WORLD AID THE CHOICE BETWEEN FOOD AND FACTORIES

Press, Volume CV, Issue 31003, 8 March 1966, Page 16

WORLD AID THE CHOICE BETWEEN FOOD AND FACTORIES

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“Lynccus”

” of the “Economist. "I

[From the "Economist” Intelligence Unit J

The reaction of the developed countries to the Indian famine is not simply a heartwarming response to a nation in great distress; it is also sadly symbolic of the changing character of the world aid effort.

The western world, or more precisely the United States, is eagerly stepping into the breach to provide emergency food supplies. President Johnson's foreign aid message to Congress in February stressed other specific subjects for practical direct assistance: food production, education, health. The emphasis of American aid is moving towards these so-called practical objectives. The danger is that this shift, justifiable though it may be, is also a cloak for a reduction in the total aid effort. Changed Times This is a far cry from the old cold war days of six or seven years ago, the happy time (for aid recipients) when East and West were both anxiously and expensivelyseeking the favours of poorer, newly-emergent nations. But since then not only have relations between the two power blocs been erratically but steadily on the mend, wealthier countries have also discovered that no amount of aid can secure the loyalty of a developing country. Indeed it might simply be used as a bargaining counter in relations with the other side. At the same time, in spite of its unprecedented burst of prosperity, the United States has become increasingly hesitant about its foreign aid, as more and more American voices have been raised to ask whether the money is ’-eally being usefully spent Britain meanwhile has been beset with an apparently permanent economic crisis. Only France now gives anything like 1 per cent of its national income for foreign aid. And the total of the West’s aid effort to the developing countries has remained unchanged since 1961, desnite the dimin!ehs«g purchasing power of 'r-id-’n- r>’-rp.nr-ies. and decnite the West’s rising prosneritv and the poorer coun tries’ growing poverty. Wasteful Spending So the old idea—that developing countries ought to industrialise as quickly as possible, with suitable help from their richer friends —seems to be giving way to the suggestion. sometimes simply implied, that the developing countries ought to concentrate on their agricultural development. They are, after all. on the brink of starvation. Food should come before factories. Admittedly far too much aid in the last few years has been wastefully spent. Too much has gone in flamboyant, grandiose—or just prestige—-

projects. Too little attention has been paid to economic viability. So perhaps some degree of “supervision" had to come anyway. But this is no reason for the wealthier countries to cut down their aid efforts in total. Nor does it constitute an argument for telling poorer countries to forget the dreanis of industrial plenty with which some of their leaders have been beguiling their expectant populations, ever since it was discovered that political independence did not miraculously conjure up a state of instant affluence. A False Choice What, after all, have the richer countries been doing to foster the infant export industries of the developing countries? What would they do if new export industries emerged to threaten seriously the vested interest of nowsnug, high-cost western manufacturing industry? History provides the answers. Nor will heavy investment of scarce skills and capital in agriculture ever provide the basis

for a take-off into self-sustain-ing economic growth, although it may meet the immediate problem of food shortages.

The rich should return to their original purpose—to get the poor industrialised. The choice between food and factories is a false one. Famine relief should not be allowed to distract attention from the longer term aims. The lesson to be learnt from the last ten frustrating years is not the futility of general aid-giving but the pointlessness of indiscriminate aid for thinly disguised political purposes. This does not mean Americans should move in to run the economies of recipient countries. It does mean though that a higher degree of accountability ought to be demanded. The ideal intermediaries for this would be the new regional development banks that have emerged. Independent of both donors and recipients, though run by groups of developing countries, they are ideally placed to parcel out aid between the members of the bank on a basis of economic criteria alone.