Aid versus Trade, Investments, Remittances

Relief organizations have calculated that as much as 75% of foreign aid by industrialized nations is directly tied to promoting exports of goods and services that support jobs in donor nations, achieving greater trade access in receiving countries or other economic and political strategies. Some of the aid comes with so many strings attached, including preferential tendering on contracts and the hiring of expensive consultants, that only 30-40% of dollar value is ever realized for the intended recipients. Then the rampant official corruption in the developing world further eats away at a big chunk of what is left. To make matters worse, the increasing percentages of budgets and GDP claimed by debt repayments take away money needed for basic human development needs, such as education and healthcare, in the developing world.



In the United States for example, most of the food aid, including the additional $770m food aid last year, for the poor countries requires the aid recipients to purchase food from the US agribusiness. These funds do not help the farmers in the poor nations grow food for the countries to become less dependent on foreign help. The US farm lobby continues to flex its muscle and enrich itself, without regard for the severity of the hunger crisis in the poor nations resulting from sharp increase in food prices. Three years ago, farmers and their allies in Congress effectively destroyed an effort by the Bush administration to begin the switch to untied food aid. The current composition of US Congress is no different, as far as the overwhelming power of the farm lobby is concerned.

European governments switched to giving all-cash donations for food in the mid-1990s, arguing that cash allows more flexibility in responding to crises and that the U.S. uses its food aid as a form of farm subsidy. But the Europeans also continue to erect various barriers to food imports from poor nations that could improve the viability of agriculture in many Asian and African countries.

Private donations abroad by Americans, including pledges to charities and churches and disbursements from corporate foundations, now are three times as large as America's official development assistance of $20 billion, and there is every indication this trend will continue. Washington's contribution looks even more miserly when the ODA data are broken down. Here are some basic facts about US foreign assistance:

1. Less than half of aid from the United States goes to the poorest countries.

2. The largest recipients are strategic allies such as Egypt, Israel, Russia, Pakistan, Afghanistan and Iraq.

3. Israel is the richest country to receive the highest per capita U.S. assistance ($77 per Israeli compared to $3 per person in poor countries).

4. Even after the planned tripling of the US aid to $1.5 billion a year to Pakistan, it still amounts to about $8 per Pakistani.



According to Asia Times, last year only five of the 22 countries considered industrialized - Norway, Denmark, the Netherlands, Luxembourg and Sweden - achieved the donor benchmark of allocating 0.7% of GNP to ODA. The benchmark was adopted at the Earth Summit in Rio de Janeiro in 1992 under the UN Agenda 21 program for eradicating poverty through development assistance. No other countries have even come close to meeting the target.

France managed 0.41% of GNP last year, the United Kingdom 0.34%, Germany 0.28%, Canada 0.26%, Spain 0.25% and Australia 0.25%. Japan, the only Asian participant, came in a lowly 19th with a paltry 0.2%, maintaining a reduced ODA commitment that dates back to 2001.

Dambisa Moyo, a former economist at Goldman Sachs, and the author of "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.", recently argued in a Wall Street Journal OpEd that "money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty. Cutting off the flow would be far more beneficial."

She goes on to say, "Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.

Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster."

Last year, remittances to developing nations grew by 8.8% to $305 billion, more than three times the official development aid, according to World Bank.



Official development assistance received by Pakistan has not been particularly effective, according to media reports attributed to UN findings. A United Nations report titled "U.N. reforms and civil society engagements" in 2008 claimed that Pakistan has received 58 billion dollars in foreign aid from 1950 to 1999, however it systematically underperformed on most of the social and political indicators. The report further added, "If Pakistan had invested all the ODA (official development assistance) during this period at a real rate of six percent, it would have a stock of assets equal to 239 billion dollars in 1998, many times the current external debt."



At the end of calender year 2008 in Pakistan, remittances topped 7 billion dollars, an increase of 17 per cent year over year, led by higher remittances from oil-rich GCC countries, which grew by 30 per cent year on year. Similarly, FDI inflows jumped 100 per cent year over year to 708 million dollars in December, 2008, as the telecom, oil and gas, and financial-services sectors continued to attract foreign inventors, according a report in the Nation newspaper. Annual cash remittances from overseas Pakistanis and foreign direct investments (FDI) in Pakistan earlier this decade have been far larger and much more significant in its rapid growth than all of the foreign aid put together.


Last year, remittances to various other Asian countries were as follows: $8.9 billion for Bangladesh, $27 billion for China, $30 billion for India, $6.5 billion for Indonesia, $2.2 billion for Nepal, $1.8 billion for Malaysia, $16.4 billion for the Philippines, $2.7 billion for Sri Lanka, $5.5 billion for Vietnam and $1.8 billion for Thailand, according to International Labour Organization estimates.

While recognizing that there is no one silver bullet to alleviate poverty, microfinancing, along with social entrepreneurship, is becoming an essential component of non-government efforts in Pakistan and other developing nations to empower ordinary people toward self-reliance by lifting them out of poverty and teaching them the right skills to help themselves. “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” This proverb has guided the efforts of late Dr. Akhtar Hameed Khan, acclaimed Pakistani social scientist and founder of Orangi Pilot Project. Supported by private foundations working in Pakistan, all efforts at alleviating poverty should be guided by this proverb that captures the essence of self-reliance.

While government and multilateral financial institutional programs do help to some extent, it is the privatization of aid, trade, remittances and investments for the poor through various investors and donors, such as private corporation, foundations and the immigrants working in the rich countries, that provides the best hope to ensure that the funds and the practical benefits reach the intended recipients. Such a strategy minimizes the role of the politicians and the corrupt officials in both the donor and the recipient nations.

Related Links:

Microfinance in Pakistan

PIDE Report on FDI in Pakistan

Foreign Remittances Help Developing World
Foreign Aid Continues to Pour in Resurgent India
US Food Aid and the Farm Lobby

Dambisa Moyo: Aid to Africa

Rampant Corruption in Construction Industry

Obama's Farm Subsidy Cuts Meet Stiff Resistance

Global Slowdown Hits Foreign Workers

Comments

Hasnain said…
Another couple of articles that make the case that developmental aid serves to weaken local markets and dampen the spirit of entrepreneurship.

http://yoonhe.wordpress.com/2009/04/08/for-gods-sake-please-stop-the-aid/
Riaz Haq said…
One of the ways Pakistani economy manages to stay afloat is by increasing remittances coming from overseas Pakistanis.

