International Development Ethics Tweet

First Steps
by Ian Reynolds

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Written while a MPA student at George Mason University

Ethics in Public Administration - Summer 2013

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Introduction

Turn on the television in the late-night hours and you may very well see an advertisement urging you to donate some small amount to help children avoid starvation. The advertisement may also inform you that, “each year 18 million people die prematurely from poverty-related causes.”¹ Thankfully, many people actually do take the step of donating to help that poor emaciated child that you saw. Even if they refuse to donate, or are unable to, they likely pay taxes of some kind. In the US, between 1 and 1.5% of the US budget is allocated to foreign assistance of some kind.² This very small part of the taxes they pay, may very well go toward helping children just like the ones we've all seen on television. Our government does this for many reasons, but regardless of the motivation, helping those is need is a good thing, right? This paper will peel back the assumed morality of aid, and ask the question that every development professional should be asking themselves: Is international development aid ethical?

Respected economists such as Dambisa Moyo aren't so sure. A Zambian born economist, Dambisa has been making the rounds on CNN, The BBC, Bloomberg, CNBC and many others promoting her new book Dead Aid. Her prescription for helping Africa is counter-intuitive, stop all aid to Africa.³ She describes aid, particularly that which is distributed directly to governments in Africa, is not only ineffective, it is counter-productive and thus, immoral. She goes on to say that aid has never worked and never will. She attaches various caveats to this, but we will address those later.

Responding to this concern of development effectiveness is no small task. The primary issue facing anyone attempting to do so, is disagreement over underlying definitions. The term “development” is surprisingly complex, as there are economic, political, and normative connotations to the term and little agreement on what constitutes “good development.” To assist in the task of identifying a workable definition, we will ask a seemingly simple question, “What is the relationship between economic growth and development?”

Clarifying the difference between these concepts will allow us to focus on normative development. Once that is accomplished, we can construct an ethical framework, and use it to answer; “Should development funds be invested in projects that match the values of the donor country, or the receiving country?” Upon addressing these questions, we will utilize recent revelations in development ethics to clearly define “good” and “bad” development, and thus effectively answer concerns regarding the morality of International Development.

A Case Study in Development Failure: Growth and Negative Externalities

When an economist speaks about the state of a national economy, the term GDP (Gross Domestic Product), GNP (Gross National Product), or GNI (Gross National Income) will likely be one of the first words out of their mouth. While sophisticated economists use many metrics to determine the state of a national economy, often times GDP, GNP and GNI will be used as the primary method of understanding current economic conditions. While each of these metrics differ in small ways from each-other, they all are used as important determinants to decide if and how much aid will be distributed to a country.

Looking at just two major aid providers, The World Bank and USAID, we see how critical these metrics have become. The World Bank classifies countries based on GNI; loan and aid programs that they are eligible for will be determined by that classification.⁴ USAID utilizes a number of metrics to determine 'Country Progress', but GDP is one of the core components to how they classify economic progress.⁵ The subtext to the use of this metric, is that development agencies are encouraging foreign governments to focus their economic policies on GDP, GNP, and GNI growth. The thinking is, macro economic growth translates into expanded opportunities for the individual. Unfortunately, as Lorenzo Fioramonti describes in Gross Domestic Problem, utilizing this statistic to extrapolate information far outside of it's intended scope (such as normative developmental progress) is not only short-sighted, it is reckless.

In 1956 Simon Kuznets, the creator of GNP and winner of the 1971 Nobel prize in economics, took it upon himself to calculate the GNP of all countries, dating way back to 1841.⁶ Shortly after performing this task however, he began to question the applicability of his statistic to developing economies. He cited concerns that included: “an accretion of luxury expenses at the top of the income scale of a nation would offset a drop of purchasing power at the bottom.”⁷ One could argue that this failing of GNP and GDP applies to developed economies as well, as only focusing on gross income, instead of income distribution has dangerous implications. Few people would argue the rich getting richer, and the poor getting poorer would constitute "good growth," yet you can have robust GDP growth in this very situation.

