EU Development Policy

2nd of June 2009, Group 9 - Team A F. Arab, K. Diakidis, T. Krume, C.Tonne

 EU

Development Policy

 Milestones / Main Tenets  EU and HIPC Initiative  Economics Behind ▪ The Vicious Circle of Poverty

 EU

Reality Check: Ghana

 Ghana and HIPC Initiative  Ghana and the Vicious Circle of Poverty

 Conclusion
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case

 1950:  1957:

Schuman Declaration Treaty of Rome Lomé Conventions

“Development of the African continent” Development assistance officially introduced in EC
 1975-1995:

Geographical widening (ACP countries) & trade arrangements

 2000
June 2, 2009

(revised 2005): Cotonou Agreement

Group 9 Team A - EU Development Policy – An Ambiguous Case

Built on 3 Complementary Pillars:
1. Development cooperation 2. Economic and trade cooperation 3. Political dimension

Objective 1:
 Eradication of poverty in the context of

sustainable development (to achieve MDGs)

Objective 2:

 Economic cooperation to integrate economies

gradually and smoothly into world economy

 African, Caribbean, Pacific (ACP) countries Group 9 Team A - EU Development Policy – An Ambiguous Case June 2, 2009

Rationale  The HIPC Initiative funds debt relief for all ‘Highly Indebted Poor Countries’ (HIPCs)  Initiators  Established 1996 by World Bank & IMF / EU support since  $51 bn funded in total / EU: $1.6 bn  Objectives  Lower external debt burdens of HIPC governments  Finance add. government spending on poor people  Conditions  Eligibility is based on external debts and income June 2, 2009 per capitaGroup 9 Team A - EU Development Policy – An Ambiguous Case

Debt Relief as Soluti on ?

June 2, 2009

Group 9 Team A - EU Development Policy – An Ambiguous Case

2002: Ghana’s initiative to revive economic growth
 Application for HIPC programme (set an end to

debts)

Pre-2004: Successful efforts to restructure:
Efficienc  Administration (combating corruption)  Procedures y  Practices

2004: HICP completion point reached after:
 Poverty reduction  Improved macroeconomic performance (e.g.

June 2, 2009

inflation) Group 9 Team A - EU Development Policy – An Ambiguous Case

 IMF

Resident Representative in Ghana stated:

“Ghana has achieved relatively strong economic growth with significant reduction in the rate of inflation and other efficiency related improvements. The progress is overall satisfactory.” (IMF, 2005)
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case

Magic Formula:
   

1. 2. 3. 4.

Reform system Remove corruption Insert aid Flourish

Set of conditions and assessments made sure Ghana will be able to act under the right measures when receiving debt relief through HIPC  consider economic AND political infrastructure to prevent wasted aid
Group 9 Team A - EU Development Policy – An Ambiguous Case

June 2, 2009

After all this, sneaky trade barriers remain:
 Major obstacle to the eradication of poverty  Example 1: EU’s export restriction on Ghanaian

cocoa using the chocolate directive (main export product to the EU)  Example 2: Strict EU regulations on banana exports, regarding
▪ ▪ ▪ ▪ ▪ ▪ Size Weight Colour Shape Texture Quality
Group 9 Team A - EU Development Policy – An Ambiguous Case

June 2, 2009

June 2, 2009

Group 9 Team A - EU Development Policy – An Ambiguous Case

 Adjei

Henaku, the Executive Secretary of the Ghana Farmers’ Association, put it like this:

June 2, 2009

“It is extremely difficult to figure out how the dumping of cheap poultry parts-like legs, wings, necks - that have no markets in the EU anyway, could be permitted in the name of free trade that is supposed to promote competitiveness.”
Group 9 Team A - EU Development Policy – An Ambiguous Case

 In

order to escape the poverty cycle an income high enough to allow savings must be achieved  investment!
 Sneaky export restrictions and dumping

prevent exactly that  So the EU is making efforts to eradicate poverty while partially being the source of it
▪ Going 2 steps forward, and 1 back each time?
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case

 No,

▪ It can be good though:

2 steps forward and 1.5 back:

 With the support of international donors

Ghana has been able to curb economic growth between 1991 and 2002 by 4.2 percent per annum (European Commission, 2006).
▪ However, Ghana has a much higher potential, still largely depends on primary products  deteriorating terms of trade...

 EU’s

economic interests still main priority, interest groups still dominant
 Aid could have a much bigger positive

impact!

June 2, 2009

Group 9 Team A - EU Development Policy – An Ambiguous Case

 http://www.youtube.com/watch?v=Bl

Dhd_0f-r4

 
 

Aim: Eradicate poverty and integrate economies into world economy Ghana:
HIPC partly helps to break vicious circle of poverty EU trade barriers and Directives hinder sound economic growth  Works on poverty reduction but hinders economic integration

Statement confirmed: EU Development Policy reveals ambiguousness

 

What should be done?

Remove barriers to trade Stop dumping9 Team A - EU Development Policy – An Ambiguous Case June 2, 2009 Group

The World Bank (2009). Poverty. Retrieved May 5, 2009, from: http://www.worldbank.org/depweb/beyond/beyondbw GAWU, D. C. (2004). New ACP-EU Trade Arrangements: New Barriers to Eradicating Poverty? Brussels: Eurostep. Damned by Debt Relief (movie) (2007). Retrieved May 28, 2009, from: http://www.youtube.com/watch?v=BlDhd_0f-r4
Group 9 Team A - EU Development Policy – An Ambiguous Case

June 2, 2009

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June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case

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