According to the Nation newspaper, Pakistan received the highest-ever amount of over $7.811 billion as expatriate’s remittances in the recently concluded 2008-09 fiscal year (FY09), beating the previous record of $6.451 billion received in the preceding 2007-08 fiscal year (FY08).
In FY09 workers’ remittances showed an increase of 21.08 percent, or $1.36 billion, when compared with FY08. The amount of $7.811 billion includes $0.48 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).
The monthly average remittances in the period from July 2008 to June 2009 comes out to $650.95 million as compared to $537.60 million during the same corresponding period of the 2007-08 fiscal year, registering an increase of 21.08 percent.
The inflow of remittances in the July 2008 to June 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,735.87 million, $1,688.59 million, $1,559.56 million, $1,202.65 million, $605.69 million and $247.66 million respectively, as compared to $1,762.03 million, $1,090.30 million, $1,251.32 million, $983.39 million, $458.87 million and $176.64 million respectively, in the July 2007 to June 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during FY09 amounted to $771.03 million as against $726.29 million in FY08.
During the last month (June 2009), Pakistani workers remitted an amount of $735.17 million, up $187.76 million or 34.30 percent when compared with an amount of $547.41 million sent home in June 2008. The amount remitted in June 2009 is the second-highest received in a single month after $739.43 million sent home in March 2009.
The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to June, 2008. According to the break up, remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $164.70 million, $154.39 million, $152.33 million, $108.11 million, $68.48 million and $22.95m respectively, as compared to corresponding receipts from the respective countries during June, 2008 i.e. $88.29m, $143.57m, $123.67 million, $90.98m, $38.08m and $13.98m. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June 2009 amounted to $64.19m compared to $48.80m during June 2008.

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/11-Jul-2009/Pakistan-received-record-7811b-remittances--in-FY09
Riaz Haq said…
Here's an excerpt from an interesting opinion by Jeffrey Sachs published in Christian Science Monitor:

Those who contend that foreign aid does not work - and cannot work - are mistaken. These skeptics make a career of promoting pessimism by pointing to the many undoubted failures of past aid efforts. But the fact remains that we can help ensure the successful economic development of the poorest countries. We can help them escape from poverty. It's in our national interest to do so.

The first step out of rural poverty almost always involves a boost in food production to end cycles of famine. Asia's ascent from poverty in the last 40 years began with a "green revolution." Food yields doubled or tripled. The Rockefeller Foundation helped with the development and propagation of high-yield seeds, and US aid enabled India and other countries to provide subsidized fertilizer and seeds to impoverished farmers. Once farmers could earn an income, they could move on to small-business development.

A second step out of poverty is an improvement in health conditions, led by improved nutrition, cleaner drinking water, and more basic health services. In the Asian success stories, child mortality dropped sharply, which, in turn, led to smaller families because poor parents gained confidence that their children would survive to adulthood.

The third step is the move from economic isolation to international trade. Chile, for instance, has become the chief source of off-season fruit in the US during the past 20 years by creating highly efficient supply chains. China and India have boomed as exporters of manufacturing goods and services, respectively. In all three, trade linkages were a matter of improved connectivity - roads, power, telecommunications, the Internet, and transport containerization.

Today, the skeptics like to claim that Africa is too far behind, too corrupt, to become a China or India. They are mistaken. An African green revolution, health revolution, and connectivity revolution are all within reach. Engineers and scientists have already developed the needed tools. The Millennium Villages project, which I and a group of colleagues developed, is now rapidly expanding in 10 countries in Africa and is showing that this triple transformation - in improved agriculture, health, and connectivity - is feasible.

Improved seed varieties, fertilizers, irrigation, and trucks have all helped convert famine into bumper crops in just one or two productive growing seasons.

Malaria is under control. Farmers have access to capital to make the change from subsistence to cash crops. Children are being treated for worms and receive a midday meal to help keep them healthy and in school.
Riaz Haq said…
The Development Set

By Ross Coggins

Excuse me friends, I must catch my jet,
I’m off to join the Development Set.
My bags are packed and I’ve had all my shots;
I have travelers checks and pills for the trots.

The Development Set is bright and noble.
Our thoughts are deep and our vision global.
Although we move with the better classes,
Our thoughts are always with the masses.

In Sheraton Hotels in scattered nations,
We damn multi-national corporations.
Injustice seems easy to protest,
In such seething hotbeds of social unrest.

We discuss malnutrition over steaks
And plan hunger talks over coffee breaks.
Whether Asian flood or African drought
We face each issue with open mouth.

We bring in consultants whose circumlocution
Raises difficulties for every solution,
Thus guaranteeing good eating
By showing the need for another meeting.

The language of the Development Set
Stretches the English alphabet.
We use swell words like “epigenetic”
“Micro”, macro and logarithmatic.

It pleasures us to be esoteric—
It’s so intellectually atmospheric!
And though establishments may be unmoved,
Our vocabularies are much improved.

When the talk gets deep and you’re feeling dumb,
You can keep your shame to a minimum.
To show that you, too, are intelligent,
Simply ask, “Is it really development?”

Or say, “That’s fine in practice, but don’t you see,
It doesn’t really work in theory.”
A few may find this incomprehensible,
But most will admire you as deep and sensible.

Development Set homes are extremely chic,
Full of carvings, curios and draped with batik.
Eye-level photos subtly assure
That your host is at home with the great and the poor.

Enough of these verses—on with the mission!
Our task is as broad as the human condition.
Just pray God the biblical promise is true,
The poor ye shall always have with you.
Riaz Haq said…
A recent ODI report highlighting India's progress toward MDGs and putting India in the top 20.

Looking at the detailed report, however, it clearly highlights Pakistan along with China in the top 10 in achieving poverty reduction goal MDG1, the most important of MDGs. There is no mention of India on this list in table 4.

http://www.odi.org.uk/resources/download/4908.pdf
Riaz Haq said…
Here's the story of how Acumen's Jacqueline Novogratz got into microfinance, as published by Businessweek:

I was an accidental banker. To please my parents, I went for an interview with Chase Manhattan Bank in 1983. They promised to send me into their offices in more than 40 countries and essentially audit the practices. It was an extraordinary job.

I had an epiphany in Brazil. We had made a $100 million loan to an airline owner who immediately moved the money to the Cayman Islands. Yet I saw all these people in the favelas who were incredibly productive but had no access to capital. I decided to leave Chase to work with a group that wanted me to help create credit systems in Africa.

As I was preparing to leave, though, the COO offered me a once-in-a-lifetime opportunity to work directly with him. He made it clear that, in a few years, I would be able to write my ticket on Wall Street. I was torn. No one wanted me to go to Africa: not my family, my friends, or my employers. But I thought, "If I don't go now, I might never go." So I quit.

