Western Financial Assistance to the Developing World

Perceptions of the Power Imbalance and its Impact on Fiscal Terms

Chuku-Dinka R. Spencer

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137583994
• Topic: Economics
• Subtopic: Macroeconomics
• Index: Economics

This unconventional book addresses the imbalance of power between countries that give and receive funds for international financial development, with particular attention to the outcomes and impacts of this imbalance on recipient countries. It provides an in-depth analysis of the perceptions that population segments of recipient countries have of the power plays inherent in giving and receiving financial assistance, delving deep into the factors that affect these perceptions to examine how and why developed countries wield power over countries receiving financial assistance. While the text focuses primarily on African countries, it also addresses the broader power imbalance between developed countries in the global north and developing countries in the global south. It also examines perceptions of development assistance and power imbalance between the global south in general and the BRICS countries which provide assistance to the global south in particular. This book is an ideal tool for those studying the socioeconomic impacts of international financial assistance to developing countries.

© The Author(s) 2016

Chuku-Dinka R. SpencerWestern Financial Assistance to the Developing World10.1057/978-1-137-58399-4_1

Begin Abstract

1. Introduction: A Sense of the Context

Chuku-Dinka R. Spencer¹

(1)

African Development Bank, Tunis-Belvedere, Tunisia

End Abstract

International Advocacy Groups are often involved in development efforts in developing countries. One such advocacy group is fighting to stop the construction of the Gibe III dam in Ethiopia (Bosshard and Pottinger, International Rivers). The United Nations Educational, Scientific, and Cultural Organization (UNESCO) is also urging Ethiopia to halt and abandon the construction of the Gibe III dam (nazret.com). In fact, an advocacy organization halted the construction of the Talo dam in Mali (Fink and Meierotto 2002).

Other specific actions in some developed countries as evidenced by some journal and newspaper articles have repercussions on activities in some developing countries. These include the signing of the farm bill by former President George Bush in May 2002. The farm bill was expected to increase the amount of subsidies to farmers by $83 billion spread over ten years. It was estimated that this bill would increase the US subsidies to farmers by about 60 % (Mshomba 2002). In a briefing paper by Oxfam, it was indicated that cotton subsidies were destroying the livelihood of farmers in Africa and other developing countries (Watkins, K.—Oxfam 2002; also Oxfam New Zealand).

These are but a few of the international media articles relating to development efforts and farming in Africa. These show just a few of the overt ways external forces try to exercise power over developing countries. There are many other more subtle exercises of power, by these external forces, which are barely visible at a casual glance at development efforts in Africa, especially in the rural areas. External forces are understood to mean all bodies, organizations, notions, concepts, and ideas that may come from outside of the continent. The field is vast and cannot be thoroughly analyzed within this book. I am therefore going to concentrate on development finance generally and mainly to rural areas; more particularly, I shall concentrate mostly on Sub-Saharan Africa. However, I shall refer to other forms of external forces only as they have a bearing on development finance. Why do some of these development efforts generate so much media attention from bodies outside the borders of the countries concerned?

How do the external bodies exercise power or influence over activities being carried out or intending to be carried out by governments in Africa? What powers, seen or unseen, do these bodies have over development efforts in Africa? What perception do the developing countries have of the power and of the wielder of the power? What emotional frames do the people directly concerned with these exercises have before, during, and after the interventions? These perceptions and emotions condition what Scott (1990, pp. 14, 28, 187–190) calls their “hidden transcripts,” as well as their “public transcripts.” He stated that the “hidden transcripts” (i.e. the private or hidden speech and behavior) are different from the public expression and behavior, which constitute the “public transcript.” Can the notions of “public” and “private/hidden” transcripts inform the analysis of the influence of external forces on development finance and rural areas in particular? Do the countries, that are recipients of financial assistance, actually perceive “power play?” These and other questions will be discussed in this chapter and in the chapters which follow.

The need for financial assistance arises because of the gap between financial resources required for development purposes and the amount of financial resources which developing countries possess. This resource gap is the underlying cause of the demand for assistance from external sources and will be discussed in detail in Chap. 3. It is rare that recipients of development finance consciously perceive such financial assistance in terms of power play between two different forces, of which one is external and the other is internal. However, it is not a far stretch to see donors (external) and recipients (internal) in situations of conflict, especially where specific conditions are part of the assistance package. In such situations, the receipt of the assistance by the recipient is dependent on the recipient behaving in a specific way as per the conditions accompanying the package, taking specific actions or carrying out specific activities. Under these circumstances, the donor would have been able to get the recipient to do things, which the recipient may or may not have wanted to do. As we shall see in Chaps. 3 and 4, and in line with the thinking of Lukes (2005, pp. 20, 21, 42–44), Dowding (1996, pp. 4, 5), and Morris (1987, pp. 25, 33, 38), the donors have exercised power over the recipients. This is because they have obtained outcomes of behavior that they expected from the exercise of power.

In addition to the description given above, external forces are further defined as those forces, physical and non-physical, that generally intervene in African development finance and assistance from outside the continent. In short, external forces are all forces exogenous to the continent. This description, though, begs the question as to the category into which we place development finance institutions created by African countries themselves. Internal forces are those forces that are endogenous to the continent. We shall discuss external forces more fully in Chap. 3.

