole unless others are fulfilled. It is on this ground that the goal of having the high-income people make some kind of transfer to very poor people remains a worthy one, despite the disappointments of the past.
One may hope that in the next half century, either owing to aid, investment, political reform, or some other set of factors, the developing world will have much closer to reaching “decade of development”. But this cannot be possible unless developing countries develop good fiscal, monetary, and trade policies. These goal policies should be accompanied with good governance, accountability and transparence, the device that lack in most Less Developed countries (LDC).
5. REFERENCE:
1. William, Easterly (2003). “Can Foreign Aid Buy Growth?” Journal of Economic Perspectives.
2. BBC News viewpoint: foreign aid (2007). Also available at bbc.co.uk/schools /gcse bitesize.
3. Lancaster, Carol, Aid for Africa: so much to do, so little done. Chicago, 1999.
4. U.S. Department of state, Agency for International development. U.S. Overseas Loans and Grants and Assistance form International organizations Washington, D.C. 1990.
5. Britannica encyclopedia (1974). Publisher Hellen Hemiriguray Beenton, Chicago.
6. Sogge, David (1996). Foreign Aid does it Harm or Help. The Christian Century, Feb 23, 2000, pp 206 – 209.
7. Edwards, Michael. Future Positive: International Cooperation in the 21st century.
8. Ludwig von Misses Institute: A foreign aid Disaster in the making (Article). Contact @ mises-org AOL-IM MainMises Mises.org sitemap.
9. Kimura, Hideni: RIETI Report № 081 April 25, 2007. Analyzing the effects of foreign Aid on FDI gravity – Equation Approach.
1. Introduction
2. THEORITICAL LITERATURE REVIEW
2.1. Definition of foreign Aid
2.2 . Kinds of aid
2.3. Origin of foreign aid
2.4. Conditionality of foreign aid
2.5. The Role of foreign aid
2.6 . Critical view of foreign aid
2.7. Alternative to foreign aid
3. EMPIRICAL LITERATURE REVIEW
3.1. United states aid program after world war II
3.1.1. The Truman Doctrine
3.1.2 The Marshall plan
3.1.3 The Point four program
3.1.4. USAID
3.1.5. New Directions (1970s to the 1990s)
3.2. Other Donors
3.3. Western donors
3.4. Communist Donors
3.5. Multilateral aid
4. Conclusion
5. Reference
INTRODUCTION
This journal paper will try to examine foreign aid through various sub – sections as stipulated in the above table of content.
In an attempt to define foreign aid, the writings of scholars such as Burnside and Dollar, Thomas J. Dilorenzo will provide some materials. We will also get additional definitions from Britannica Encyclopedia and the British Broadcasting Corporation (BBC) dialogue on the topic.
The paper will also try to explore the kinds of aid by once again revisiting Britannica encyclopedia (1974) page 522 to 525. The same book also will assist us in trying to tress the origin of foreign aid.
The paper will then embark on a brief look of U.S. foreign aid program after World War II. In our effort to explore the sub-section, we shall make consultations to different literatures. Various foreign aid programmes launched by different U.S. president administrations will be of much help in trying to fulfill the material need for the paper.
This paper will not end with U.S. aid programme but will go a head to examine other donors which include western donors, communist donors and multilateral aid donors.
In our effort do find the difficulties associated with obtaining foreign aid, we shall sub-title our work as conditionality of foreign aid. We shall also consult the observations of various scholars and aid practitioner with regard to this.
With regard to the role of foreign aid, this paper will take note of the work of different scholars and practitioners. A former deputy administrator, Carol Lancaster and World Bank economists, David Dollar will contribute much out of their writings.
This paper will also provide a critical view of foreign aid. Some scholars and Practitioners writing will again be of much help. Such scholars and practitioners are Carol Lancaster, Bauer, Edwards and David Osterfield.
We shall then have a look at alternatives to foreign aid as suggested by Britannia encyclopedia.
Finally the paper will give conclusion through providing personal opinion on how we can make foreign aid a success and correct the mistakes of the past.
2. THEORITICAL LITERATURE REVIEW
2.1. DEFINITION OF FOREIGN AID
According to Britannica encyclopedia (1974), foreign aid consist of international transfers of capital, goods or services for the benefit of other nations and their citizens.
British Broadcasting corporation (BBC) Bite size (2007), saw aid as the giving of money, goods and advice by one country to another.
Burnside and Dollar (2000) paper defined aid as the grant element of a aid, excluding the loan component of “Concessional” loans, which are made at extremely low interest rates, a measure of aid that is called “Effective Development” Assistance”. However, the standard definition of aid according to the development assistance committee of the OECD is grants and concessional loans net of repayment of previous aid loans a measure that treats forgiveness of past loans as correct aid.