I ended up going to Rwanda in the late 1980s to set up a microfinance institution and a bakery. I came back to the U.S. to get an MBA and work at the Rockefeller Foundation before returning in 1996. When I got back to Rwanda, all the women from the bakery had been killed. Of the other women I'd worked with, one was killed in the genocide, another saw her family killed, and another was a perpetrator who was sentenced to life imprisonment.

The aid system was broken. The financial markets alone weren't going to solve the problem. I wanted to invest in entrepreneurs who could see the potential of the very poor. The poor want to produce and consume and solve their own problems. In 2001, I started Acumen as a nonprofit venture capital fund. Instead of giving their money away, philanthropists could invest it in businesses. Now it's a $50 million fund that has leveraged another $200 million of capital and created 35,000 jobs. My dream is to build this into a more powerful asset class. Everything comes at a price. I have to say no to a lot of things I love to do. But we have the potential to help build businesses that change lives.
Riaz Haq said…
British Prime Minister David Cameron, now on a visit to Pakistan, has offered about $1 billion in aid for education, according to Financial Times:

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/cc68ce4c-5f91-11e0-bd1b-00144feab49a.html#ixzz1IfKt9DJ6

David Cameron offered Pakistan’s leaders up to £650m ($1,055m) of aid for schools and heaped praise on their “huge fight” against terrorism in a diplomatic gamble to end years of mutual mistrust with a gesture of goodwill.

During a confidence-building visit to Islamabad with an entourage of his most senior security advisers, Mr Cameron jettisoned the usual list of UK demands and instead gave Pakistan the benefit of the doubt over Afghanistan and its support for militant groups.

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/cc68ce4c-5f91-11e0-bd1b-00144feab49a.html#ixzz1IfLC3dkM

Such optimism over Islamabad’s intentions marks a big break in British diplomacy, making a stark contrast with Mr Cameron’s description of Pakistan “looking both ways” on terrorism, a remark that triggered a serious diplomatic incident last year.

Rather than regarding Pakistan as a country that “can do more”, particularly on curbing Taliban activities, the British assumption is now that Islamabad’s security agencies have limited control over militant groups they once helped to create.

The big test for Mr Cameron is whether his expression of trust can generate better results than the more transactional approach adopted in the past. British officials say they are already seeing tangible improvements in intelligence co-operation and a greater willingness to discuss a political peace deal in Afghanistan.

Mr Cameron sought to demonstrate the breadth of the new partnership by offering funds for up to 4m school places by 2015. “I struggle to find a country that’s more in our interest to progress and succeed than Pakistan,” Mr Cameron said after a meeting with Yusuf Raza Gilani, Pakistan’s prime minister.

“If Pakistan succeeds then we will have a good story ... if it fails we will have all the problems of migration and extremism, all the problems.”

The package of up to £650m, which more than doubles previous education funding, forms part of an aid programme that is set to become Britain’s biggest.
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The centrepiece of Mr Cameron’s visit was a security round-table with Pakistan’s civilian leadership and General Ashfaq Kayani, its military chief. Sir John Sawers, head of the Secret Intelligence Service, MI6, and General Sir David Richards, chief of the defence staff, also attended, in their second visit to Islamabad in less than a month.

Mr Gilani later brushed aside questions over Pakistan’s willingness to combat terrorism. “We’ve the ability and we have the resolve and we are fighting and we’ve paid a very heavy price for that,” he said, citing the 30,000 casualties in Pakistan’s effort to quell an internal insurgency.

One senior Pakistani government official speaking after Mr Cameron’s meetings said closer security ties would take some more time to develop. “Clearly, the UK wants Pakistan to extend help to combat militant plots on British soil,” he said. “But the UK will also need to be much more forthcoming on helping Pakistan to go after members of its own militant groups from places like Baluchistan who have taken refuge in Britain.”
Riaz Haq said…
Here's an interesting discussion on channeling foreign aid through government vs non-government orgs in Pakistan:

ISLAMABAD // Growing international aid flows into terrorism-torn Pakistan are vulnerable to widespread abuse because of endemic nepotism within the government and domestic non-government organisations, according to non-profit sector insiders. The threat is exacerbated by negligent management by international donors, whose ability to audit projects is limited both by security-related restrictions on the movement of personnel and their susceptibility to elitist social circles dominated by their clientele, NGO managers and consultants said in a series of interviews.

NGOs emerged as an alternative recipient of foreign aid to Pakistan in the late 1980s, following the withdrawal of Soviet occupation forces from neighbouring Afghanistan and decreasing US funds, and became the preferred recipients as relations between the government and its erstwhile allies deteriorated in the 1990s. The role of the NGOs increased as civil war flared in Afghanistan and more refugees poured into Pakistan. However, many NGOs were formed not by idealists, but "by well-educated people with social and political connections," said Arshed Bhatti, an Islamabad-based consultant to NGOs .

Often, they are relatives and cronies of military officers, politicians, civil servants and judges that "invest in 5-to-9pm socialising [with Pakistani and foreign officials], and execute the agreements the next 9am-to-5pm", he said. Subsequently, a large chunk of funding keeps going to the same people, who take two bites at foreign funding by forming their own NGOs and working as lobbyists for others, Mr Bhatti said.

Research by The National revealed numerous examples of human rights NGOs with trustees who are senior government functionaries, including serving federal and provincial ministers, all of whom are in a position to lobby for and secure funding from both international donors and the Pakistani government. Baber Javed, programme manager for the Pakistan Centre for Philanthropy, which certifies corporate social responsibility initiatives for the government, said problems within the non-profit sector were largely attributable to the restrictive practices of major international NGOs, including the humanitarian arms of the United Nations.

He said those big players had each developed pools of four or five local NGOs, and worked exclusively with them, leading to an elite grouping of some 40 to 50 organisations. That compares to 95,000 total NGOs in Pakistan, of which 65,000 were officially registered, according to a 2001 study published by Johns Hopkins University. Asma Jehangir, chairperson of the Human Rights Commission of Pakistan, a Lahore-based NGO, said the Pakistani government's funding of NGOs was particularly questionable....


http://www.thenational.ae/news/worldwide/south-asia/foreign-aid-to-pakistan-is-a-victim-of-nepotism
Riaz Haq said…
Here's an excerpt from a Time magazine story on NGO spending in India:

With 3.3 million registered NGOs, India's nonprofit sector raises between $8 billion and $16 billion in funding every year. According to Home Ministry statistics, foreign funding to Indian NGOs saw a 56% increase in the 2005-06 and 2006-07 fiscal years. In 2008, the latest available data, the total official foreign aid to India was $2.15 billion.