Kutznets' also observed that less developed economies function differently, due to the availability of free (common) goods.⁸ In addition, “gross product is not fully adjusted for the value of commodities consumed.”⁹ Kuznets concerns were not related to the environment. In the 1930's, the environment was still seen as a limitless resource to tap. His concern was merely one of accuracy, but it translates to a far more pressing concern in modern day. By not accounting for commodities consumed, GNP, GDP, and GNI provide an easy avenue toward boosting growth, the destruction of a nations ecosystem. Increased coal usage in power generation boosts "gross" economic growth. Thus an economist working out of a developing economy doesn't have to look very hard to find the easiest way to improve their economic output and garner rewards from aid institutions.

Kuznets' would summarize his concerns by saying that “the welfare of a nation can scarcely be inferred from a measure of national income” and that “policymakers should distinguish between the mere 'quantity' of economic growth and its actual 'quality' in order to clarify what type of growth they want to achieve and 'for what'.”¹⁰ The fact that the creator of this highly used statistic was warning against it's use as a means of evaluating progress, should give any international development practitioner pause. Flawed economic methodologies will result in flawed economic incentives, and there-by undesired economic consequences. If one desires evidence of this, we need only look at history.

Within the international development space there are numerous institutions providing aid. From a US perspective, funds for development assistance are funneled to developing countries via bilateral funding institutions such as USAID, The Millennium Challenge Corporation, The US Institute of Peace, and many others. These are all part of the US Government, and thus funded by the American taxpayer. Large Non-Governmental organizations such as World Vision, The Gates Foundation and Catholic Charities are also big players in this space. Finally, perhaps the best known aid providers are multilateral institutions such as, The World Bank, The International Monetary Fund, The Asia Development Bank, The Africa Development Bank, The United Nations Development Program, and numerous others. The multilateral institutions are interesting in that, while funded partially by the US government, they are not overseen by the US government. One would hope that this translates into a more open-minded perspective on development objectives. Unfortunately, if we look at the case of The IMF Structural Adjustment Program imposed on Jamaica in the late 1970's, we see a perfect example of short-term economic output being confused with long-term economic growth and “development”.

As part of a documentary on the result of World Bank and IMF interventions in Jamaica, former prime minister, Michael Manley, clearly describes how long-term growth and poverty reduction were not the objective. On explaining the situation facing Jamaica in the late 70's he details a meeting with the IMF,

What you really need, is to sit down with them and say look, can I workout a five-year program? And in the meantime, I'm strapped for cash, so can you up-front help me out of the cash bind and put it in the context of a long-term development plan. And they say no, long-term development is your problem.¹¹

At which time, the IMF described the structural adjustment program they had in mind, to which the then prime minister replied, “If I do it that way, when I've finished repaying you, I'm going to be in the bind all over! This can't solve my problem. And they say 'Not our problem.'”¹² The former prime minister's concerns turned out to be accurate. Shortly after receiving the funds, trade policy adjustments were put in place, such as, removing the protected banana marketplace Jamaica enjoyed with the United Kingdom, and the removal of dairy trade barriers. These reforms resulted in swift economic collapse of the nations agriculture industry.¹³

The exchange with the IMF that Manley describes, flies in the face of everything that IMF literature states as the purpose of the Structural Adjustment Program. One review of the program responds to criticism with the comment, “The IMF supports prudent macroeconomic policies because we want to promote long-term growth, not in spite of it.”¹⁴ Notice that the IMF's focus is on “long-term growth”. Christine Lagarde, the current IMF head, is quoted as saying

1) Economic stability is essential for poverty reduction.

2) Growth and equity are mutually reinforcing, and necessary for sustainability.

3) Fiscal policies can improve equity and lower poverty.¹⁵

The IMF strongly believes that economic growth is causal with poverty reduction. Instead of focusing on the highly complex concept of poverty, they focus on the concrete problem of faltering economies.

