Foreign aid, investment and national development Editorial
Guyana Chronicle
June 1, 2002

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ONE TRUTH Third World countries have had to confront over the last decade is that the once-steady flow of development aid, which represented a minute percentage of the Gross National Products (GDPs) of the industrialised world, was drying up: consequently, development planners of poor countries have had to come up with practical and achievable goals if they wanted greater allocations of finances. Further, many of these economic objectives have to address measurable improvements in the standard of living of Third World nations.

The effects of the current global economic recession compounded by the events of September 11, 2001 have brought about dramatic changes in the re-ordering of priorities by developed countries and the international financial institutions. As a result, the policy-makers of Third World countries have had to devise more creative ways of meeting both the short-term and long-term needs of their people within limited budgets.

Here, we must recall the words of Mr John Caloghirou, former representative of the European Union in Guyana. Speaking at a ceremony to turn the sod on the construction site of a dental complex in mid-1997, Mr Caloghirou observed that the important objective of the European Union is not confined to building roads and bridges, although these activities are important. The primary objective, he said, is to help the Guyanese population to arrive at a point where it no longer needs external assistance to do anything. “We are working towards making ourselves redundant; so that there is no more need for development aid, and we are hoping that all the programmes we are doing will work in that direction.”

The profound import of this statement should not fill the minds of thinking Guyanese with anguish or dread, but instead, should work to kindle within the nation a spirit of self-reliance and a will to overcome the inevitable economic hurdles, and to prosper eventually.

One single thread that runs through most of the literature on development is that of a nation’s effort - a people’s will to work towards the goal of social and economic development regardless of the aid and expertise promised or given by other countries. This effort becomes a driving force when people understand that they are working for improvements in their own lives, for their children’s future and for the ultimate development of their country.

Of course, economic development is boosted tremendously with foreign investment and the concomitant transfers of specialist skills and technology. But, as UNDP envoy Ms Elena Martinez pointed out in a lecture at the Foreign Service Institute late in 1999, although there is more money around for Foreign Direct Investment (FDI), the bulk of this cash goes to some high growth, developing countries. Noting that Foreign Direct Investment totals US$250 Billion annually, Ms Martinez said: “The vast movement of capital and technology that characterises globalisation is thus leading to a situation where developing countries stand to benefit far more from private sector investment than they do from Official Development Assistance.”

Ms Martinez explained that while 80 per cent of Foreign Direct Assistance goes to a small group of high growth developing countries, the majority of countries in the Third World have to make do with three per cent of the total. “These are hard truths to accept, yet they are the features of the world of tomorrow: less money for development, and more money for Foreign Direct Investment - but only for those countries which can offer an attractive investment climate,” she explained.

Guyanese economic planners and stakeholders should consider the hard truths listed by UNDP envoy, Ms Elena Martinez, and then seek to put the necessary mechanisms in place to meet the new challenges.