Read more: http://www.time.com/time/world/article/0,8599,2036307,00.html#ixzz1SfGSmZ8T
Riaz Haq said…
Here's an interesting News International story on Pakistan as an international aid donor:

Pakistan’s contributions to mitigate the suffering of the countries hit by natural calamities are not only commendable but also helped Islamabad a lot to safeguard its economic interests. Sri Lanka, China, Iran, Nepal, Maldives and Afghanistan are the countries where Pakistan did a lot on humanitarian front and also managed to keep its say in the said countries.

As far as Afghanistan is concerned, Pakistan during the Musharraf regime announced the $300 million (over Rs 25.5 billion) grant for various projects out of which Pakistan has so far doled out $ 175 million (Rs 12 billion) since the announcement of the then President Pervez Musharraf during his visit to Kabul.

However, in 2009-10, according to Additional Secretary at Finance Ministry Mr Rana Asad Amin, Pakistan provided Rs 2 billion to Afghanistan to complete the various projects. Likewise, Rs 2.5 billion each allocated to Afghanistan in 2010-11 and current financial year 2011-12.

And in the future Pakistan will keep on doling out the amount to Afghanistan under the pledged $ 300 million grant. The Emergency Relief Fund Data is an eye opener for those who deem Pakistan did not play its role on the humanitarian front which is vital to keep its economic interests intact.

According to Emergency Relief Fund data, Pakistan in 2003 donated Rs 53.9 million in the shape of kind in to to to four countries that include Rs 1.72 million to Sri Lanka for flood victims, Rs 10.9 million to Algeria for earthquake victims and Rs 2.6 million to China for fight against sars and Rs 38.7 million to Iraq for war victims.

In 2004, Pakistan again donated Rs 171 million in kinds to four countries that include Rs 140.8 million go Iran for earthquake victims, Rs 3 million for Sri Lanka for drought victims, Rs 9.8 million to Afghanistan for food shortage and Rs 18.2 million to Bangladesh for flood victims.

However, when catastrophic tsunami badly hit Sri Lanka, Indonesia and Maldives in 2005, Pakistan came up with a bang and helped the said countries on big way and donated Rs 668 million for the said three countries. In addition Pakistan also extended the donation of Rs 26.3 million in kind to Comoros in the head od food assistance.

In 2006, Pakistan bequeathed Rs197.8 million to three countries including Rs 7.7 million in kind to Iran for earthquake victims, Rs 92.2 million to Indonesia also for earthquake victims and Rs 97.9 million to Lebanon for war affected people.

In 2007, China was provided Rs 1.875 million in kind for flood affected people, Bangladesh given Rs 72.19 million for cyclone affected people. However, Pakistan in 2008 donated Rs 5 million to Myanmar for cyclone affected people, and Rs 160.503 million to China for earthquake affected people and Rs 1.153 million to Nepal for flood victims.

And in 2009, Pakistan provided Rs 33.338 million in kind to Palestinians of Gaza. In addition, in 2008, Pakistan also provided Rs 81 million in kind to Cuba for hurricane affected people. As far as Pakistan’s authorities are concerned, they managed to ink trade deals with China and Sri Lanka with which Pakistan also possess the in-depth strategic relations.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=61681&Cat=2
Riaz Haq said…
Here are some excerpts from an AP story on the impact Punjab govt's spurning of US aid:

......Like many government-run hospitals in Pakistan, Lady Willingdon struggles to provide even basic care. The hospital, built by the British in the 1930s before Pakistan's independence, was meant to house 80 patients. The country's population has since boomed, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings.
-----
There are only three working infant incubators, which were donated by NGOs, said Mohammed Athar, the doctor who runs the nursery for premature babies. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease, he said.

"Without incubators, it's useless," said Athar.

The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities, said Sharif, the hospital administrator.

The U.S. has financed similar efforts to transform two hospitals in southern Sindh province that treat tens of thousands of patients every year.

The head of the Punjab government, Shahbaz Sharif, tried to justify his decision to spurn American aid following the May 2 raid that killed the al-Qaida chief not far from Pakistan's equivalent of West Point. He said at the time that Pakistan needed "to break the begging bowl" and "get rid of the foreign shackles."

The U.S. operation outraged Pakistani officials because they were not told about it beforehand.

Sharif is a leading member of the main opposition party in the country, and many viewed his decision as a way to siphon votes away from the Pakistan People's Party, which controls the federal government. The Punjab government spokesman declined to comment on this interpretation.

Sharif and other members of his government are unlikely to feel much personal impact from the move to turn down U.S. aid.

Free government-run hospitals like Lady Willingdon are mainly used by the poor, who are already suffering from Pakistan's weak economy and surging inflation. Wealthier citizens opt for more expensive private institutions in Pakistan or abroad.

A large chunk of the American assistance, $100 million, was to be used to rebuild schools in southern Punjab destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.

The money will now be redirected to other areas of the country, said the U.S. Embassy.

Washington has continued several programs in Punjab that don't run directly through the provincial government, such as rehabilitation of power plants and small grants to female entrepreneurs in flood-affected areas, said the embassy.

The loss of aid for schools, water and sanitation also won't be felt acutely by the elite. Most send their children to private schools and live in leafy parts of Lahore dotted with Western restaurant chains, polo grounds and cosmetic surgery centers. The Sharifs own property in London worth millions of dollars.
----------
Life is very different for Pakistanis who live in Shamaspura, a dirt-poor part of Lahore filled with ramshackle brick houses separated by a narrow mud lane coursing with sewage. Most of the roughly 15,000 residents are fruit and vegetable vendors who make about $2 per day. They are forced to tie pieces of cloth across their faucets to filter out dirt and insects in the water.

"We have asked the government to pave our road and build us a sewer system, but they said they don't have any money," said Jumma Khan, a 55-year-old vegetable vendor......
Riaz Haq said…
Here's an Atlantic piece on a new better model for delivering US aid in Pakistan:

So while USAID is very good at quickly mobilizing assistance to disaster-afflicted communities, it carries a lot of political baggage -- so much so in places like Pakistan that the U.S might be better off in the long run by downsizing USAID's direct activities there and working through alternative programs.

One good model might be the Rural Support Programmes Network. A sprawling collection of local NGOs, the RSPN was founded by the Agha Khan Network in 1982, and has since become its own, separate program. While the stats about its reach are impressive -- reaching millions of the poorest homes across a vast swath of Pakistan -- what's especially fascinating about RSPN are its methods.

Put simply, RSPN has a different focus than normal aid programs. They emphasize the development of institutions first, and only after that institution is established do they worry about its output or performance. The NGO also heavily invests in the smallest scale of the community, from conceptualization to execution, hiring mostly locals to administer projects. Lastly, they have extraordinarily long project timelines -- sometimes as long as 15 years from start to finish.

