Development Aid—Populism and the End of the Neoliberal Agenda

100 Pages·2018·1.2 MB·English

by  Viktor Jakupec (auth.)

SPRINGER BRIEFS IN PHILOSOPHY
Viktor Jakupec
Development
Aid–Populism
and the End of
the Neoliberal
Agenda
SpringerBriefs in Philosophy
More information about this series at http://www.springer.com/series/10082
Viktor Jakupec
—
Development Aid Populism
and the End of the Neoliberal
Agenda
123
Viktor Jakupec
Faculty of EconomicsandSocial Sciences
University of Potsdam
Potsdam
Germany
and
Faculty of Arts andEducation
Deakin University
Warrnambool
Australia
ISSN 2211-4548 ISSN 2211-4556 (electronic)
SpringerBriefs inPhilosophy
ISBN978-3-319-72747-9 ISBN978-3-319-72748-6 (eBook)
https://doi.org/10.1007/978-3-319-72748-6
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Preface
Development aid is a complex and contested concept. It serves as a political tool
with the aim to expand or maintain donor countries’ geopolitical influences, it is
used as a catalyst to improve trade relationships, and it is applied as a measure
to impose certain ideological values and norms on aid-recipient countries.
Alternatively, it was and is used as a strategy to replace or counteract the existing
dominant geopolitical and geoeconomic spheres of interests and ideologies.
Intherecenttimes,auniquegeopoliticalconstellationemerged,namelytherise
ofpopulisminWesterndemocracies,theemergenceofnewdevelopmentbanksand
initiatives, and the quest for preserving the existing development aid world order.
We have witnessed the electoral success of Donald Trump and his pursuit of
populist foreign policies and the development aid agenda. The established
Washington Consensus-based International Finance Institutions (IFIs) such as the
WorldBank,theInternationalMonitoryFund(IMF),theWorldTradeOrganisation
(WTO), and other similar institutions defending, promoting, and imposing the
dominant neoliberal development aid ideology. The third factor is the emergence
of the new development banks dominated by China, such the Asian Infrastructure
andInvestmentBank(AIIB),theNewDevelopmentBank(NDB)formerly known
as the BRICS Bank, and the One Belt, One Road (OBOR) initiative.
Trump’s populism is challenging the neoliberal ideology of the Washington
Consensus institutions (e.g. World Bank, IMF, WTO) and development aid as a
political or diplomatictool. The USA under the Trump administration is retreating
fromitsglobaldevelopmentaidleadershiprole.TheChina-dominateddevelopment
banks and initiatives are providing a counterbalance to the neoliberal
ideology-based IFIs, by avoiding an imposition of ideological conditionalities on
theirdevelopmentaid-seekingcountries.Thisallpointstoapotentialdeclineofthe
existing and a rise of new paradigms concerning the future geopolitical develop-
ment aid world order.
v
vi Preface
The complexities and contestability of development aid at political and eco-
nomic levels are further emphasised by the discord amongst the academic com-
munity. There is the academic camp referring to the works of William Easterly,
PeterBauer,MiltonFriedman,andotherswhichmaintainsthedevelopmentaidhas
been ineffective and inefficient and has failed to deliver the goals of poverty
reductionandeconomicdevelopment.Thereisanothercamp,claimingtheopposite
noting the works of Jeffrey Sachs, Joseph Stiglitz, Nicholas Stern, amongst many
others.Academicdiscoursewhichdoesnotsubscribetotheclaimsofnegativeand
positive impacts, efficiencies and effectiveness of development aid is limited.
Much of the academic discourse is focussed on issues concerning the dominant
development aid ideology, namely neoliberalism, and claims that there is insuffi-
cient evidence to show that the existing Washington Consensus neoliberalism has
advanced the economic or political well-being of developing nations globally. Of
course, there are successes, but many are not well documented, and much of
development aid outcomes and impacts are shrouded in secrecy.
Conceptualising and Defining Development Aid
Havingoutlinedverybrieflythecurrenteventsconcerningdevelopmentaid,wecan
now turn to the concept of development aid in more detail. For a better under-
standing a working definition of development aid may be in place. It is often
referred in the literature, social media and political discussion as foreign aid,
internationalaid,orforeignassistance.Themostcommonlyaccepteddefinitionwas
formulatedbytheDevelopmentAssistanceCommission(DAC)oftheOrganisation
for Economic Cooperation and Development (OECD), which specifies develop-
mentaidasaflowoffinancesorcommodities,andprovisionoftechnicalassistance
to developing countries with the aim to promote economic development including
socialwelfare(e.g.healthandeducation).Itexcludesmilitaryaidandhumanitarian
and emergency aid, and is in a form of grants or subsidised loans (OECD 1972;
Radelet 2006).
Drawing on traditional delineations, for the purpose of this discussion, the fol-
lowing development aid definition will be used, namely development aid denotes
…voluntary transfer of public resources from a government to another independent gov-
ernment,toaNon-GovernmentOrganisationortoaninternationalorganisation(suchasthe
WorldBankortheUNDevelopmentProgram)withatleasta25%grantelement,onegoal
ofwhichistobetterthehumanconditioninthecountryreceivingaid(Lancaster2007,p.9)
To clarify, development aid as defined above promotes technical assistance,
financialflows,andtrade,withthepurposetoadvanceeconomicdevelopmentand
social welfare and is afforded as subsidised loans or grants.
Preface vii
Setting the Scene
It is evident from the above definitions that development aid is mainly considered
