By Ben Townsend
The hyper-integration of trade is unstoppable. Markets are endlessly entangling themselves with each other and every existing or up-and-coming global power has a stake in somebody else, fighting for financial influence across the planet. The world has grown smaller in recent decades, yet the economy has increased in size and complexity, binding countries together in a way that excludes all those that were left behind, even if stalled by a decade or two.
The consequences for the outsiders of this global market community, often afflicted by corruption, poverty, and destabilisation, encourage states to send humanitarian aid overseas from a slice of their annual income, the majority emanating from the West and Japan. However, charity, more often than not, ensures that the poor stay poor, class divides remain fractured and developing countries stay in development.
(This excludes those countries suffering from war or the people from displacement, where aid is a necessary and an essential lifeline. Humanitarian aid as a solution to poverty and/or to prop up underperforming countries is the centre of criticism here.)
Aid, in both its financial and physical form, is barely effective at the best of times. Donated dollar bills often fall into the hands of local governments and politicians, spent on prolonging the initial problem and allowing barely a drop to trickle down to where it’s required. Food, medicine, and physical supplies regularly follow the same fate. However, the issue is not in the sentiment, but in the reliance on this system. It would suffice if our ultimate goal was to keep the hearts of the destitute just about beating, in utter reliance of their charitable and powerful overlords. Yet, it is not. Our goals should be to boost economic development, employ citizens, create and expand middle classes and pull up seats in the world order for those countries that have fallen so far behind, mercilessly abandoned by the states hanging on tightly enough to the rapidly advancing globalisation train.
Perhaps this is ambitious, yet arguably no more so than expecting developing countries to undergo economic expansion from free bags of rice.
At least half of the humanitarian aid budget should be replaced by creating new markets. In order for these to work, investment needs to be injected into agricultural technology, infrastructure development, and job-creation, alongside stronger cooperation with respective governments to tackle issues on the international stage. For example, if better guarantees can be secured from developing countries to insure foreign corporations and their respective establishments against the risks that they fear setting up on foreign turf, many more would flock to employ the local population.
Whilst this can arrive as a result of the search for cheap labour, it has nonetheless been the economic saving grace for many previously agricultural states, such as China and Vietnam, to name just a few.
Any investor would tell you that putting your money where it can grow, rather throwing it away into an ever-hungry black hole, would be a much more sensible choice than our current tact. Expenses in administration and the slight deviation in attention from our own fast-paced worldwide transactions might cost the West in the short term, but future alliances with developing countries that have finally accessed booming markets are sure to fill up the worldwide kitty. By creating a market bubble, one through which developing countries can trade easily, it would generate growth on their scale, allowing them to mature economically and industrialise efficiently. A major problem at the moment is that developing and affluent countries alike worry about making more risky investments that could generate thriving long term improvements in vital sectors such as transport and power, reverting to safer and less enthusiastic options instead.
In India, over 50 percent of the population works in agriculture, something that is not likely to change any time soon. The nation’s speciality and biggest income earner is IT services, a niche line of work that requires fewer employees every year. Harsh regulation over land ownership rights and a lack of quality farming tools or internal transport and exporting conditions prevents India from fully tapping into the global market. India’s government, compared to many, don’t represent the worst example of corruption, and they have the one of the biggest up-and-coming economies, yet, unlike China, whose success story continues to shock the world, India has the method, but not the means.
This could easily be changed.
It is all too often that either through a lack of infrastructure, regulation, or suitable work, swathes of a country’s population remain destitute, often reduced to working in agriculture while their country holds so much potential, just like India. As the World Economic Forum previously published, “aid alone will not close the $1.5 trillion annual gap in infrastructure investment in developing countries.”
Of course, efforts to support developing countries outside of humanitarian aid are underway, employed by worldwide bodies such as the UN and the European Union, albeit poorly. West Africa, for example, recently denied the EU’s offer of an Economic Partnership Agreement (EPA). The EU attempted to introduce Nigeria into the world market, yet by doing so, would actually have disadvantaged and alienated local businesses and industries (which make up most of the country), leaving them no way of competing with global players. One EU regulation dictates that raw food can be traded freely, but processed goods come with a tariff, sometimes as high as 30%. How is this intended to aid the industrialisation of developing countries? Aid is good, but allowing an energetic and willing economy to flourish is better.
Powerful global players attract the wealth that international trade brings and totally dominate their lesser counterparts. Germany is one such example, often making more money from coffee exports than the whole of Africa combined.
Monopolies, despite their best intentions, are still monopolies.
In November 2018, 19 of the United Nations member states pledged just over $400 million in humanitarian development funds, which when considered constitutes a measly amount, especially when compared to the $1 billion that was pledged for tackling climate change throughout developing countries in October. Even the climate change fund declined after richer countries started backtracking on their commitments and began squabbling about the financial control of international banks. Regardless, efforts to tackle environmental problems in developing countries are useless unless the infrastructures and economies are functioning properly.
Perhaps the most ambitious of recent humanitarian investment programmes, however, is currently underway. The World Bank Group has a branch, aptly named the International Development Association (IDA), which recently pledged, with the help of a coalition of countries, a grand $75 billion into the effort of creating sustainable and simplified markets for developing countries and dismantling the various existing barriers to growth. This is a good step in the direction of making a real difference, rather than a perceived one.
It’s understandable that many developed countries have their own problems, and these subsequently need solving. Current arguments in the UK state that we give too much away to help others in the form of our foreign aid budget, especially when poverty is a such a big issue in our own nation. However, by bringing developing countries around the world into our economic scope, successfully dishing out gold tickets for the complex yet exciting journey of globalisation, we will not only improve the lives of countless people, but also leave both parties far more prosperous as a result.
As is common with all types of charity, the time and effort you put in are more valuable and rewarding than your money.