Focusing on short term projects is a critical weakness of how the U.S. conducts both warfare and aid. Put simply, you make very different decisions if you have to show progress next year than if you have to show progress next decade. RSPN's longer term focus lets it work on more difficult goals, such as creating institutional capacity that can exist without foreign input. It also means RSPN can build out micro-infrastructure projects like micro-hydro power plants that allow communities to finance their own development -- again, without foreign input.

But the most interesting project RSPN has done in rural Pakistan is a collaborative micro-healthcare insurance system. For very little money -- $3.50 a year in some cases -- poor people can get access to basic medical care (especially maternity care) and assistance if they face hospitalization.

A hyper-local focus on poor, isolated communities has created an unexpected way to provide previously unfathomable sorts of services to the poor at very low cost. The RSPN affiliates who provide microinsurance reach almost a million people, and at very little cost, by employing local community members for expertise, services, and administration.

This structure applies to much of what RSPN does: local projects, run by locals. It is a sharp contrast to even the ostensibly locally focused aid projects administered by U.S. and European NGOs and aid agencies, which focus on establishing a strong presence in capital cities and rely on expensive expatriate administrators. RSPN's local focus carries significant spillover effects in its communities as well: providing opportunities and improving the quality of life makes those communities significantly better off as a consequence. The "brain drain" of young people leaving to find opportunity elsewhere is diminished, and with better health and finances they can develop themselves, without the distorting effect of foreign money.
-------------
If anything, what the RSPN shows is that focusing on the small scale, and on the hyper-local, is actually a more effective way of developing isolated, poor, rural communities..


http://www.theatlantic.com/international/archive/2012/04/a-radically-different-way-of-bringing-us-aid-to-pakistan/256459/
Riaz Haq said…
Here's Dambisa Moyo's interview on China's relationship with Africa:



A: There’s nothing wrong about China going around the world making resource deals to support its growing population. What it’s doing makes a lot of sense. Yes, my concern is that other countries will not catch on until it is too late. In a zero-sum world, what will happen if China wins the race for resources? Other countries seem to be asleep while China is making a concerted effort. Some 24 ongoing wars and violent conflicts have their origins in commodities, and this trend is poised to continue. China is befriending what I call “the Axis of the Unloved”—countries and regions such as Africa, Brazil, Colombia, Argentina and parts of Eastern Europe that have been basically ignored by the Western economies. China is the leading trading partner and foreign investor in many of these countries—a very different approach to the West’s largely aid-based model.

Q: The Chinese economic edge in this is that its state capitalism offers advantages that the Western laissez-faire model does not.

A: Favoured Chinese companies have a zero or near-zero cost of capital. State-owned banks provide highly concessional credit lines, in the form of government grants or low-interest loans. Favoured companies also benefit from tax breaks and the preferential allocation of key contracts. Like the US$12-billion credit line extended to Wuhan Iron and Steel, a major steel producer, by the state-owned China Development Bank, for ļ¬nancing “overseas resource base construction.” And of course it helps to have a war chest of over US$3 trillion, while Western economies are struggling with cash constraints.

Q: The Chinese political edge is that it’s famously untroubled by governance issues in the countries it deals with.

A: Well frankly, in practice there is little to distinguish between the commodity counterparts of Western nations and those of China. U.S. and European countries are just as happy as China to strike deals with countries with less than pristine reputations—whether it’s Saudi Arabia, Venezuela or Russia. Two wrongs don’t make a right, but in this narrow sense, it’s unfair to constantly point fingers at China.

Q: So you think that criticism of China on both scores—cheating, so to speak, economically and being too comfortable with dictators politically—is often unfair and wrong?

A: Cheating is one thing, meddling in the markets is a whole other thing. Virtually all governments meddle in the commodities markets. Western governments are particularly egregious in this respect. The United States paid US$6 billion in commodity subsidies in 2010. OECD countries spend a total of US$226 billion on agricultural subsidies yearly. And in the EU, the Common Agricultural Policy sees some 40 billion euros spent on direct farm subsidies. So if meddling in the market is “cheating,” China has a lot of company. And the West has never had much of a problem dealing with despots and dictators if there is a benefit to be gained.
-------------
A: I think the reasons are quite clear. China pursues strictly business, symbiotic relationships, trading access to commodities for infrastructure, employment and other economic benefits. Take employment. The construction of the Imboulou Dam in [the Republic of the] Congo in 2010 employed 2,000 locals (compared to 400 Chinese). Survey results indicate that Africans much prefer to deal with the Chinese than with Westerners. In Ivory Coast, Mali, and Kenya, more than 90 per cent of respondents see China’s economic growth as “a good thing.” In Tanzania, 78 per cent agree, but only 36 per cent feel the same way about American influence. The difference is stark. Across the developing world, people want jobs, infrastructure and investment and the Chinese engagement does exactly that. ....


http://www2.macleans.ca/2012/06/04/dambisa-moyo-on-resource-scarcity-and-chinas-race-for-deals
Riaz Haq said…
Here's an ET report on record high remittances from Pakistani diaspora:

With an impressive 17.7% annual growth, remittances sent home by overseas Pakistanis surged to a record high and crossed the psychological mark of $13 billion in the previous fiscal year 2011-12, the State Bank of Pakistan (SBP) announced on Tuesday.

Continuous growth in remittances is being billed as a lifeline for Pakistan’s economy, especially when energy shortages and high inflation have hurt gross domestic product (GDP) growth.

“Remittances have been playing a key role in the country’s economic performance,” said Muzammil Aslam, Managing Director of Emerging Economics Consultancy.

“One can safely say that the continuous rise in remittances in the last few years has saved Pakistan from serious economic problems including default on debt repayments.”

Aslam suggested that the government can further increase the flow of remittances if it reduces the difference between interbank and open market exchange rates for the US dollar from the present one rupee to 10 to 15 paisa. “This will encourage overseas workers to send more and more dollars through banking channels instead of illegal means.”

Invest Capital Markets analyst Khurram Schehzad commented that the continuous rise in remittances is significantly positive for the country as the money supported the economy in different forms. Overseas Pakistani workers remitted a record amount of $13.186 billion in the last fiscal year ended June 30, 2012, compared with $11.201 billion received a year earlier, the SBP said.

Except for September ($890.42 million) and November ($924.92 million), Pakistanis remitted more than $1 billion in each of the remaining 10 months.

Monthly average of remittances rose 17.73% to $1.099 billion compared with $933.41 million a year earlier.

In June overseas Pakistanis sent home $1.117 billion compared to $1.104 billion received in the same month of 2010-11.