Macro-economic data is only one component to the entire picture of how a country is developing however, and utilizing figures such as GDP is counter-productive. It provides information that is inaccurate and unhelpful for developing nations. Yet despite the calls of the creator of GNP to not use his statistic in the developing context, the IMF, The World Bank, USAID and many other institutions use it extensively. Not only is the metric utilized outside of it's intended scope, the broader objective of economic growth often unseated the original objective of poverty reduction.

This is not to say that these institutions haven't learned from past mistakes. Numerous papers have come out of the IMF and World Bank admitting past failures, and warn as to the consequences of overly aggressive free-market reforms. The institutions have also enacted many reforms to try and prevent future such calamities. Assigning blame for a specific incident isn't the purpose of examining these cases though. What is important to learn from our development past, is how these institutions arrived at their prescriptions for the nation receiving funds. The World Bank and IMF assumed that economic growth would result in development because of a strict free-market ideology that blinded them to other potential outcomes. These blind spots could have been prevented if development programs were designed in consultation with loan / aid recipients, instead of simply acting paternally and believing that they knew what was best for a country they may never have even visited. An objective examination of history shows us that while long-term economic growth is certainly a component to a countries improvement, one does not necessitate the other. Additionally, short-term growth that is followed by long-term economic decline is a detriment to poverty reduction efforts.

Defining Development Properly: Looking Beyond Ideology

The incident involving Jamaica and The Structural Adjustment Program is one of many failures in the development field. The policies that were imposed on Jamaica resulted in both macro-economic decline AND an increase in poverty. Besides ideology, it's safe to say that both institutions never bothered to paint a picture as to what good development in Jamaica would constitute. Is good development simply more consumers in the marketplace? Perhaps an increase in literacy rates? What about infant mortality rates? These are simply a few of the statistics that an individual might associate with development, but which one actually constitutes good development is not as clear. Every individual will prioritize these objectives differently, and an individual living in the country requiring assistance, will have a very different perspective from an individual sitting in a Washington, DC AID office.

One source for resolving this conflict is the International Development Ethics field. While a small group of moral philosophers populate this field, their findings reveal the underlying cause of numerous developmental failures and provides means to resolve them. Ethicists in this field agree that development can be used both in a descriptive and normative sense. The two concepts are separate, and assuming that they are related is very dangerous, “what is frequently called 'development' – for instance, economic growth – has created as many problems as it has solved.”¹⁶ The aforementioned incident with Jamaica exemplifies this observation.

Normative Development: Resolving the Confusion

If macro economic growth is not the same as development, what is? Amatya Sen offers us an excellent starting point to resolving this conflict, with an understanding of development that transcends petty arguments, as summarized by David A. Crocker,

Development should be understood ultimately not as economic growth, industrialization, or modernization, which are at best means for the expansion of people's valuable capabilities and functions'. The valued functionings can vary from such elementary ones as avoiding mortality or preventable morbidity, or being sheltered, clothed, and nourished, to such complex achievements as taking part in the life of the community, having a joyful and stimulating life, or attaining self-respect and the respect of others.¹⁷

In just two sentences Sen has not only identified the source of conflict over development, as a confusion of ends with means, he has also laid the foundation to an ethical framework that can be used to guide International Development policy at every level.

David A. Crocker synthesizes an ethical framework for International Development from the writings of Sen and many others. This framework starts by tossing out the cookie-cutter approach. The best means to develop a country will depend on that countries history, social structure, and their relationship to the global economy.¹⁸ The ethicists that Crocker draws upon seem to agree that some combination of capabilities and agency should be the basis by which development policy is created.