Has any one of the parties concerned been aware of the underlying implications of the act of giving and receiving financial assistance? Invariably, both parties realize that one party has got the other to do things that the other may or may not have wanted to do. But do they feel that power has been exercised? Both parties may consider that a transaction has taken place. One party was selling a good, which we call “development finance” and/or “development assistance,” and the other was in the market for development finance and/or development assistance. One party received a good, which we call here “development assistance or development finance,” and the other party received, in return, the execution of specific actions or activities. The preceding fact holds true, mainly for grants, but it can also be extended to loans. The recipient of “development finance” uses the funds, equipment, and other materials that accompanied the assistance, or that could be acquired with the funds, to “further” its development agenda. The results of this “furthering” are what are expected to lead to higher social and economic levels in the lives of the population in the recipient country. The “furthering” of development is expected to be the ultimate outcome of the exercise of power by the donor. The recipients thus accept, willingly or reluctantly, for power to be exercised on them, in exchange for the furthering of their development agenda. There is, therefore, a “contract” both literally and metaphorically between the two parties. The motivation of the external party behind this “contract” is varied. The “motivation” of the external force/party could be commercial, economic/financial, strategic, or altruistic/humanitarian. Does the motivation of the external force influence the perception of the exercise of power by the recipients of development finance?

If there is a “contract,” then how can there be a power play between the forces? What are the instruments used to exercise this power? Power play in the field of development finance is a “process,” which has prescribed procedures and is generally stretched out over a specific period for any specific package. Each specific package constitutes a building block to strengthen the power of the external force over a much longer period. Thus over the years, the total amount of development finance from any particular donor/external force, as we shall see in Chaps. 3 and 4, helps to give the external force greater “power to” and “power over” recipient countries. Each development finance package contributes to increasing the “strength/magnitude” of the power of the external force. The cumulative strength of the external force helps to ensure that the recipient countries acquiesce to other types of exercises of power, which may not be related to development finance or development assistance. The examples of the Chinese in Zambia and in Nigeria, which will be discussed in Chap. 4, are cases in point. Procedures in development finance start with the official application for assistance and include what is termed the “project/program cycle.”

Targets (people and outcome) of the development finance package are identified, with clear objectives, overall goals, beneficiaries, implementation activities, procurement processes and procedures, and other relevant aspects, such as required resources. In addition, the objectives and other parameters are agreed upon between the donor and the recipient parties prior to project/program start up. These objectives are generally defined, in both the traditional, now less used, “project approach,” the sector-wide approach, and the new “budget support approach” as achieving or attaining improvement in conditions of living of the population, or in certain target parameters like income, production, productivity, levels of economic or financial status, money supply, and other agreed-upon goals. Other procedures, which are part of this “process,” are preparation and appraisal of the program. Once the program or project has been appraised and the conditions which determine access to the funds are prepared and discussed in the field at appraisal, the whole report embodying the program/project is discussed in detail and agreed upon at negotiations between the two parties. The appraisal report, in the case of development finance institutions, is discussed in a meeting of the approving body, and then theoretically, the funds become available for disbursement. Regular field visits are made by the donor/lender/external force, and desk reviews of the program to ascertain progress, correct any deviation or errors, or redirect the program are also part of this “process.” These activities help to strengthen the elements of power and also constitute in themselves exercises of power. In a way, they are means to control the actions and activities related to the development finance package and to ensure that the direction of progress is in accordance with the agreed-upon “contract.” In addition, these activities are intended to help lead to the outcomes expected and/or desired by the more dominant force.

During the period of working on the “process,” several power sources are called into play. These power sources, which we shall discuss in Chap. 3, become, as it were, fountains from which power flows and is wielded. These sources help to condition the recipients and their perceptions about development finance. They make acceptance by the recipients of the subtle and/or overt exercise of power easier. As we shall see in Chap. 3, these power sources belong to different owners and become the strength by which the donor forces get the results they anticipate as the outcome of the exercise of power. However, are the recipients without strength or power of their own that they accept that behavior patterns or actions are imposed on them? No, they are not without strength of their own. In line with the thinking of Foucault (Foucault—Faubion, ed. 2000, pp. 347) and Scott (1990, pp. 192–197, 199), where power exists, resistance is also present. Foucault recognized that the existence of power does not automatically mean successful exercise of power. A power relationship cannot exist with areas of what Foucault called insubordination. These points or areas of insubordination constitute means of escape.

In all power play, however, “relative strength” is the critical factor, and the party, which possesses the greater strength, is generally the party, which can dictate, to a large degree, the outcome of the power play. As Chap. 3 will show, this party is the dominant party and is generally the donor party. In line with the thinking of Scott (1990, pp. 14, 28, 187–190) and as we shall see in Chaps. 3 and 4, the recipient countries also have tools that they can use to thwart the powers exercised on them by a superior force. I call those times when the power flow is thwarted “breaks in the power flow.” These breaks represent gaps in the otherwise seemingly seamless flow of power from the donor countries/external forces to, and over, the recipient countries. Some of the gaps are created by the recipients countries wh...

Table of contents

• Cover
• Frontmatter
• 1. Introduction: A Sense of the Context
• 2. Conceptual and Key Issues
• 3. Understanding the Exercise of Power
• 4. Appreciating Perception and Power
• 5. Perceptions, Outcomes, and Power: Positives and Negatives
• 6. Conclusions
• Backmatter