beyondbrics

The debate over poverty and development can often seem detached from the world of business and investment. But surging interest in emerging markets is changing that. Some of the countries where westerners are building factories, wooing consumers or snapping up shares also face big developmental challenges. Think India, Nigeria or Egypt.

How those challenges are tackled – whether it’s health, education, infrastructure or job creation – will have a big influence on how emerging markets evolve. That’s why a renewed debate on the pros and cons of aid, sparked by a UN summit on the Millennium Development Goals, matters to the broadest possible audience.

Jeffrey Sachs, an adviser to the UN secretary general on the MDGs, says in an opinion piece for Tuesday’s FT that the traditional system of bilateral development assistance is broken. Instead, he argues, the world needs more pooled funding from multiple donors.

Some readers posting comments on FT.com disagree, citing the EU’s aid budget and Uganda’s experience as examples of how pooled funds can go wrong too. The performance of a multi-donor trust fund administered by the World Bank in south Sudan is not encouraging either.

At root, though, Sachs’s main point is that aid can work. Others disagree with him on a more fundamental level, often vehemently.

Dambisa Moyo is one of the anti-aid brigade and her book Dead Aid gave new impetus to the debate last year. Another is William Easterly of New York University who argues forcefully on beyondbrics on Tuesday that the Millennium Development Goals have failed the world’s poor by perpetuating a misguided aid-led approach to development.

He writes:

current experience and history both speak loudly that the only real engine of growth out of poverty is private business, and there is no evidence that aid fuels such growth.

It is often said that no country in history has ever lifted itself out of mass poverty thanks to foreign aid. It’s only the private sector that has done that.

Yet at the MDG summit on Tuesday, there were calls for more aid for immunisations, or human rights, or education, as the Guardian reports.

Angela Merkel, the German chancellor, told delegates that “development aid cannot continue indefinitely”. She said the UN had to accept that efforts to eliminate poverty and hunger had fallen short of the MDGs, but rather than turning to business as the remedy, she stressed the need for improved governance in the developing world to ensure that aid didn’t go to waste.

Business people have allowed others to monopolise this debate for too long. Perhaps now is the time for them to speak up.

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