Crocker uses the term capabilities extensively in his framework, to which he is referring to the ability of citizens to perform certain tasks. Is an individual in Rwanda capable of feeding themselves? Does a Russian have some say in the governmental policies that impact them? Questions such as these move us past arbitrary poverty benchmarks, and ask the more fundamental question, “What can I do, that you can not?” and perhaps more importantly, “What is preventing you from doing what I can do?” Sometimes capabilities are so basic, as to be impossible for international development to remedy. For example, if a citizen of Laos lost their legs due to an UXO (Unexploded Ordinance) left over from the Vietnam war, that person can no longer walk. No amount of guilt over the reason for that loss of mobility, is going to change the fact that current technology prevents those legs from being returned to the individual. What if we ask, “Do individuals with some loss of movement have the means by which they can care for themselves and act independently?” When asking this question, means to fulfill this capability, such as wheelchair provision and building accessibility may enter the development policy agenda.

Capabilities are fairly easy to conceptualize, but we are left wondering where to start in selecting a capability of concern. There are many differences in capabilities from one individual to the next, and from one country context to another. The term agency which is used repeatedly by the ethicists that Crocker draws upon, provides us an anchor to ground us. This term is best summed up as follows, “[Collective agency] means that citizens acting in concert with and through their elected representatives are responsible for the development of their own community, region and country.”¹⁹ Thus, while enhancing capabilities is the objective of development, agency provides us a guiding ethos to our interventions.

We may utilize the concept of collective agency to probe prospective development interventions for their morality. For example, if the US government gives millions in US crop surpluses to a country on the verge of famine, does this integrate the concepts of capabilities and agency? One could certainly argue that it does provide a means to improve the capabilities of people living in the nation experiencing a food crisis. Obtaining sufficient caloric content to live is certainly a capability. Does this intervention provide the individual with any agency though? It most certainly does not provide the individual with any control of their own development or community. Instead it treats recipients as children and breeds dependence on the aid community. This leaves us with a dilemma. Do we let people starve because we are impairing their collective agency? Thankfully there are usually many methods to approaching a problem, and direct transfer of agricultural commodities is only one means. Other means of assisting people in need will be examined later, but let's return to a more basic question. Should development funds be invested in projects that match the values of the donor country, or the receiving country?

International Development Project Creation: Triage In a Sea of Inequity

The capability and agency framework provides us with concrete means to tackle tasks such as, deciding what countries to provide aid to, what projects are launched, and whose ethics should guide the planning of those projects. In an ideal world, aid would be distributed to countries based on a balance of which ones needed it the most and which ones could best utilize it to improve their collective agency. Aid providers would then target work areas which recipient county citizens request assistance with. Some example areas would include, malaria prevention, HIV treatment, civil society strengthening, improving transparency and reducing corruption, just to name a few. The reality of work area identification is that large bilateral and multilateral institutions tend to come up with ideas on their own, then present those ideas to country representatives. This method is extremely flawed as it puts the recipient nations' government in the positions of fearing to disagree, lest the donor agency just say “never-mind.” As far as the recipient nation is concerned, the list shown to them may not be an ideal list, but flawed help is better than no help.

A better way to determine aid work areas is through direct consultation with communities on-the-ground. Regardless of what objectives are selected through this process, an aid provider has already achieved a great deal, simply by shaping policy in this democratic manner. This is because for an individual to exhibit agency they must,

1) Decide for herself (rather than someone or something else forcing the decision) to do X

2) Base her decisions on reasons, such as the pursuit of goals

3) Perform or has a role in performing X

4) Thereby brings about (or contributes to the bringing about of) change in the world.²⁰

By generating objectives based on the areas that individuals living in the nation view as most problematic, you also enlist these individuals in the fulfilling of their objectives. Instead of passive recipients, they become active participants. Once general objectives are defined, again aid providers should hit the ground running, working with recipient nation NGOs, members of government and community groups, to start brainstorming some project ideas within the overarching objectives.