Thomas J. Dilorenzo (2005) while writing on tsunami disaster, saw foreign aid as “throwing money at the problem” Peter Bauer (Lord Banner) (1991) notes that foreign aid is not ”aid” but a transfer or subsidy. And it is typically not transfer to the poor and needy but to the governments.
2.3. KINDS OF AID
According to Britanica encyclopedia (1974), official foreign aid is offered in two major forms:-
(1) Capital transfers, in cash or kind, either as grants or loans and
(2) Technical assistance and training usually as grants in the form of men and technical equipment.
Development assistance -- in form of loans or grants of capital then assumes the dominant role. In countries that are poor with little industrial development, this assistance commonly takes the form of grants or low-interest – bearing loans (as in U.S. aid to Laos or French aid to African states).
Military assistance - in the form of either equipment or training advisers – as been an extremely important part of aid, both east and west. Sometimes such aid is supplemented by grants of funds for “budgetary support” to poor countries where the donor country has substantial military and political interests (as the United States has had in Taiwan, South Korea and South Vietnam).
Disaster relief is another form of foreign aid; for the United States it has become a method of reducing agricultural surpluses by distributing them to famine stricken countries such as India.
The Millennium Challenge Account (MCA) as pointed out by Roy Prosterman of Rural Development institute notes that the New stepped-up U.S. program to fight global poverty – places basic land rights for the rural poor as a fundamental item on the global AID agenda. MCA says “the committee believes that ownership by the poor of a plot of land, at least sufficient to erect basic shelter and have a garden producing food and income, is fundamental importance for empowerment, livelihood, social stability and the creation of wealth.
2.4. ORIGIN OF FOREIGN AID
Britannica concise encyclopedia (2004), tresses the origin of foreign aid from the 18th century when Prussian subsidized some of its allies. After World War II, foreign aid developed into a more sophisticated instrument of foreign policy. International organizations such as the United Nations Relief and Rehabilitation, were created to provide aid to war-ravaged countries and newly freed colonies.
The International Monetary Fund (IMF) and the World Bank have been heavily financed and influenced by the United States and, prior to the end of the cold war, the government of the soviet bloc generally refused to participates in those organizations.
2.5. ALTERNATIVE TO FOREIGN AID
Britannica encyclopedia points out that most Western governments, wishing to reduce aid costs have turned increasingly to the encouragement of private investment through guarantee schemes and tax concessions.
Private investment is only one of several alternatives to government foreign aid that have been suggested. The others include:
2.5.1 Revising the tariffs of developed countries to give preference to
the manufactured exports of underdeveloped countries.
2.5.2 Guaranteeing bond issues of underdeveloped countries in the
International Capital markets;
2.5.3. Devoting some share of the proceeds from exploiting ocean resources
to economic development;
2.5.4. Establishing international machinery to support the prices of
commodities exported by underdeveloped countries; and
2.5.5. Using special Drawing rights as a source of development finance for
poor nations.
2.6. CONDITIONALITY OF FOREIGN AID
William Easterly: Journal of Economic perspectives (2003), points out that the Aid agencies often place conditions on loans and aid. These conditions typically include.
2.6.1. Macroeconomic stability (low-budget deficits and inflation).
2.6.2. Non interference with market pricing.
2.6.3. Privatization of state-owned enterprises
2.6.4. Openness to international trade.
BBC (BITE SIZE revision) (2007) points out that the problem with a lot of bilateral government aid is that it’s tied and that the receiving country has to buy goods or services from the donor country. A good example is the Pergau Dam in Indonesia – Britain helped to fund the dam on the condition that Malaysia bought £ 1 billion worth of military equipment.
David Sogge while writing on foreign Aid: Does it harm or help, points out that, in case of the U.S, foreign aid was long tied to the nations military and geopolitical strategies as defined by the cold war.
2.7. THE ROLE OF FOREIGN AID
Writing in 1978, Ian J. Bickerton noted that ”foreign aid has enabled former colonial powers, such as the United Kingdom and France, to maintain their historic political, economic and cultural ties with former colonies – it is precisely this network of Atlantic - European domination and Imperialism that forms the basis of the current aid programs”.
Carol Lancaster, a former deputy administration of USAID points to progress in lowering the rate of poverty worldwide, from 28 percent in the late 1980s to 24 percent adecade later, and to the trend of rising living standards in Europe, Asia, the Middle East ad Latin America.
