Right Institution is the way forwrd for Global South to alleviate from Poverty

Politics of developing area has broadened my understanding about why global south are poor and global north are rich. The question that I used to asked myself was why global south countries are still wallowing in extreme poverty despite all the foreign assistance they received from global north countries? And the answer that I got from the class is aid without proper or right institution is meaningless.

From the class lectures, I got surprised about the vast economic disparity between US and Mexico despite they shared border and in a same geographical location. Acemoglu and Robinson (2012) elaborates on the historical analysis of the two countries made me understood that economic growth is easily to take place in places with right institutions which encourage individual participation, enforce property right and create equal opportunity which encourage investments in new technologies and skills are more conducive to economic growth than extractive institution which give opportunity to few people. This scenario divulged to me to understand that sharing border with rich country does not guarantee economic growth for the poor country if it does not have right institution in place.

One study that also fascinated me is Jeffery Sachs assertion that generous foreign aid and investment are the best medicine for poor country to get their foot on the ladder of development. He posits that poor countries are not poor because of bad governance but because they do not receive much aid from donor or rich countries. Then the question is why poor countries are still struggling with their economy despite the generous funds they have received from rich countries?

 William Easterly (2005) also opined that despite the good intension behind the loan for the structural adjustment program for global south countries to recover from its economic crisis, it couldn’t even achieve positive results for both donors and the recipient countries and this informed my decision that aid without right institution is meaningless.

Paul collier (2007) bottom billion also got me fascinated about how some government from poor countries divert humanitarian aid to build their military strength despite nation is suffering from hunger. This revelation shows that despite the effort by global north to help poor countries to alleviate from poverty, their government do not make good use of the help they offer meaning they lack institutions which will guide them to utilize and implement the offer very well or setting their priorities right.

Conclusion, the global north should teach global south the right institution which encourage quality education, innovation and patriotic citizens who will see corruption as a crime but not as a norm. Again, global south countries should realize that too much dependent on aid will blind them from seeing the way that will lead them to attain economic growth. And I end it by saying Global north should encourage global south countries to set up strong and right institution but not seeing foreign aid as the messiah for their alleviation from poverty.

‘’Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime’’.

Word Count # 515

Evaluation of Aid

 

Jeffery Sachs (2006) argue that poor countries are caught in ‘’poverty traps’’ and claims that rich countries and donor agents should increase aid flows for the poor countries and this will promote economic growth. But on the contrary  Easterly (2006)asserts that aid can work when there is evaluation mechanism which will facilitate the assistance from the rich country to the poor country. In the course of this point out measures that can enable donor and recipient to channel aid to the right use that is aid reaching the those who are in need for it but not for politicians or bureaucrats will just use it to enrich themselves. Easterly proposes some measures and is as follows.

 

 Information and feedback from the recipient countries. Aid agencies or bureaucrat must get in touch the recipient country and know what exactly they want and check whether the assistance is been implement well. This information will help donor countries and aid agencies to make right decisions about the disbursement of the assistance. This will put a check on both the bureaucrats and government to use the aid very well rather for their own gains. Without checks politicians will use it to pursue their own agenda in disbursement and allocation of foreign aid. They will use it for buying votes to stay in power because staying in power give them the opportunity to receive assistance from rich countries. This acts prevents the poor people who really the assistance to benefits from the projects

Again, incentives. Easterly argue that donor countries and agencies should motivate the bureaucrats who will go on grounds to monitor if the money is be put in right use and this monitoring will need an independence body which cannot be influence by bribe and due to that they must be financially equipped to do diligent work. Incentives will enable donor country or aid agencies to get informed whether financial assistance like medicine or provision of clean water has reached dying patient and community which lack treated water. will help aid staff to find things that work and this will enable agencies to start specializing much more in individual, monitoring tasks for which they can help account

Accountability. Most donors do not have accountability machinery to question recipient about how the  aid was used. This encourage both recipient government and bureaucrats to embezzle the money for their own use and create white elephant projects out of it.

In conclusion, lack of  feedback  from  recipient country , no incentives and no accountability of the disbursement of aid weakens the poor country to have fruitful implementation of foreign aid which is supposed to contribute to growth. I agree with Easterly that the above measures of evaluation will prevents corrupt government from using aid for their own gain rather than the benefits of those in need for aid .