One weakness with this approach is that it involves additional time, and up-front expense. USAID and other aid agencies operate on tight time-lines, and once funds are established to assist a nation, there is a great deal of pressure to spend it as quickly as possible. Failing to do so could result in accusations that the practitioners are sitting on their hands idly, wasting time. Unfortunately, this issue exists as a result of previous aid projects being initiated rapidly with no recipient consultation, thus funders have come to expect immediate turn-around. This problem can't be overcome overnight, but gradually introducing more time for planning will result in it becoming the “norm” of development project generation. Generating aid projects based purely on the ethical framework of donor nations is patently foolish. However ignoring lessons learned from previous experiences is also short-sighted, so adopting recipient nation objectives without modification may also be impossible. Through cooperation however, objectives and projects that match both the needs and ethical frameworks of the nations involved is possible.

Where we Went Wrong and How To Fix it

Aid is neither good or bad in a bubble. The consequences of it's provision may be positive or negative depending on how it is structured. Economists such as Dambisa Moyo are right to point to the numerous failures of aid as a reason to question how it is distributed. However, her assertion that aid has never done any good is simply false. She tries to limit her extreme argument by saying that she is only referring to direct government transfers, but that argument too fails. South Korea stands as a shining example of what is possible with foreign aid. It utilized development assistance to conquer domestic problems, and now is a major aid provider.²¹ Extreme ideology, be it in the form of universal hatred of aid, or in universal support, is counter-productive. The starving child that you saw on television can be helped, but it must be done carefully.

Over time the aid industry has begun a slow crawl away from direct commodity provision, toward local and regional asset procurement. This involves purchasing local food for citizens in the midst of a famine, resulting in increased efficiencies and better (but not great) agency enhancement. A far better method of intervention is through information exchange on better farming techniques, irrigation, etc. Projects that utilize this means not only enhance the capabilities of the recipient, they empower the recipient to feed themselves in the future, build a business, and hopefully improve their nation. Yet, in the midst of the 2003 Ethiopia famine, “USAID spent $500 million on emergency food aid, compared with $50 million for development programming in agriculture, health, nutrition, water, and sanitation put together.”²²

International Development operates in a highly political context. Even if the aid is originating from a non-profit institution, country selection, objective declaration and project planning are all tied up in what the donors perceived wants are. Some organizations and agencies have more freedom than others in how they act on-the-ground, but those that lack the freedom to do development right, providing capabilities and agency to recipients, should question the viability of their current structure. International Development is a macro level intervention on the future course of an entire nations economic, social, political and even moral development. It is no small matter, and should be undertaken with the utmost care. If projects are designed without consultation of the people who will be participating in the program, we risk more than just failure.

The Food For Peace Program, initiated by the US Agriculture department utilized direct transfer of US crop surpluses to nations experiencing food crisis. As a result of the program being designed to aid US agriculture, food would arrive late and spoiled. It cratered local food prices, decimated entire agricultural markets and resulted in the deaths of untold numbers of people. The evidence of this is hidden between the lines in a report issued by the GAO:

We found that international in-kind donation took the longest, averaging 147 days. Local and regional procurements took on average 35 and 41 days, shortening the delivery time from international donations by 112 days and 106 days, respectively.²³

As a result of designing a program with US farmers in mind, not the needs of starving citizens and their collective agency, we provided food aid over 100 days late. How many people died waiting for food in that time?

If such horrible atrocities occur under the umbrella of International Development, our original question as to it's morality is a fair one. When one understands the ethical framework of capabilities and agency that Crocker lays out however, we can come to a simple conclusion, aid can be ethical, but it certainly isn't inherently so. If Aid projects are entered into with development ethics integrated, positive outcomes for the recipient nation are still not guaranteed, but the chances are dramatically enhanced. The aid industry has spent far too many years acting paternally, and only just now is starting to wake up. If practitioners in International Development want improved outcomes, and ultimately increased funding, they need to actually perform good, ie ethical development. The development ethics framework described by Crocker provides us a starting point, the peoples of the developing world, will fill in the rest.