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Globalization and Economic Development

Globalization and Economic Development

Essays in Honour of J. George Waardenburg

Edited by Servaas Storm and C. W.M. Naastepad

Globalization is widely regarded as a means not only of ensuring efficiency and growth, but also of achieving equity and development for those countries operating in the global economy. The book argues that this perception of globalization as the road to development has lost its lustre. The experience of the 1990s belied expectation of the gains, such as faster growth and reduced poverty, which could be achieved through closer integration in the world economy.

Chapter 9: Aid in the twenty-first century: Reconciling the real and the desirable

Frances Stewart

Subjects: development studies, development economics, economics and finance, development economics, post-keynesian economics


9. Aid in the twenty-first century: Reconciling the real and the desirable Frances Stewart 1. INTRODUCTION Significant levels of aid from rich to poor countries – that is, the transfer of resources by gift or at highly subsidized interest rates – will, I believe, come to be viewed as peculiar to the second half of the twentieth century. This is because aid had historic functions in this period, with the end of colonialism, the acquisition of political independence among Third World countries, and the Cold War. This was a transitional period in which fundamental choices were being made about the nature of economic development, and whether laisser-faire capitalism, Keynesian/welfare state capitalism or centrally planned socialism would dominate. Aid was a major instrument influencing choices among these alternatives. At the end of the twentieth century these choices appear to have been largely made in favour of laisser-faire capitalism (with elements of Keynesian or welfare state interventions in some places), and thus from the perspective of donors aid is much less useful. Aid is also motivated by altruism, it is claimed. Both empirical investigation and casual observation would suggest that altruism has been a stronger motive among small aid donors (for example, the Scandinavians), and for some types of aid (non-governmental organizations (NGOs), humanitarian aid), than for official development aid from large donors (see for example, Maizels and Nissanke, 1984). The role of altruism as a significant source of human motivation in general is being downplayed in the late...

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