1. FOREIGN AID, FOREIGN POLICY AND DEVELOPMENT MANAGEMENT Louis A. Picard PIA 2096/PIA 2490 Week Seven

2. Quote “[T]he syllogism is a reliable form of logic.”[i][i] [i] Roland Egger, University of Virginia quoted in Harlan Cleveland, Gerard J. Mangone, John Clarke Adams, The Overseas Americans (New York: McGraw- Hill, 1960), p. 41. [i]

3. Foreign Aid Course From Basic Needs to Structural Adjustment

4. The Models Winning Hearts and Minds Villagization- Rural Community Development Strategies of Community Develop and capacity building have their origins in 1950s Vietnam

5. The Best Focus on Community Development Rural Industrialization and (later) micro- credit Foreign Aid Field Officers- on the ground Basic Needs

6. BASIC NEEDS 1968- Robert McNamara appointed President of the World Bank Announces a shift from Growth strategy to Basic Needs Part of Debate about Equity

7. Integrated Rural Development Combines growth and production with social services Area wide Approach providing seeds, fertilizer and equipment With social services: schools, water, health service and community development at village level

8. The Problem: Basic Needs The Problem: Presages Economic Collapse Overview Of Financial and Budgetary Management Systems in LDCs

9. Domestic Management Systems and International Influences Six historical periods of budgetary and fiscal management  Until the 1950s Recurrent budgets Law and order Colonial models Recurrent vs. Development budgets

10. Domestic Management Systems and International Influences Six historical periods of budgetary and fiscal management  Mid 1960s – 1970s Distribution and basic needs World Bank and poorest of the poor Heavy debts and deficit spending

11. Domestic Management Systems and International Influences Six historical periods of budgetary and fiscal management  Mid 1970s – 1980 (Planning vs. Budgets) Planning demanded by technical assistance Technical assistance both grants and loans (no private loans to Africa) Project planning "wins" over national planning and budgeting systems

12. Technical Assistance and Structural Adjustment

13. Overview The Problem of Debt Stabilization vs. Conditionality Public Sector Reform Policy Reform IMF vs. World Bank vs. Bilateral Donors vs. UNDP  Bridging Loans  Sectoral Loans and Grants  Project Grants  International Requirements vs. domestic political response

14. Domestic Management Systems and International Influences Six historical periods of budgetary and fiscal management  1980s Structural Adjustment—"non-budgetary" allocations vs. incremental budgeting Problem of debt Donor monies drive the system in the degenerated state

15. Current State of Financial Management IMF stabilization and trade liberalization  Currency reform, auctions and end of subsidies (urban privileges)  Market prices for agriculture  Deregulate the economy

16. State of Financial Management under SAPs Conditionality—World Bank, UNDP and the "Management" SAPs  Opposing views of many UNDP Representatives Role of the Resident and Country Plans  The receivership committee Resident Rep., World Bank Representative and the IMF delegate resident ambassadors  Stabilization and Conditionality Requirements Public Sector Reform

17. Current State of Financial Management Reality—the absence of recurrent budgets Activity (economy) driven by technical assistance projects the only game in town Bridging and sectoral loans and grants major source of international involvement

18. Current State of Financial Management Key Conditionality—Privatization of the economy  Divestiture  Contracting out  Liquidation  Sell off public private partnership shares

19. Current State of Financial Management Problem—Privatization of the bureaucracy  Cutback the civil service Infamous 19% first cut  Individuals work with investments and the service/commercial sector  Departments sell their services Statistics in Zaire/Congo

20. Current State of Financial Management Problem—Privatization of the bureaucracy  Sub-economic salaries Offices, houses and telephones—buying soap and selling chickens  International conditions for "good" bureaucrats World Bank in Uganda special salaries for those on contract with the project  Goal: Return to the recurrent budgeting process of 1950s

21. The Debate The primacy of the Nation-State: How sovereign?  Impact of trans-national actors  Issue of micro-states  Rational Actor model- public or social choice theory Collective choice is non-rational  The role of international regimes UN, World Bank, IMP, etc. New International Order (NIO)

22. Concepts and Terms: Review Neo-Orthodoxy Heterodoxy Stabilization Conditionality Public Sector Reform

23. Domestic Management Systems and International Influences Six historical periods of budgetary and fiscal management  1990s Collapse of the Soviet Union “Clash of civilizations”

24. Second World as New Debtors Chad vs. Russia  Transitional States  Rise of Asia and blocks  Crisis in Asia and the return to debt management

25. The Debate The Importance of the Market The end of the Command Economy? The concepts of market and productivity  International systemic hegemony and competition within international markets  Complementarity problem and origins of capital  Market failure?

26. The Debate The World Economic Regime  World Market: Only game in Town?  Questions of conflict: pluralist vs. hegemonic models in the post-war world  Economic change vs. political development Governance (democracy) a pre-requisite?  Impact of world economy on Domestic Economies

27. Development of Underdevelopment Changing Terms  Non-Western World  Developing areas or nations  Third World  Southern Tier States  LDCs  UDCs  Transitional States?

28. Foreign Aid vs. Technical Assistance Current bias to international trade Governance and Nation Building Back to the future  Get the LDC economy back to the 1950s Dependent development  Is it dependent and is it development?

29. Foreign Aid vs. Technical Assistance The utility of the rational actor model for foreign aid Impact of culture  Corruption, clan and ethnicity  Clans in Somalia and taxi drivers in Washington Impact of Intellectual systems and ideologies influences and beliefs Impact of Standard Operating Procedures

30. Divisions Within the World Before 1989  North: Industrialist/ Developed Agriculture Regime Type Democratic or not Socialist vs. Capitalist  South: LDC limited agric. Industry Underdeveloped Socialist or primitive capitalist Crony capitalism Patron-client

31. Divisions Within the World Today  Capitalist Developed States, North America, Parts of East Asia, Western Europe including settler states vs. “Everybody else”

32. Quote ‘AID!’ the farmer cried. Look at you.... He pointed, sweeping his finger from one charred remembrance of a home to another. ‘Here is your American AID!’ The farmer spat on the ground and walked away.[i][i] [i] Neil Sheehan, A Bright Shining Lie: John Paul Vann and America in Vietnam (New York: Random House, 1988), p. 562. [i]

33. Three Views of Foreign Aid- A Reminder 1. Part of Balance of Power- Carrot and Stick Approach (based on exchange Theory 2. Commercial Promotion: Focus on International Trade 3. Humanitarian Theory: Moral Imperative