U.S. History Encyclopedia points out that in addition to providing aid to Israel and Egypt, the foreign Military financing (FMF ) funds have been used for detonating mines, fighting narcotics traffic, helping to dismantle nuclear weapons in Russia and integrating Hungary, Poland and the Czech Republic within NATO.
Kimura Hidemi under RIETI report 2007 points out that although the direct effect of foreign aid on growth is not clear, it may still promote the growth of the recipient country indirectly, for example by facilitating domestic investment, physical, infrastructure investment, and Foreign Direct Investment (FDI).
Kimura further notes that Japanese foreign aid has been “good aid” due to its capacity to attract private sector funds with a higher possibility of promoting economic growth.
Carol Lancaster and Michael Edwards, both being scholars of high integrity agree that in sub-Saharan Africa (except in oil-producing countries like Nigeria), political independence has been accompanied by a steady rise in dependence on aid. Virtually, all public development – schools, health centers, roads, and power – is paid for by donors.
According World Bank economists David Dollar, A. Craig Burnside and Paul Collier: aid can help, but it should be concentrated on countries with good macro-economic policy and governments genuinely committed to improving public services and infrastructure, and stamping out corruption.
William Easterly (2003) while writing on “Can foreign Aid Buy growth points out that some proponents have argued that aid could also buy time for reformers to implement painful but necessary changes in economic policies.
The author further points out that the loan offered to Brazilian north east in June 2001 facilitated innovative government - led initiatives in land reform, rural electrification and water supply and a fall in infant mortality. Other sectoral success stories from Uganda, South Korea and Taiwan include the elimination of small pox, the near elimination of river blindness family planning and the general rise in life expectancy and fall in infant mortality, in which foreign assistance played some role.
2.8. CRITICAL VIEW OF FOREIGN AID
Lancaster and Edwards agree that aid has rarely helped and sometimes damage the capacity of Africans to govern their own affairs. Both note that aid has propped up autocratic, winner-take-all, incompetent governments and a violent opposition movement or two.
Lancaster further observes that in more than one African country “the accountability of the government to its people gradually (was) replaced by accountability to its major aid donor” Governments that finance their activities through taxes and fees at least have to negotiate to some extent with their citizens, whereas those that rely on foreign aid focus their attention on the source of that aid. Aid, in other words, helps centralize power.
The authors also notes that African governments have also suffered from deliberate efforts, at the belief of aid agencies with powers over development dogmas, to “shrink the state” Massive downsizing, the slashing of real wages and the degeneration of working conditions for public servants have deprived millions of Africans of whatever minimal access to health care, schooling and responsive public services they one had. In these circumstances, petty corruption has grown, fostering yet more cynicism and disorder in the relation between governments and their citizens.
Edwards also traces a direct line between the erosion of public sector capacity and the imposition of one-size-fits-all polices of structural adjustment driven by international finance agencies during the Reagan – Thatcher years.
Kimura Hidemi on RIETI report concludes that foreign aid does not promote foreign direct Investment (FDI) inflows either by supplying economic /social infrastructure in the host country (no infrastructure effect), or by providing information on the business environment in the host country (no vanguard effect), nor does it shrink FDI by encouraging unproductive rent-seeking activities (no rent-seeking effect).
U.S. History Britannica encyclopedia notes that in Vietnam era, however, the consensus of support began to unravel. Like the war itself, foreign aid programs were variously attacked as imperialistic, paternalistic, harmful, wasteful, or just plain useless.
Carol Lancaster argues that a new policy of foreign aid, one that emphasizes humanitarian relief, democracy, human rights, and development latter to be limited to the poorest countries is precisely the mechanism to further an American “diplomacy of values”. Such aid will bring “soft power” to the United States, enhancing “the credibility and trust that the US can command in the world.”
Relief worker, Michael Maren (1990s) recalled that “the relief program was probably killing as many people as it was saving, and the net result was that Somali soldiers were supplementing their income by selling food”, even as rebel forces were using it for to further warfare on Ethiopia.
In another ironic example, notes Maren, the U.S supported World Bank and gave $ 16 million to Sudan to fight hunger while Sudan’s government was starving its own people. Foreign aid, then has been attacked by critics for imperialistically exploiting economics, hurting local farmers and peasants, and consolidating the grip of local elites at the expense of the average Third World resident.
First of all, notes Bauer, foreign aid is not “aid” but a transfer or subsidy. And it is typically not a transfer to the poor and needy but to governments. Thus, the predominant effect of “foreign aid” has always been to enlarge the size and scope of the state, which always ends up impairing prosperity and diminishing the liberty of the people. Worse yet, it leads to the centralization of governmental power, since the transfers are always to the recipient country’s central government.