Word 471

The ”Big Push” not a Solution for Economic Growth

                             The ‘’Big Push’’ not a Solution for Economic Growth

 

In the course to end poverty in developing countries Jeffery Sachs opined that the way out is foreign aid and investment and this foreign aid must come from developed countries. Sachs requested a donor plan which will facilitate the manner the donor will fulfilled their commitment and he pointed out to four aspect of aid flows and these were the magnitude of the aid, Aid must be long term enough to enable the recipient country to flow through ten- years program of scaling up, Aid must be predictable enough, and Aid must support the MDG-based poverty reduction strategy and specifically the investment plan, rather than the pet projects of the aid agencies.

 Jeffery Sachs,( 2006) poor countries are caught in poverty traps and out of it they will need a Big Push to come out of it and the Big Push involving foreign aid and investment. Sachs argue that poor countries are poor not because they are lazy or their government are corrupt but rather they faced structural challenges that keep them from getting their foot on the ladder of development, to investment in people and in infrastructural will give impoverished communities around the world , both rural and urban. He portrays aid as the necessary catalyst for investment that would in turn lead to growth and presumably initialize an upward path to economic development. In my opinion Sachs theory of big Push might not be the best solution to deliver poor countries from poverty because it has negative implication which will in the long run contribute to their slow movement of economic growth. Some of the challenges are as follows.

it will increase dependency. The receipt countries become more dependent on the donor country or agent and this makes them lose their influence. They will always ask for more. Again, the aid will not encourage some of the political leaders to do much about their economy but rather put their economy in shambles because they know donor countries or agencies will always come to their aid to recover from their economic crisis.

Again, foreign aid perpetuate corruption. It causes multiple distortions in the public sector. Most of the funds will be wasted on white elephant or abandoned projects, making fraudulent procurement and unnecessary expenditures that create opportunity to save some funds into their pocket.  One such popular policy is to increase the size of the civil service in order to slash unemployment rates, such that aid funds are wasted on paying unnecessarily large numbers of government employees for doing essentially nothing. This translates into a chronic tendency for the state to become overextended. 

In conclusion, good economic management is more important than foreign aid. Sachs argue that poor governance is not a cause of poverty in global south countries but I categorically assert that proper management of foreign aid need good governance and proper economic management. With good institution aid is likely to have a detrimental impact on the quality of governance in a recipient developing country.

 word count  507

Economic Rise of China- Factory Girls

 The economic growth has not been worth it for most Chinese citizen because it has created mediocrity over excellence and is the those who can afford to pay bribes are those benefiting most from the Chinese economic growth. Despite China’s economic growth there is inequality of growth between rural people and urban folks and this disparity lead a lot of exuberant and noble youth to migrate from rural farming land to urban industrialized cities for fortune. The Chinese system just see development as putting up big infrastructure like construction of mall but not the developing the wellbeing of individuals especially those in the villages. In-addition, the city inequality of life is determined by who can pay bribe, kickbacks and afford to get what he or she want but not who qualify for it on merit. In the issue of how Chunning secured her driving license from black market demonstrated how the level of corruption has reached in china. This continue practices of paying bribes for driving license show how dangerous driving will be on their roads.  Despite technology growth and easy access of quality product for construction work, contractors in the city were still depending on poor materials for public project and they do so to pocket the remaining money for the project. Chang used the construction of the Mo mall as an example of shoddy work by contractor whose interest is about getting millions of money in his pocket than doing a good job.’’ I don’t care if it the factory’s problem or whose problem he said “ if we don’t finish, we don’t get paid ‘’  Cheng ,2009(P337).

Authoritarianism is the style of leadership by most entrepreneur or business owners in china. They do not involve their staffs in decision making process and let them feel less important and this does not show a good democratic leader but rather authoritarian leader. This kind of style of leaderships kills many initiatives . Chunming quit her job due to Chairman Chan leadership style .  (Chang 2009 ) also makes it clear that the girls did not have job security and due to that it is easy for job owners to terminate worker appointment without paying all the benefit the employer deserved. Since the citizens are desperate for jobs even in poor working conditions it gives power to job owners and managers to intimidate and abuse their workers.  Majority of Chinese stand a greater health risk associated to the pollution from the factories circulated around the cities.

Finally, I can say though rise of economic growth has enabled many villagers or youth to seek opportunities from the cities which has fetched them money but I  see these opportunities as short term benefit but not in the long run because there are a lot of mediocrity in the system and corruption is also see as a norm of doing business.

(Word count: 478)