In the same month, remittances from Saudi Arabia, UAE, USA, UK, GCC countries and EU countries amounted to $333.68 million, $219.14 million, $206.60 million, $128.12 million, $126.72 million and $29.24 million respectively. In comparison, remittances from these countries were $291.55 million, $270.04 million, $204.64 million, $121.35 million, $106.20 million and $33.83 million respectively in June 2011.

Analysts believe that the SBP’s initiative for facilitation of remittances, called the Pakistan Remittance Initiative (PRI), has significantly contributed to the growth of remittances.

Since its inception in April 2009, PRI has taken a number of steps to enhance the flow of remittances through legal channels. These include preparation of strategies on remittances, taking all necessary steps to implement the overall strategy, playing an advisory role for the financial sector in terms of preparing a business case, relationship building with overseas correspondents, creating separate and efficient remittance payment highways and becoming a national focal point for overseas Pakistanis through a round-the-clock call centre.


http://tribune.com.pk/story/406343/remittances-surge-to-record-high/
Riaz Haq said…
Here's a Dawn Op Ed by Sakib Sherani:

As a result of the agreement on reopening Nato’s ground routes, it has been reported that Pakistan will receive around $1.2bn of unpaid arrears pertaining to the Coalition Support Funds (CSF). This money is reimbursement for costs already incurred by Pakistan in military operations in the northwest in support of Nato/Isaf’s Afghanistan campaign, and not assistance.

Nonetheless, it represents a not insignificant potential reduction of the fiscal deficit (by 0.5 per cent of GDP) and the need to borrow by government. More importantly, it has the potential to calm the financial markets that are nervous about depleting forex reserves in the context of large debt repayments due this fiscal year.

However, beyond this the CSF inflow will have a limited effect. To put this money into context, $1.2bn is roughly the equivalent of 0.5 per cent of GDP, 2.5 per cent of Pakistan’s annual foreign exchange earnings and 2.7 per cent of projected imports this year. More importantly, for the benefit of friends who celebrate the arrival of each $1bn of foreign taxpayer money as if it was ‘manna from heaven’, this inflow (or the elusive Kerry-Lugar money for that matter) is the equivalent of a miniscule 2.9 per cent of potential tax revenue that Pakistan can collect — but chooses not to.

In terms of overall US assistance, Pakistan has been a recipient of substantial inflows from the US in fits and starts over the years, with the bulk being in the realm of military aid. In terms of US economic assistance to Pakistan, the defining features since inception appear to have been:

— It has not been enduring, but spasmodic;

— The US has invariably followed a short-sighted, ‘transactional’ approach in its relationship with Pakistan, and continues to do so despite a strong case having been made at the start of the Pakistan-US strategic dialogue for a ‘transformational’ relationship;

— Assistance has peaked in non-democratic set-ups;

— US aid has generally been pro-cyclical, reinforcing upturns in the economy, rather than supporting Pakistan’s economy in a downturn (as currently). As a result, the impact has not been ‘visible’.

— US programmes are mired in bureaucracy, with large ‘lags’ and high transactional costs (to be fair, the latter is pretty much the case with all aid programmes across the board);

— Spending has, until now, either ignored areas deemed high-impact by the Pakistan side (agriculture, water, market access, for example) or, has been spread too thin over a large number of projects. As a result, the impact has been diffused, denying the US visibility for the taxpayer dollars it has spent in Pakistan.

The most potent form of economic assistance the US can provide to Pakistan, one with the greatest externality, is allowing preferential market access to the country’s textile and clothing (T&C) exports. If focused on the right products, such as garments (labour-intensive and value-added), the US intervention has the potential to create hundreds of thousands of additional direct and indirect jobs, carving a powerful urban, educated (and possibly currently unemployed) constituency comprising the country’s youth.

This will also be the ‘lowest cost’ in terms of US taxpayer dollars, since the additional exports from Pakistan will most likely displace existing imports into the US from some other producer.

Strangely, this is proving to be the second hardest legislation to bring to Congress after domestic gun control. Pursued actively by Pakistan since 2004, this request has routinely met the same response: Congress will not sacrifice the interest of its states with a large textiles constituency. Since then, however, Congress has allowed duty-free access for textiles and clothing to large regional blocs in Central America, the Andean states, and a number of African countries....


http://dawn.com/2012/07/13/pakistan-the-us/
Riaz Haq said…
Here's a Nation report on total loans and grants for Pakistan since 1985:

Pakistan received over $72.26 billion in the shape of grants and loans from different countries and international financial institutions during 1985 to June 2012.

During this period, 24 countries and 13 different global lending agencies gave loans of over $59.24 billion to Pakistan while 32 states and 13 financial organisations lent country over $13.02 billion in the shape of grants. Cash received against IMF stand-by programme is not included in these figures, it has been learnt.

According to figures released by Financial Division, from 1985 to June 2012, Pakistan received $15,937 million from Asian Development Bank (ADB), $11,076 million from IDA, $5,842 million from IBRD, $5,717 million from Japan, $6,457 million from IDB, $3,666 million from USA and $3,400 million from China.

The report further revealed that Pakistan received $6.37 billion during former Prime Minister Muhammad Khan Junejo’s regime while $23.01 billion in Musharraf era whereas the incumbent government received $14 billion until June 2012 from different countries and global financial institutions.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/20-Sep-2012/pakistan-received-over-72-26b-in-27-years

Here's a BR story on Pak debt repayments since Year 2000:

Pakistan repaid $10.3 billion to lenders till 2011-12
September 20, 2012

Pakistan has repaid $10.3 billion between 2000 and 2011-12 to various bilateral and multilateral donors, excluding the International Monetary Fund (IMF). Data obtained by Business Recorder showed that actual payments from 2000-01 till 2011-12 pertaining to loans that were signed after July 2000 stood at $10.37 billion: total loans amounted to $5.7 billion, $4.45 billion was interest and commitment charges were $157 million.

Data also showed that the Islamic Development Bank (IDB) was repaid $3.08 billion with $2.9 billion as actual amount of loan while $199 billion was paid as interest. Asian Development Bank (ADB) has been repaid $1.8 billion, including $1.3 billion actual loan with $461 million interest while $32 million was paid as commitment charges.

France has been repaid $1.02 billion, including $218.3 million actual loan amount and $809 million interest while commitment charges were $470,000. The US, one of the major financial assistance providers to Pakistan, was repaid $336.2 million, including $59.1 million actual loan amount and interest of $277 million.

The UAE was repaid $13.6 million ($1 million actual loan plus $12.5 million interest), Turk Exim Bank was repaid $64.5 million ($51.6 actual loan plus $12.9 interest), Switzerland $27.9 million, including $11.1 million actual loan and $16.8 million interest, Sweden was repaid $62.7 million ($19.6 million actual loan plus $43.1 million interest) and Saudi Arabia was repaid $390 million from 2000-2001 till 2011-12.

