pa761c.jpg Paul Lachine

Privatizing Development Aid

While eliminating extreme poverty is undoubtedly an urgent moral imperative, official development aid – which often suffers from poor allocation and inefficient delivery – may not be the best way to achieve it. Indeed, there is a strong case for involving the private sector in development assistance.

LONDON – Much has changed about official development assistance (ODA) over the last 50 years. Since it originated during the Cold War, when members of the OECD’s Development Assistance Committee spent roughly $60 billion annually (an amount that the Soviet Union undoubtedly matched), recipient countries have been called “backward,” “developing,” “southern,” and, lately, “emerging.”

Indeed, what defines a recipient country has increasingly been called into question in recent years. The United Kingdom is debating whether to discontinue aid to India, the third-largest recipient of capital inflows and the home of the UK’s largest manufacturing employer, the Tata Group. Likewise, eurozone countries have been looking to long-time aid recipient China, which holds $2.5 trillion of US government debt, to help them overcome their own debt crisis.

Furthermore, development itself has been redefined, with the policy focus shifting to good governance, transparency, accountability, and human rights. As a result, initiatives aimed at improving health, education, and gender equality have replaced large-scale construction projects.