Rethinking Development

By Luis Bravo
Luis Bravo is a sophomore at the University of Pennsylvania studying Sociology.

​Consistent with Trump’s campaign promise to place “America First,” the Office of Management and Budget released its plan to reduce international foreign assistance by 32%, amounting to roughly 13.5 billion dollars. When examined up close, these numbers are even more staggering, revealing a 25% reduction to the administration’s office for AIDS relief, a 68% loss in funding for the Bureau for Food Security, and a 94.5% cut for the State Department’s Bureau of Oceans and International Environmental and Scientific Affairs. [1] Though the United States has prided itself on being the largest provider of international aid, it has always lagged far behind in comparison to other industrialized nations relative to the national GDP. [2] These latest measures further display the United States’ commitment to distance itself from the international community, demonstrating a growing reluctance to continue sending aid to developing nations. In light of America’s isolationism, other countries such as China are stepping in to assume the void America is leaving behind.

Already, China has invested $354.4 billion dollars on foreign aid and reports praise its surprising effectiveness. [3] [4] The loss of American hegemony will not be a product of Trump’s instability or Congress’s inability to act, but rather the United States’ weakening commitment to providing foreign relief assistance. In order to reclaim its position on the World Stage, America must rethink international development.

America’s history with foreign aid can be traced back to World War I with the establishment of the Committee for Relief in Belgium. [5] Through the lend-lease programs, levels of foreign aid were increased during World War II to assist with the European Reconstruction efforts. By 1945, the International Monetary Fund (IMF) and the World Bank were established, the former specifically designed to assist developing nations. While the IMF and World Bank are both international organizations composed of numerous countries, voting is structured in such a way that grants the United States and the European Union significant influence on its decisions. [6] In 1961, the most recognized international aid program, the United States Agency for International Development (US-AID), was created to focus on long-term economic and social development in LDC countries. During this time, the IMF and World Bank also expanded their purview and began to address social issues in addition to economic development. [7]

The creation of all these agencies demonstrated the United States concern with the state of the international communities, but things started to change after the 1980’s with the Latin American debt crisis and the Asian Financial crisis. Disillusioned with the effectiveness of foreign assistance, the United States began to push for stronger loan conditionality agreements that required receiving countries to adopt deep neoliberal structural reforms. The success of these policies was short lived and resulted in anti-American sentiments throughout the developing community that persist to this day. Consequently, the G-77’s has been committed to blocking trade negotiations in the World Trade Organization (WTO) until more equitable trade policies are passed. [8] With the future of global economic progress at stake, the United States should adopt a proactive approach within the global community to redefine the relationship between developed and developing countries.

One of the first changes the United States could adopt is changing the paradigm of international development. “America First” is not synonymous with “America Alone”, as classical economic theory shows greater cooperation ultimately leads to cheaper goods for all consumers. [9] Globalization has already begun to change our economy by reducing the availability of manufacturing jobs. While there might be growing pains, domestic policies can be adopted to ease this transition and become a more prominent player on the world stage. Furthermore, international development is not a zero-sum game and should not be treated as such.

While there are winners and losers in economics, we can minimize disparities and work towards more responsible development. It is within the United States’ best interest to help build the economies of other countries especially developing nations because in the long run this will benefit American consumers. Such an approach requires us to shed traditional notions of hegemony. With an increasingly global economy, the hegemon isn’t the country with the greatest share of the economy, but rather the country that best facilitates trade conversations.

In terms of tangible policies, the United States should pass legislation that reflects its commitment to international development and ensures greater reciprocity with foreign governments. Though we should not encroach on the sovereignty of other nations, we should assist countries open to cooperation by sharing our expertise and playing a more active role in the implementation of projects. The effectiveness of fiscal assistance is limited by a country’s knowledge on how to best utilize it; greater oversight will ensure foreign aid is used efficiently and responsibly. That being said, we should also be mindful that economic development is not a one-size-fits-all solution. Neoliberal conditionality agreements have historically been tremendous failures. As we continue suggesting policy solutions to other countries and conditionality agreements for loans, we should better consider the political, economic, and social conditions of other nations and find suggestions tailored to their needs. This can best be resolved by increasing the amount of funding in the IMF and World Bank has available for research. [10]

The international economy has come a long way since the times of British imperial hegemony. Technological progress and developments such as the internet have created an interconnected world unlike any we’ve ever seen before. These changes require that we adopt new approaches to old problems, including international development. The only way we will be able to reduce friction with developing countries and continue to be a key player in the international community is by redefining our relationship to be much more cooperative. As the most powerful nation in the world, the United States has the ability to redefine the international economic order - we simply lack the willingness to do so. If we don’t step up, other countries will gladly take our place.

[1] Bryant Harris, Robbie Gramer, and Emily Tamkin, “The End of Foreign Aid As We Know It,” Foreign Policy (blog), accessed October 26, 2017, https://foreignpolicy.com/2017/04/24/u-s-agency-for-international-development-foreign-aid-state-department-trump-slash-foreign-funding/
[2] Poncie Rutsch, “Guess How Much Of Uncle Sam’s Money Goes To Foreign Aid. Guess Again!,” NPR.org, accessed October 26, 2017, http://www.npr.org/sections/goatsandsoda/2015/02/10/383875581/guess-how-much-of-uncle-sams-money-goes-to-foreign-aid-guess-again .
[3] Nyshka Chandran, “China Development Aid: How and Where Beijing Is Spending Its Cash,” accessed October 26, 2017, https://www.cnbc.com/2017/10/13/china-development-aid-how-and-where-beijing-is-spending-its-cash.html
[4] The Economist, “Despite Its Reputation, Chinese Aid Is Quite Effective,” The Economist, October 12, 2017, https://www.economist.com/news/china/21730195-new-study-reassesses-notion-china-bad-donor-despite-its-reputation-chinese-aid
[5] Fisher and Gay, “The Commission for Relief in Belgium,” 1929, http://net.lib.byu.edu/estu/wwi/comment/CRB/CRB1-4a.htm
[6] Thomas Oatley, International Political Economy, 5th edition (Boston: Longman, 2013).
[7] Ngaire Woods, “The Globalizers: The IMF, the World Bank, and Their Borrowers,” accessed October 26, 2017, https://www.amazon.com/Globalizers-World-Borrowers-Cornell-Studies/dp/0801474205.
[8] “Wrestling for Influence,” The Economist, July 3, 2008, http://www.economist.com/node/11664289
[9] Library of Economics and Liberty, “Comparative Advantage and the Benefits of Trade, College Economics Topics,” accessed October 26, 2017, http://www.econlib.org/library/Topics/College/comparativeadvantage.html.
[10] Rumu Sarkar, “International Development Law: Substantive Principles,” October 29, 2009, http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780195398281.001.0001/acprof-9780195398281-chapter-02.
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