Documents also showed that Russia received $77.5 million as repayment, including $19.7 million actual loan with $57.8 million interest. Japan received $1.1 billion against actual loan of $185.8 million, Italy was repaid $18.6 million, Austria $53.5 million against actual loan of $18.2 million and Canada was repaid $38.7 million while the actual loan amount was $12 million. Germany was repaid $314.2 million while International Bank of Reconstruction and Development (IBRD) and International Development Association (IDA) have been repaid $422.2 million against the actual loan amount of $33 million.


http://www.brecorder.com/money-a-banking/198/1238626/
Riaz Haq said…
Bill Gates' Annual Letter 2014:

In their annual letter published on Tuesday, Bill and Melinda Gates addressed a number of claims about global poverty often used to argue against giving aid to countries that need it most -- and debunked each and every one.

Read the letter in its entirety here.

Myth No. 1: Poor countries are doomed to remain poor.

Fact: Citizens of countries once said to be "trapped in poverty" are now earning competitive salaries. Since 1960, China’s income per person has increased eightfold and India’s has quadrupled. Even smaller countries are seeing vast improvements. Botswana, for example, has witnessed a 30-fold increase in per capita income, Bill Gates noted.

Myth No. 2: There is no hope for Africa.

Fact: Africa has its share of problems, but the continent has also come a long way on a number of fronts. Since 1960, the life expectancy of women in sub-Saharan Africa has increased from 41 to 57, the chairman of Microsoft said. Whereas an estimated 40 percent of African children were in school in 1970, now more than 75 percent are pursuing education. Also, the number of AIDS-related deaths dropped 38 percent in Eastern and Southern Africa between 2005 and 2011, according to the United Nations.

Myth No. 3: Helping almost every country achieve middle-income status will just make some problems worse.

Fact: It’s true that too much development can put a further strain on the environment, but that’s not reason enough to stop helping struggling countries, Bill Gates wrote. The key is simply to develop cheaper and cleaner sources of energy and to recognize that as more people become educated, they’ll be able to tackle these problems on their own.

Myth No. 4: Foreign aid is a big fat waste.

Fact: We’re not committing as much money to foreign aid as naysayers may have you think. Bill Gates noted that Norway, the most generous nation in the world, allots less than 3 percent of its budget to foreign aid. The U.S. allots less than 1 percent, which comes to about $30 billion a year.

While that certainly isn’t pocket change, the context is key, especially when considering where this money is going. It’s being spent on vaccines, education, family planning and other life-saving tools that keep children alive and empower them to become functioning members of society who can make a difference.

Myth No. 5: Aid holds back normal economic development.

Fact: Simply put, aid gives struggling countries the cushion they need to stand on their own two feet. According to Bill Gates, a number of countries that once heavily relied on aid to survive hardly get any today. Those include Botswana, Morocco, Brazil, Mexico, Chile, Costa Rica, Peru and Thailand, among others.

Myth No. 6: Saving lives leads to overpopulation.

Fact: According to Melinda Gates, parents are actually more inclined to have a lot of kids when they don’t feel certain that their children will survive. In Afghanistan, for example, the child mortality rate is very high, yet Afghan women have an average of 6.2 children each, she noted. So even though more than 10 percent of Afghan children don’t survive, the country’s population is expected to grow to 55 million from 30 million by 2050.

Myth No. 7: The world is getting worse.

Fact: Yes, there are still plenty of problems that have to be addressed, but we’ve made an incredible amount of progress and have much more to look forward to. India is on track to be officially rid of polio this year, and the world could be polio-free by 2018. Since 1990, childhood death rates have been cut in half and maternal deaths have dropped by nearly the same share, according to the World Health Organization. Anti-female genital mutilation campaigns are making progress in a number of countries, and more women in the developing world are getting access to family planning resources.

http://www.huffingtonpost.com/2014/01/21/bill-gates-annual-letter_n_4638747.html

http://annualletter.gatesfoundation.org/
Riaz Haq said…
Pakistan's remittances of $18.4 billion nearly made up for the trade deficit of $19.8 billion over 11 months ending in May 2015:

Pakistan's trade deficit widened by 11.73 percent to $19.735 billion for the July 2014 to May 2015 period, compared with a deficit of $17.663 billion for the same period last year, according to the Pakistan Bureau of Statistics.

Exports declined to $21.875 billion in the eleven month period from $23.092 billion the previous year. Imports rose to $41.610 billion from $40.755 billion.

The Pakistan financial year begins in July.

On a monthly basis, the trade deficit rose to $1.894 billion in May from $1.795 billion the previous month.

Exports totalled $1.953 billion in May and imports were worth $3.847 billion.

http://in.reuters.com/article/2015/06/16/pakistan-trade-idINL4N0XH4J720150616
Riaz Haq said…
#India biggest recipient of #America's economic aid over 66-year period: USAID; #Israel 2nd. #Pakistan 5th. http://www.dawn.com/news/1194228

The data, which is inflation adjusted, shows India received approximately $65.1bn in economic assistance from 1946 until 2012, followed closely by Israel, which was given $65bn.

With $44.4bn received as economic assistance from the US, Pakistan is also among the top five countries to receive economic assistance out of a total of 200 countries and regions.

Top 10 countries receiving US economic assistance from 1946-2012

India: $65.1bn
Israel: $65bn
United Kingdom: $63.6bn
Egypt: $59.6bn
Pakistan: $44.4bn
Vietnam: $41bn
Iraq: $39.7bn
South Korea: $36.5bn
Germany: $33.3bn
France: $31bn
Indian economic aid is spread out over various sectors and programs, including child survival and health, development assistance, HIV/AIDS initiatives, migration and refugee assistance, food aid, and narcotics control. The bulk of this aid ($26bn) is provided to various USAID programmes.

A majority of Israel's $65bn economic assistance was given to its Economic Support Fund and Security Support Assistance, with $56.5bn alone attributed to these programmes.

In comparison, of the $44.4bn provided to Pakistan in economic assistance, $13.8bn is given to USAID programmes, while $13.7bn is attributed to the Economic Support Fund and Security Support Assistance.


Israel received $134bn in military assistance over 1946-2012 ─ a figure which far outnumbers military assistance provided to the the second entrant on the list, Vietnam, at $77.9bn.