Since foreign aid goes from one government to another, continues Bauer, it inevitably diverts resource from the activity of production to the activity of “rent seeking” or attempts to acquire governmental funds. It creates agiant patronage machine, in other words, with all the attendant corruption that such things have always entailed. Such corruption often leads to armed conflict over the control of the patronage in many Third World countries. And as more and more resources are devoted to rent seeking instead of production and entrepreneurship, the recipient countries become poorer and poorer. If anything, it is foreign aid that causes a “vicious circle of poverty”
Bauer even found that aid-receiving governments intentionally wrecked their own economies as a strategy for acquiring additional millions in foreign aid. Like all forms of welfare, foreign aid also enforces an attitude among aid recipients that circumstances are beyond their own control, and therefore they must depend on begging from foreigners rather than on entrepreneurship. Foreign aid creates a giant moral hazard problem, in other words.
Bauer further points out that if the aid is in the form of say, farm tractors, then the politicians create for themselves yet another opportunity to buy votes (and solicit campaign contributions) with the tax dollars that are used to pay for the American-made tractors. Thus, politicians and tractor manufacturers become the real beneficiaries of the aid.
Food aid, observes Bauer, has at times been disastrous for countries in Africa and elsewhere. Dumping millions of tons of grain and other foods depresses agricultural prices in the recipient countries, driving many of their farmers into bankruptcy, and creating even more dependence on foreign aid. The farmers then migrate to the cities to find work, driving up food prices more, which is often met with price controls on food, which creates even more food shortage and appeals for even more foreign food aid.
As David Osterfeld (page 150) wrote in prosperity vs. planning: there is little or no concern over whether these subsidized investments will benefit consumers and be profitable. They are viewed as a merely a pork barrel, get-rich-quick opportunity for a small number of politically connected people in the recipient country, period. This, foreign aid has funded such things as “double-deck suspension bridge for non-existent rail roads, giant oil refineries in countries that neither produce nor refine oil, giant crop-storage depots that are not accessible to farmers and numerous other white elephants”.
Family, William Easterly (2003) writing on “can foreign aid Buy Growth?”, observes that the governments of the poor countries, through incentive to raise the production potential of the poor, especially when doing so might endanger political activism that threatens the current political elite.
3. EMPIRICAL LITERATURE REVIEW
3.1. UNITED STATES AID PROGRAM AFTER WORLD WAR II
3.1.1. The Truman Doctrine.
One of the first indications of the role that foreign aid was to play in the cold war came with the announcement of the Truman Doctrine on 12 March 1947 by President Harry S. Truman. The Truman Doctrine was a response to the growing influence of communist parties in Greece and Turkey and included the extension of $ 400 million in economic and military aid to the Greek and Turkish governments.
3.1.2. The Marshall plan
This was launched on 6th June 1947 by U.S. secretary of state, George Marshall. It sought to protect Western Europe from any further worsening of the post-1945 economic and political Crisis. The Marshall plan aimed at preventing or containing the appearance in Europe of governments, or groupings of governments, that would threaten the security interests of the United States.
One of the requirements of Marshall Plan was that the bulk of the aid money was to be used to purchase U.S. exports, which provided an important push to the U.S. economy and bolstered trade linkages that favoured U.S. manufacturers.
3.1.3. The Point Four Program.
This was launched on 20th January 1949 by Truman when he delivered his inaugural address at the start of his second term as president. This was also enacted as the International Development Act.
Point one pledged continuing U.S. support for the United Nations. Point two emphasized U.S. support for the world economic recovery, while point three reiterated the U.S. commitment to supporting “freedom-loving nations.” Point four set out a U.S. commitment to providing American technical and scientific expertise and capital to ”underdeveloped’ nations in an effort to improve their living standards.
3.1.4. USAID
As part of its wider emphasis on foreign aid, the president Kennedy administration set up the USAID in 1961 to coordinate government foreign aid initiatives. Established as a semi-autonomous body operating in the state department, it was responsible for disbursing and administering aid in South Vietnam and around the World. A large percentage of the aid was initially disbursed to the Alliance for progress, another ambitions modernizing initiative that Kennedy administration hoped would contain the “communist threat” to Latin America following the revolution in Cuba in 1959.
3.1.5. New Directions (1970s to the 1990s)
This was launched during Nixon era. This led briefly to an emphasis on both the basic needs of the poor and direct grassroots participation in the process of development. Foreign Assistance Act (1961) was amended between 1973 and 1978 to provide for an increased focus on human rights in the disbursement of foreign aid.
In 1980s USAID’s main focus was the Private Enterprise Initiative (PEI), which promoted private sector development and encouraged market-oriented reform. This also saw percentage of foreign assistance going to development - related programs decline and the amount spent or security-related project rise.
