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The Issue of Aid in Sub-Saharan Africa

The Issue of Aid in Sub-Saharan Africa

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Published by A Masand
Why has aid by the World Bank and the International Monetary Fund been a barrier instead of a catalyst to growth for the Sub-Saharan African economy?
Why has aid by the World Bank and the International Monetary Fund been a barrier instead of a catalyst to growth for the Sub-Saharan African economy?

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Published by: A Masand on Jan 29, 2009
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05/10/2014

 
AartiMasand
TheIssueof AidinSub-SaharanAfrica
BeforetravelingtoSub-SaharanAfrica (SSA)Americansarerequiredtobevaccinatedagainst yellowfeter(inadditiontoa hostof otherinoculations)andcarryanyandallmedicationsasmedicalcareisunavailableismostareas.Oncetheretheyareto refrainfromdrivingatnightespeciallyinruralareasdueto car-jackings,dressappropriatelydue totheprevalenceofmalarialmosquitos,anddrinkonlybottledwaterduetotheprevalenceofschistosomiasis. state.gov2001)Theseequirementshightightvarious problemsaffectingthecountriesofSSAodaynamelythelackof healthcareprovisionsforthepopulation.Theincreasingviolenceinmanyurbanand ruralareas.Theprevalenceof diseasefromairand waterbornevectors.Inadditionto theseanotherm,forhealthconcerns theAIDSepidemic.I.IntroductionAfricais thesecond argestcontinent,containing770 million peopleandmuchoftheworld'snaturalresources.Andyetinpopulardiscoursetistermed negativelyas alandin"chaos"(Ayitteyl99S).Its economyis reflectedintermsof a"growthdisaster"
 
(Easterlyand Levine 1998).Why has SSAcontinued oexhibit slowgrowth?This wasmy initial investigation.Accordingto Ghanaianeconomist,GeorgeAyittey, therearedomesticand externalcauses.ThepostcolonialAfricannationscannot econcilethetwoAfricas,"one traditionaland one modern(or"Western").Thatsplit, causeshaoson theAfricanpeople.He holds theelites culpable. Hestatestheelites, heparasiticminoritygroup[operate]byanassortmentof importedor borrowed institutions"to devastateheeconomy ntheirquestforpower.Theelites namelycomrptpoliticians,seekpersonalgainand don't work tocreateorder but instead osternstability nsocial,economicandpoliticalrealms. Theexternalcausesrenefficientformsof assistanceyinternationalorganizationsand countries. Thefocus on thispaperson the latter,namely the role ofaid in theSub-Saharaneconomy. This isdue to the factthat comrptpoliticiansareprimarilythe first to receiveany foreign aid beforeit ever reachesapersonin need.(Ayittey1999)Consequently thispapershows thatdespite the intentionsof theseorganizationsassistanceprogramsof theInternationalMonetaryFund/World Bankhavefailedto spurpositive growthforthepasttwo decades. Itfurther urges oran analysisofthe core causesofwhyaid from these organizationshas failed.Alternatively itchallenges he validityofforeignaid to spur economicgrowthindeveloping countrieslikeSub-Saharan frica. Finally,it calls for a new modelforgivingaid to SSA,onehattakeshe current situation in thecountryintoconsideration.A measure of economicgrowthis the aggregatedamountofproductionof acountry. Thisis known as theGrossDomestic Productor GDP. Since 1980,GDPpercapita(GDPdividedper person)n SSA has declinedat almost lYoperannum. Thedeclinehasbeenwidespread:32 countriesarepoorernowthan n 1980.(Easterly1999)
 
Thishastaken placedespiteinterventionfromtheintemationalcommunitytospureconomic growth.Aidintheformof loanshasbeen grantedtoSub-SaharanAfricaincreasinglyfordecades.Yettherehasnotbeenincreasedgrowth.This paradoxisthefocusof myresearchproposal.WhyhasSub-SaharanAfricahadslowgrowthsincethe1980sdespitethe increasednvolvernentofthe InternationalMonetaryFund(IMF)andWorldBank?Thisispuzzlingas conditionalityrequiresthatcountriesfollow policyprescriptionsinordertogetfuture loans.Thiswouldimplythatthecountrieshavefollowedthepolicyprescriptionsand havenotexhibitedpositivegrowth.Thereforethepoliciesnamelyconditionalityare a failure.Inaddition,thisisapuzzleas the IMFandtheWorldBankarebydefinitioninstitutionsthataiddevelopingcountriesro spureconomic growth.TheIMFisacooperativeinstitutionof182membercountries(dominatedbyWestemcountriesi.e.theUnitedStatesholdsthe mostvotes).Theprimarygoalofthe IMFisto maintainstabilityintheworldeconomy.In linewith itsaimsittemporarilymakesavailableitsresourcesoamernbercountrydependentuponthemmeetingkeycriteria.Thesecriteria,oftentermedconditionality,areconditionshatspecificchangesareimplementednthecountry.AnotherinstitutionthathasaidedSSAandworksinconjunctionwiththeIMFhasbeentheWorldBank.TheWorldBankprovidesdevelopmentassistancentheformof loans.Itsaim isto facilitate positivegrowthfordevelopingcountries. (pbs.org).AsTablel,showsdespiteincreasedinvolvementof thesewoorganizationsherehasbeencontinuedeconomicstasnationnSub-Saharanfrica.

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