The Economic North–South Divide

The Economic North–South Divide

Six Decades of Unequal Development

Kunibert Raffer and H. W. Singer

The Economic North–South Divide explores the structural roots of the debt crisis and considers the impact of debt management on North–South economic relations, exposing certain double standards that tilt global markets further against the South. Encouraged by recent successful opposition to neoliberalism, the authors finally propose ideas for a world where people seem to matter.

Chapter 6: ODA after the Cold War: Less Money at Tougher Conditions

Kunibert Raffer and H. W. Singer

Subjects: development studies, development economics, economics and finance, development economics


CHAPTER 6 4/7/01 1:33 pm Page 1 6. ODA after the Cold War: Less money on tougher conditions Two events characterized 1989 as a watershed year for ODA. Overtaking the USA, Japan became the world’s biggest ODA source in dollar terms, an event that marked the end of an era. Much more important, however, was that communism collapsed in Europe, an event often symbolized by the crumbling of the Berlin Wall. The demise of the Eastern bloc gave rise to great hopes. Large parts of expenditures on armaments had suddenly become unnecessary, so at least some of these resources would be available for development. An enormous ‘peace dividend’ was expected to increase aid to both East and South. The élan of these expectations suggests a comparison to the period immediately after World War II, when North-South cooperation was propagated on a scale strongly influenced by the Marshall Plan. Quantitative expectations were accompanied by suggestions for qualitative changes. The UNDP (1994, p.69), for instance, saw the end of the Cold War as a ‘rare opportunity to make a fresh start’, calling for a restructuring of aid: it should be made more participatory and people-centred to genuinely benefit the poor - something it had hardly done so far. The peace dividend failed to materialize. Quite to the contrary, ODA even dropped substantially, as depicted in Figure 5.1. The ‘precipitate fall in ODA since 1992 is almost entirely due to cuts in aid from G7 countries, particularly the “big four”’ (OECD...

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