What's the matter with foreign aid? (1) Development as colonialism

This is the first part of a three part critique of our aid and development model. This first part of this essay is a brief look into the historical context of our current development paradigm.(1)

I grew up believing that something changed after WWII, there had been a global awakening, and the start of a period marked by international collaboration and respect for human rights, advanced by such historic achievements as the founding of the United Nations, the Universal Declaration of Human Rights and the independence of former colonies. Based on these new foundations, there would be a steady progress towards, peace, freedom and equality, thanks to a process called 'development'. I am a bit older now, and have worked for nearly 7 years in this field of development. My optimism has faded, and I am starting to fear it may have been a naive childhood illusion. Has anything really fundamentally changed?

Development as we know it today started after the second World War. At the end of the war, at the 1944 Bretton Woods conference, the groundwork of our current global economic system was laid with the foundation of the World Bank and the International Monetary Fund.(2) A few years later the GATT(3) agreement came into being, regulating international trade. In a landmark inaugural speech in 1949, United States president Harry Truman(4) declared the development agenda of the US by calling for “the improvement and growth of underdeveloped areas”.(5)

The Bretton Woods conference with
John Maynard Keynes representing the UK

WWII marked the end of the colonial era and in the years after the war, many former colonies gained their independence. Yet, the former colonial powers did not fully cast aside their former dependencies. Instead of colonial rule, the relationship between the West and what was now called the ‘Third World’, was marked by a program called ‘development’. The industrialized countries committed to helping non-industrialized countries achieve the same level of material wealth and technological advancement.

Critics today however say that this ‘development’ effort was still in some sense a continuation of colonial policy.(6) Fundamentally, they argue, power structures did not change, they were just presented differently. Third World countries were being treated in a paternalistic way and First World countries still tried to impose their way of life on them. Instead of ‘civilizing the uncivilized’, now they just spoke of ‘developing the underdeveloped’. The West, the argument goes, used aid to keep Third World countries dependent on them, meanwhile using them for resources, cheap labor and as a market to sell its products, quite similar to what happened during colonial times. Edward Goldsmith writes: 

The massive effort to industrialize the developing world in the years since World War II was not motivated by purely philanthropic considerations, but by the need to bring the developing world into the orbit of the Western trading system in order to create an ever expanding market for the West’s goods and services and to gain a source of cheap labour and raw materials for its industries. This was also the goal of colonialism, especially during its last phase which started in the 1870s. For that reason, there is a striking continuity between the colonial era and the era of development, both in the methods used to achieve their common goal and in the social and ecological consequences of applying them. With the development of the global economy, we are entering a new era of corporate colonialism that could be more ruthless than the colonialism that preceded it. (7)

The World Bank headquarters

Through development loans, structural adjustment programs(8) and trade agreements developing countries were brought into the global economy. Local subsistence economies disappeared and these countries became increasingly dependent on Western markets. One could see this development as an honest attempt to help Third World countries make progress. Yet, Western countries were more powerful in the global economic play and could decide the rules of the game. The dollars given to aid were often dwarfed by the debts that aid-receiving countries had to pay off and by the losses that they incurred through trade agreements that hindered their export and flooded their markets with subsidized Western goods. One could thus also look at development as the West expanding its influence and its market. The question remains who benefited most from it all.(9)

The founders of this development industry did not hide these intentions. President Kennedy is reported to have said: “Foreign aid is a method by which the United States maintains a position of influence and control around the world.”(10) And Eugene Black, one of the first presidents of the World Bank said:

Our foreign aid programmes constitute a distinct benefit to American business. The three major benefits are: (i) foreign aid provides a substantial and immediate market for United States goods and services; (ii) foreign aid stimulates the development of new overseas markets for United States' companies; (iii) foreign aid orients national economies towards a free enterprise system in which United States firms can prosper.(11)

With the end of the Cold War, the late 20th century saw a new major player emerging in the development world: the Non-Governmental Organization or NGO. An increasing share of development aid was being funneled into these non-state actors. NGOs were being hailed as the new Messiah to liberate us from poverty in the world. They were independent of states and politics and could work closely with people on the ground. Critics however saw this as development being ‘depoliticized’. As NGOs were apolitical, they seemed to take the political and economic set-up of the world for granted. As I shall discuss in the next posts, they focus on local projects and deliver services and goods. Their goal is not so much to try to change systemic causes of poverty. In this way, critics argue, they diverted attention away from addressing root causes of inequality.(12)

Critics argue that, because of these and other reasons, the entire aid and development effort of the past 70 years has been ineffective, wasteful and often has made things worse. Dambisa Moyo estimates that around 1 trillion US Dollars of aid went into Africa in the second half of the last century and concludes:

