D+C Development and Cooperation (No. 4, July/August 2001, p. 3)

Development Policy in a Globalised World

Dieter Brauer

In a comprehensive report covering the period from 1995 to 2000, the German government has drawn a balance of the challenges and achievements in North-South cooperation during the last five years. The report calls to mind the fundamental changes which have taken place in international relations with the end of the Cold War and the increasing speed of the globalisation process. Presenting the report to the press, the Minister for Economic Cooperation and Development, Heidemarie Wieczorek-Zeul, stressed that most problems of the developing countries were actually global challenges and had their causes in global problems. To help solving these problems was not only an ethical and moral responsibility, but also a contribution to securing our own future, she said.

The scare scenarios conjured up by the minister have been used before in trying to rally support for development assistance: the increasing gap between rich and poor in the world, the continuing population growth, the spread of HIV/AIDS, climate change, and the increasing scarcity of water supplies. All these threats were causes of social tensions, violent conflicts and forced population movements which could endanger peace and stability all over the world, she warned.

In the past, these warnings have hardly been heeded by politicians in the rich OECD countries: otherwise they would not have allowed development assistance to fall to its present low level of some 50 billion dollars a year. Germany, unfortunately, is no exception to this trend. Its aid budget has dropped continuously over the last decade, with more cuts envisaged by the tight-pursed Finance Minister Hans Eichel for the future. Nobody seriously believes anymore that the 0.7 per cent target agreed upon by the UN member states in 1970 will ever be reached. One consequence for development policy is that the government is looking out for new partners at home and in developing countries: cooperation with the private sector in socalled Public-Private-Partnerships (PPP) is one attempt to mobilise additional funds; cooperation with NGOs and civil society in the North and the South is another.

But the lack of adequate funds for development assistance is also having some beneficial effects: instead of concentrating on costly projects in developing countries which remain isolated islands of progress in a sea of underdevelopment, the emphasis is now on promoting the necessary structural changes which go at the roots of the problems. The German government aims at creating global structures which regulate issues like indebtedness, world trade, social standards and environmental norms and open the chance for sustainable development. In creating these global structures, the developing countries should participate on an equal footing with the industrial states. Structural reforms in the developing countries which strengthen democratic, human and gender rights are seen as a prerequisite for effective participation.

However, the industrial countries, too, must change if a more equitable and sustainable world order is to be created. The German government believes that the key lies with better coordination and coherence of all policies which affect the relationship between rich and poor countries. The losses due to trade barriers which obstruct imports from developing countries are higher than the total development assistance. The 49 Least Developed Countries alone could earn around 3 billion dollars more in foreign exchange if markets in the North were open to them. Another problem is that duties on processed goods from developing countries are higher than those on raw materials. This so-called tariff escalation keeps developing countries in permanent dependence on volatile raw material markets and dropping terms-of-trade. The situation is made worse by the fact that duties on trade among developing countries are even higher than in trade with the North so that the volume of this trade remains small. Regional cooperation and free trade arrangements are an urgent necessity to promote South-South trade.

A first step to remove trade barriers with the North was the initiative of the European Union in March this year to allow ‘Everything but Arms’ duty and quota free into the EU. But this initiative only applies to the 49 poorest countries - the LDCs - which have almost nothing to offer on the markets of the industrial countries, anyway. Moreover, the only products where they are real competitors in Europe - sugar, bananas and rice - are still subject to import quotas till the year 2006. The half-hearted EU initiative is yet another proof for the short-sightedness and selfishness of Europe’s agricultural policy. If agricultural subsidies were dropped and protectionism ended in Europe, this would do more to helping the countries of the South than even a substantial increase in traditional development assistance.

The example of agriculture shows that the German government is right when it stresses the importance of structural changes at home for a more equitable development. The Action Programme for Halving Poverty by 2015 just adopted by the cabinet in Berlin (see pp. 20 - 22) draws the right conclusions and interprets poverty reduction as a cross-cutting issue involving all ministries, not only the one for development. Trade, investments, agriculture, environment, security policy all have global ramifications. In a globalised world, development policy assumes a central place in governance, it is not just the affair of the aid ministry. This is often overlooked when one concentrates only on watching the diminishing funds in the budgets of development ministries.