Making Globalisation Work for the Poor?

The publications discussed in this article can through the links below:

Eliminating World Poverty: A Challenge for the 21st Century – White Paper on International Development, November 1997

Eliminating World Poverty – Making Globalisation Work for the Poor – White Paper on International Development, December 2000

A summary from Paul Mosley’s article discussing the two publications in New Political Economy, Vol. 6, No. 3, 2001

A response to the two white papers addressing world poverty following the creation of the Department for International Development in 1997.

Labour has always highlighted the difference in levels of overseas development assistance between them and the Conservatives. Although under 1% of government spending, it is second only to the military budget in international expenses. The aid climate has changed; it is no longer feasible to give aid because it is right, but it needs to make an impact on the ground to warrant the transaction. Until now there has been little correlation between aid flows and economic growth. Conditionality became a norm in the 1980’s. The World Bank’s World Development Report – Poverty (1990) brought a shift in focus from economic growth to poverty reduction. These White Papers adapted the department to the changes being witnessed in the developing world.

The DFID’s first White Paper, Eliminating World Poverty: A Challenge for the 21st Century (November 1997) was the first formal statement on overseas development from the British government in 20 years. The most significant parts of the report where:

  • Aid would increase in turn with government spending targets
  • Support for the OECD’s International Development Targets of 1996 and in particular, halving the amount of people living in extreme poverty by 2015.
  • Commitment to ethical trade and labour practices
  • A two tier system for receiving aid instead of conditionality. Some would receive basic humanitarian aid and social sector support but only countries that had made the transition to approved development policy and democratic forms of governance would receive enhanced assistance such as debt relief.
  • Privatisation of the DFID’s private-sector lending agency the Commonwealth Development Corporation.
  • Commitment to involving the public in development – the publication was available in a glossy package in supermarkets for a while.

The second White Paper of 200 was titled Making Globalisation Work for the Poor. A number of themes are repeated from the first paper. The government ‘will support continuing reductions in barriers to trade… and an open rules-based international trading system, and work to promote equitable trade rule and an effective voice for developing countries’. There is a commitment to eradicate corruption which seriously hinders development, as well as a acknowledgement of the importance of the roles of both the IMF and World Bank. The overarching vision is that global co-operation can steer global capitalism to work in the interests of the poor. Will this work? In some countries, yes, e.g.Botswana &Uganda. But what about in the Bihar state in India, or DRC, or Sudan?

This brings us to the criticism of the White Paper. It has an uncompromising pro-liberalisation stance that has brought the DFID into conflict with various NGOs. It is quite clear from many of the greatest development successes of the past 30 years (the Chinese Green Revolution & the South Korean agricultural and industrial revolutions) have been achieved by regimes that were neither liberal in an economic or political sense. The second criticism is that the paper is merely facilitative and not interventionist, marking a stark difference between the last Labour government’s development policy which asked who the poorest people were and then invested resources into designing projects to remove them from this desperate position. This publication supports various policies (e.g. good governance, strong health and education systems) in wording but does very little to fully back these and seems to assume that the work of globalisation will do exactly this.

The report confronts a central dilemma – it does not have control over the forces of globalisation that is espouses so highly. As we have seen aid flows, conditionality and opportunities to influence the WTO are generally weak instruments for change. The paper says very little about those who have been left behind by globalisation. The DFID should maintain its focus on supply side factors which can generate development if conditions are favourable but additionally aim to improve demand.