Central America was the object of more American economic and military aid during Reagan’s first term than in the entire period from 1950 to 1980.
The Clinton administration outlined four overall goals for U.S. foreign aid in the post-cold war era. USAID was required to set up programs oriented towards building democratic political institutions. A greater emphasis was placed on humanitarian assistance and sustainable development. Foreign aid was also directed increasingly at the former Soviet bloc, again for security reasons.
In the context of the “war on terrorism” initiated in 2001 and the reorientation and increase in foreign aid that has followed, this pattern appeared set to continue.
The 1997 state Development strategic plan outlined the following goals for foreign aid: creating “institutions that support democracy, free enterprise, the rule of law and strengthening civil society”; providing humanitarian aid; and “protecting the United States from such specific global threats as unchecked population growth, disease, the loss of biodiversity, global warning and narcotics trafficking”.
3.2. OTHER DONORS
3.2.1. Western Donors
The former colonial power – France, United Kingdom, Belgium, Netherlands – not only advance relatively large amounts of aid but offer it on generous terms, as grants or low-interest, long-term loans.
Among the smaller donors, Portugal ranked high because of its aid to its African colonies. Several small donors, including Australia, Canada and the Scandinavian nations give much aid in grants, both bilateral and multilateral.
France, Switzerland, Germany and Japan give relatively little through multilateral channels.
Australia, Germany, Japan and Portugal also stress loans rather than grants and lend at somewhat higher than average interest rates which remain below commercial term and conditions.
3.2.2. Communist donors.
The former Soviet Union, Eastern Europe and China offered aid to other communist countries, such as Cuba, North, Vietnam, North Korea and Mongolia. Most of this aid, were given in the form of loans repayable at 2 or 3 percent interests or in locally produced goods.
Communist countries also offer aid to non-communist countries, particularly in strategic areas such as the Middle East.
3.2.3. Multilateral aid.
The World Bank (began 1946) has two financing affiliates: the International Development Association (IDA), founded in 1960, which makes virtually interest-free long-term loans financed by members contributions and by a subsidy from the World Bank and the International finance Corporation (IFC), founded in 1956, which promotes private investment in underdeveloped countries.
There are also three regional development banks each lending funds to underdeveloped countries in its region. They include Inter-American Development Bank founded in 1959, which lends to Latin American countries; The African Development Bank, founded in 1964; the Asia development Bank, founded in 1965.
European Countries, under European Economic Community, established two institutions for multilateral aid – the economic Development fund and the European Investment Bank. These organs extends loans and grants to overseas countries associated with the common market as well as to Greece and Turkey.
The United Nations finances through grants a number of economic aid programs, both directly through the United Nations technical assistance programs and the U.N. special fund – and through specialized agencies, notably UNESCO, the World Health Organization (WHO), and the Food and Agriculture Organization (FAO).
CONCLUSION
True freedom is attainable only through relations with others, since in an interconnected world one can never be safe until he/she is secure, nor can one person be whole unless others are fulfilled. It is on this ground that the goal of having the high-income people make some kind of transfer to very poor people remains a worthy one, despite the disappointments of the past.
One may hope that in the next half century, either owing to aid, investment, political reform, or some other set of factors, the developing world will have much closer to reaching “decade of development”. But this cannot be possible unless developing countries develop good fiscal, monetary, and trade policies. These goal policies should be accompanied with good governance, accountability and transparence, the device that lack in most Less Developed countries (LDC).
5. REFERENCE:
1. William, Easterly (2003). “Can Foreign Aid Buy Growth?” Journal of Economic Perspectives.
2. BBC News viewpoint: foreign aid (2007). Also available at bbc.co.uk/schools /gcse bitesize.
3. Lancaster, Carol, Aid for Africa: so much to do, so little done. Chicago, 1999.
4. U.S. Department of state, Agency for International development. U.S. Overseas Loans and Grants and Assistance form International organizations Washington, D.C. 1990.
5. Britannica encyclopedia (1974). Publisher Hellen Hemiriguray Beenton, Chicago.
6. Sogge, David (1996). Foreign Aid does it Harm or Help. The Christian Century, Feb 23, 2000, pp 206 – 209.
7. Edwards, Michael. Future Positive: International Cooperation in the 21st century.
8. Ludwig von Misses Institute: A foreign aid Disaster in the making (Article). Contact @ mises-org AOL-IM MainMises Mises.org sitemap.
9. Kimura, Hideni: RIETI Report № 081 April 25, 2007. Analyzing the effects of foreign Aid on FDI gravity – Equation Approach.
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