Aid has failed to deliver the promise of sustainable economic growth and poverty reduction. At every turn of the development tale of the last five decades, policymakers have chosen to maintain the status quo and furnish Africa with more aid. Aid has not lived up to expectations. It remains at the heart of the development agenda, despite the fact that there are very compelling reasons to show that it perpetuates the cycle of poverty and derails sustainable economic growth.(13)

Helena Norberg-Hodge, who was a close witness to the 'development' of India's remote mountain region of Ladakh, saw how this process brought along social and environmental issues and left people less self-sufficient and less satisfied with their lives overall.(14)

Researcher David Sogge concludes:

Yet something is the matter with foreign aid. Where it dominates, pride and ambition have given way to dependence and deference. In some aid-targeted places, public management and services have decayed or collapsed, poverty and inequality have worsened, and insecurity prevails.(15)

The way work NGOs function today, cannot be separated from the prevailing development paradigm that was created after WWII. I will go into the details of 'NGOization' in the next essay.

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(1) The title from this post is taken from an essay by philosopher Edward Goldsmith: Goldsmith, E. (2001). Development as colonialism. In Goldsmith, E., & Mander, J. (Eds.). (2001). The case against the global economy and for a turn towards localization (pp. 19-34). Oxon, UK: Earthscan.

(2) An attempt to create an International Trade Organization failed and was supplanted three years later by the GATT.

(3) General Agreement on Tariffs and Trade. The GATT was supplanted by the World Trade Organization in 1995 following the Marrakesh agreement.

(4) President from the end of the war in 1945 until 1953.

(5) United States Congress Joint Congressional Committee on Inaugural Ceremonies (Eds.). (1989). Inaugural addresses of the presidents of the United States. Washington, DC: US Government Publishing Office. Retrieved from https://www.bartleby.com/124/pres53.html

(6) These critics are part of a movement which is commonly called ‘post-development theory’.

(7) Goldsmith. (2001). Op cit., p. 19. 

(8) In the 1980s the World Bank and IMF started with their Structural Adjustment Programs, tying loans to structural reform and demanding countries in the South to open their markets and liberalize their economies.

(9) Escobar, A. (2012). Encountering development: the making and unmaking of the Third World. Princeton, NJ: Princeton University Press.

Goldsmith. (2001). Op cit.

Hancock, G. (1992). The lords of poverty: The power, prestige, and corruption of the international aid business. New York, NY: Atlantic Monthly Press.

Manji, F., & O’Coill, C. (2002). The missionary position: NGOs and development in Africa. International Affairs 78(3), 567-83.

Norberg-Hodge, H. (1991). Ancient futures: Lessons from Ladakh for a globalizing world. San Francisco, CA: Sierra Club Books.
Sachs, W. (Ed.) (2010). The development dictionary: A guide to knowledge as power (2nd ed.). London, UK: Zed Books

Shivji, I. G. (2007). Silences in NGO discourse: The role and future of NGOs in Africa. Nairobi, Kenya: Fahamu.

Sogge, D. (2002). Give and take: What's the matter with foreign aid? Dhaka, Bangladesh: University Press.

(10) As cited in Hancock. (1992). Op cit., p. 71.

During the Cold War aid was used as a tool to maintain influence of Western, capitalist countries and prevent the rise of communism.

(11) As cited in Hancock. (1992). Op cit., p. 70.

(12) Banks, N., Hulme, D., & Edwards, M. (2015). NGOs, states, and donors revisited: Still too close for comfort? World Development, 66, 707-718.

Bebbington, A. J., Hickey, S., & Mitlin, D. C. (Eds.). (2008). Can NGOs make a difference? The challenge of development alternatives. London, UK: Zed Books.

Choudry, A., & Kapoor, D. (Eds.). (2013). NGOization: Complicity, contradictions and prospects. London, UK: Zed Books.

Jalali, R. (2013). Financing empowerment? How foreign aid to southern NGOs and social movements undermines grass-roots mobilization. Sociology Compass, 7(1), 55–73.

Kamat, S. (2004). The privatization of public interest: Theorizing NGO discourse in a neoliberal era. Review of International Political Economy, 11(1), 155-176. https://doi.org/10.1080/0969229042000179794

Manji & O’Coill. (2002). Op cit.

Murphy, B. K. (2000). International NGOs and the challenge of modernity. Development in Practice, 10(3/4), 330-347.

Shivji. (2007). Op cit.

Tandon, Y. (1996). An Africa perspective. In D. Sogge, K. Biekart & J. Saxby (Eds.), Compassion and calculation: The business of private foreign aid (pp. 179-184). London, UK: Pluto Press.

(13) Moyo, D. (2009). Dead aid: Why aid is not working and how there is a better way for Africa. New York, NY: Farrar, Straus and Giroux, p. 39

(14) Norberg-Hodge. (1991). Op cit.

(15) Sogge. (2002). Op cit., p. 7.