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Development Aid: No Quick Fix

Reports Highlight the Complexities of Assistance and Trade

HONG KONG, DEC. 18, 2005 (Zenit) - How to help developing countries is once more in the headlines. Trade ministers from 149 countries met in Hong Kong this week to continue trade talks organized by the World Trade Organization. Negotiations in the so-called Doha round have been going on now for four years and have been deadlocked over the issues of agricultural subsidies, and reforms in the area of services and industrial goods, the Wall Street Journal reported Monday.

A number of recent reports on trade and aid point to the complex issues involved in stimulating economic growth in developing countries. On Dec. 8 the World Bank released a report titled, "Poverty and the WTO -- Impacts of the Doha Development Agenda."

An "ambitious" agreement in the Doha round would reduce poverty, asserted the report's authors, L. Alan Winters, director of the World Bank's Research Group, and Thomas Hertel, professor of economics at Purdue University.

"International trade is arguably the most direct economic means by which rich countries influence poor countries," the report contends. The reforms proposed in the Doha round would have the greatest impact on prices and trade volumes for farm and food products, followed by textiles and clothing.

Brazil, the report calculates, could reduce poverty by 0.4% in the short term if the reforms are implemented, and 1.1% in the long term. China would also reduce poverty by 1.3% in the long term.

But other countries could suffer. Bangladesh, for example, a net importer of agricultural produce, would risk a 1.1% rise in poverty in the short term. But its poverty rate in the long run could fall more than 4.6%, the report estimates.

The improvements are not automatic, however. Governments need to improve infrastructure and reform domestic marketing institutions, in order to ensure that higher world prices are transmitted to rural areas. They also need to educate rural populations better, and help farmers benefit from new export opportunities.

Some progress has been made in these areas, the World Trade Organization reported Monday. In a press release the WTO noted that the amount of aid to help developing countries to participate more efficiently in international trade has increased by 50% since the Doha round commenced in November 2001.

What works, and doesn't

Another World Bank report, published Dec. 7, focused on difficulties in ensuring that aid programs achieve the desired result. In "Reaching the Poor: What Works, What Doesn't, and Why," the World Bank analyzed the gap between intentions and results in the area of health programs.

The study found that programs designed to reach poor people, often end up instead helping the better-off. The report found that in almost all of the more than 20 countries surveyed, the richest 20% of the population received more, or as much, of the government's subsidized maternal and child health-care services as the poorest 20%.

There were exceptions, however. In Mexico, for example, one program pays poor families for clinic and school attendance. The program has more than 20 million beneficiaries, and 80% of those receiving payments are in the population's poorest 40%. In Ghana and Zambia the distribution of treated bed nets, to combat malaria, has also had success in reaching the poorest sectors of the population.

But duplicating these good results is not easy, the report concluded. It said that there was no single method that can be easily introduced to deal with problems in different countries. Instead, the solution lies in adapting programs to the local characteristics.

How to help the poor was the subject of another publication issued in the week prior to the Hong Kong meeting. "How to Make Poverty History" was published by the International Institute for Environment and Development (IIED), a non-governmental organization based in London.

The report was skeptical about publicity given to big international aid agreements. "The reality is often less magnanimous," the foreword commented, "with the same money being pledged away several times, and recycled from one context to another."

The report's chapter on Africa mentioned points that were similar to the conclusions reached in the World Bank study on reaching the poor. One of the greatest failings in development assistance, noted the IIED, is the lack of support for local organizations. "Only a very small proportion of official development assistance goes to what poor groups identify as their priorities," the report commented.

The study stressed the need to concentrate on a few fundamental priorities, such as the provision of services in the area of good-quality schools, health care and the provision of water and sanitation. The publication also ...

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