Read: Pakistan 3rd biggest recipients of US aid

Top 10 countries receiving US military assistance from 1946-2012

Israel: $134bn
Vietnam: $77.9bn
Egypt: $62bn
Afghanistan: $48.3bn
Turkey: $42.2bn
South Korea: $41.1bn
France: $33bn
Greece: $29.5bn
China: $26.3bn
Iraq: $24.7bn
Pakistan just misses being on the top 10 list, coming in at twelfth place with $12.9bn in military assistance from the US. India, however, is placed at 47 out of a list of 193 countries, receiving $897 million in military assistance.

It is pertinent to mention here that Pakistan received most of the military assistance from the US during the superpower's involvement in Afghanistan during the 1980s and then after 2001.

The US non-military aid to Pakistan for the period 1991-2001 averaged just $75 million per year, while the total military aid during the eleven-year period was a paltry $7 million.
Riaz Haq said…
"It sounds kind of crazy to say that foreign aid often hurts, rather than helps, poor people in poor countries. Yet that is what Angus Deaton, the newest winner of the Nobel Prize in economics, has argued.
Deaton, an economist at Princeton University who studied poverty in India and South Africa and spent decades working at the World Bank, won his prize for studying how the poor decide to save or spend money. But his ideas about foreign aid are particularly provocative. Deaton argues that, by trying to help poor people in developing countries, the rich world may actually be corrupting those nations' governments and slowing their growth. According to Deaton, and the economists who agree with him, much of the $135 billion that the world’s most developed countries spent on official aid in 2014 may not have ended up helping the poor."


The idea of wealthier countries giving away aid blossomed in the late 1960s, as the first humanitarian crises reached mass audiences on television. Americans watched through their TV sets as children starved to death in Biafra, an oil-rich area that had seceded from Nigeria and was now being blockaded by the Nigerian government, as Philip Gourevitch recalled in a 2010 story in the New Yorker. Protesters called on the Nixon administration for action so loudly that they ended up galvanizing the largest nonmilitary airlift the world had ever seen. Only a quarter-century after Auschwitz, humanitarian aid seemed to offer the world a new hope for fighting evil without fighting a war.

There was a strong economic and political argument for helping poor countries, too. In the mid-20th century, economists widely believed that the key to triggering growth -- whether in an already well-off country or one hoping to get richer -- was pumping money into a country’s factories, roads and other infrastructure. So in the hopes of spreading the Western model of democracy and market-based economies, the United States and Western European powers encouraged foreign aid to smaller and poorer countries that could fall under the influence of the Soviet Union and China.

The level of foreign aid distributed around the world soared from the 1960s, peaking at the end of the Cold War, then dipping before rising again. Live Aid music concerts raised public awareness about challenges like starvation in Africa, while the United States launched major, multibillion-dollar aid initiatives. And the World Bank and advocates of aid aggressively seized on research that claimed that foreign aid led to economic development.

Deaton wasn’t the first economist to challenge these assumptions, but over the past two decades his arguments began to receive a great deal of attention. And he made them with perhaps a better understanding of the data than anyone had before. Deaton’s skepticism about the benefits of foreign aid grew out of his research, which involved looking in detail at households in the developing world, where he could see the effects of foreign aid intervention.

“I think his understanding of how the world worked at the micro level made him extremely suspicious of these get-rich-quick schemes that some people peddled at the development level,” says Daron Acemoglu, an economist at MIT.

----
Instead, many of the positive things that are happening in Africa – the huge adoption in cell phones over the past decade, for example – are totally homegrown. He points out that, while the world has made huge strides in reducing poverty in recent decades, almost none of this has been due to aid. Most has been due to development in countries like China, which have received very little aid as a proportion of gross domestic product and have "had to work it out for themselves."


http://www.washingtonpost.com/news/wonkblog/wp/2015/10/13/why-trying-to-help-poor-countries-might-actually-hurt-them/
Riaz Haq said…
#UAE #ADFD funds Dh1.5 billion (US $408 million) worth of projects in #Pakistan

http://gulfnews.com/news/uae/society/uae-funds-dh1-5-billion-worth-of-projects-in-pakistan-1.2074135

Up to Dh1.5 billion worth of sustainable development projects have been financed in Pakistan by the Abu Dhabi Fund for Development (ADFD), a new country report said on Monday.
To date, the ADFD, a national entity for development aid, has supported Pakistan with grants and concessionary loans on behalf of the Abu Dhabi government, valued at Dh1.5 billion across nine sustainable development projects.

The ADFD’s country report issued to mark Pakistan’s Independence Day on August 14, highlighted that the nine development projects have significantly contributed to improving socioeconomic conditions in the country.
The projects spanned diverse sectors, most notably transport, water and agriculture, healthcare.
Mohammad Saif Al Suwaidi, Director-General of ADFD, said ADFD’s role in financing these sustainable development projects across Pakistan underscores the fraternal relations and strong bilateral ties that the UAE and Pakistan share.


Stressing the importance the UAE places on supporting developing countries, Al Suwaidi said: “The comprehensive and wide spanning portfolio of development projects supported by ADFD in Pakistan can certainly be attributed to the strong relations between our countries as well as the wise directives, guidance and support of the Abu Dhabi government.”
Al Suwaidi added that ADFD believes in assisting beneficiary governments in achieving their economic, sustainable and development schemes and goals.
“We are pleased that our support to the Pakistani government has elevated living standards and boosted strategic growth in that country,” he said.
Notable projects
Some of the notable projects funded by ADFD in Pakistan include the Dh227 million construction of the UAE-Pakistani Friendship Road, which has helped link the southern and northern areas of the Waziristan region. The 72-km road serves three major cities and 20 villages and facilitates the movement of people and goods.
In the health sector, ADFD administered an estimated Dh107 million Abu Dhabi government grant to develop two healthcare projects in Pakistan. In 2013, ADFD provided Dh94 million to construct the Emirates Hospital — an integrated speciality medical centre equipped with 1,000 beds.
Furthermore, in 2006, ADFD allocated Dh13 million to fit out the Shaikh Zayed Hospital in Lahore with modern and internationally standardised equipment.
ADFD’s contributions in the education sector include a Dh46 million grant earmarked for training colleges. This project led to the construction of three training colleges for individuals living in remote areas. These include Warsak College in the Khyber Pakhtunkhwa province, and Wana College and Spinkai Cadet College — both located in South Waziristan.
ADFD also allocated Dh7 million to fund expansion works at the Shaikh Zayed International Academy (SZIA).
In order to ensure an adequate and reliable power supply, ADFD provided a Dh66 million loan to rehabilitate the Tarbela Dam in 1981.
ADFD and the Government of Pakistan have enjoyed strong and long-standing ties dating back to 1981. The synergies between the two sides continue to drive sustainable socioeconomic development across key sectors that benefit the citizens of Pakistan.

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