an economic activity. As it was identified above, it also fulfils a political purpose.
The latter is, however, missing in the above-stated definitions. However, even a
brief perusal of the literature concerning development aid shows that development
aidisclaimednotonlyasacomponentofeconomics(e.g.developmenteconomics)
butalsoaspartofthepoliticalsciences(e.g.internationalrelationsandinternational
studies). Discussions andanalysesof development aidmay also be found in social
sciences, anthropology, social policy, human geography and socio-legal studies,
and other cross-disciplinary studies.
It may be tempting to pursue development aid narrative within a framework of
competing ideologies, and economic and political orientations. However, such an
undertaking is beyond the scope of this discussion. This assessment of the
sociopolitical and socio-economic aspects of development aid will be firmly cou-
ched in the discipline called ‘development studies’, rather than economics or
politicalsciences.Inthiscontext,developmentstudiesisseenasamultidisciplinary
sub-discipline of social sciences including aspects of politics and economics.
Book Focus
This book focusses on the potential impact of Trump’s economic agenda on the
Washington Consensus-based development aid. The point of departure is the
recognition that the Washington Consensus has been and still is the
politico-economiccornerstoneofglobaldevelopmentaid.However,sincetheUSA
presidentialelectionin2016,thefutureoftheWashingtonConsensushasbeenput
in question by the Trump administration. To restate, the neoliberal ideology that
dominates the thinking and practices of the Bretton Woods institutions is under
attack by the populist movement.
Duetotheverycharacterofpopulism,itisnotsurprisingthatTrump’seconomic
rhetoric including development aid is subject to much academic commentary and
analyses.Neitherisitsurprisingthattheeconomistsaredividedanduncertainhow
to classify Trumponomics. The criticism ranges from Trumponomics being based
onisolationism,protectionism,antiglobalisation,anti-neoliberalism—termsusedin
a negative sense, mainly by proponents of neoliberalism, who have the stoutest
vested interests in the protection and continuation of the existing political and
economic establishment. Others dismiss Trumponomics uncritically by labelling it
as nationalist, isolationist, and protectionist.
A generally acceptable definition of Trumponomics, beyond that it is a multi-
plicity of economic policies which the Trump administration is attempting to
viii Preface
implement under the ‘America First’ doctrine, is wanting. Thus, perhaps a more
constructive understanding of Trumponomics and its effects on development aid
may be achieved by taking a step back and subject Trump’s populist rhetoric to a
critical analysis.
Content and Structure
The content of this book is organised into self-contained chapters. This allows the
readertochoosethereadingsequence.Eachchapterfocussesonspecificaspectsof
populism and development aid and the reader may concentrate on some in pref-
erence to other chapters. Despite the self-contained content, the chapters together
provide a compelling critical analysis of populism and its effect on development
aid.
Chapter 1: The Rise of Populism
Drawing on the recent political developments in Europe and the USA and the
public discourse since 2016, ananalysis of therise ofpopulism on theleft andthe
right is articulated and it provides an understanding of the contemporary populist
political landscape. This includes an analysis of the Trump phenomenon and his
type ofpopulismwithinacontextofTrump’sforeign policyanddevelopmentaid.
ThisiscontrastedwiththeneoliberalviewcouchedinFukuyama’s‘EndofHistory’
theorem and the rejections of the political elites and the establishment in Western
democracies.
Chapter 2: Development Aid—An Historic-Political Overview
Development aid is an important catalyst for economic development and interna-
tional politics since the end of WWII. This chapter provides a discussion and a
critical analysis of the main political, social, and economic developments in
development aid. It traces the development agenda from the advent of the Bretton
Woods agreement and the Truman Doctrine and the Marshall Plan, to the
Washington Consensus and its neoliberal manifesto. The failure of Washington
Consensusandtheriseofthepost-WashingtonConsensusisanalysedandprovides
a backdrop for the critique of economic globalisation as a development aid
cornerstone.
Chapter 3: A Critique of the Development Aid Discourse
This chapteroffers acritical reviewand analysesof the development aidacademic
and institutional discourse. Some major shortcomings concerning development aid
are articulated, including the dominance of economics at the expense of politics,
and the imposition of development aid neoliberal conditionalities which act as
barriers to socio-economic development in aid-recipient countries. In conclusion,
development aid is recast as an inference that it needs to be reconciled within
critical frameworks of different sides of the political spectrum.
Preface ix
Chapter 4: Trumponomics
This chapter provides a deconstruction of the Trump’s foreign policy vision and
Trumponomics.ItisshownthatTrumpprojectsavisionwithoutmuchideologybut
arguably a vision with sufficient potential for pragmatism and Realpolitik. This
deconstruction is based on an articulation of the theoretical and conceptual
frameworks including philosophical, political, and economic perspectives, and the
mercantilist groundings. In conclusion, it is argued that Trumponomics contrasts
withthe‘transformationaldiplomacy’ofpreviousUSadministrations.Instead,itis
immersed in short-sighted ‘transactional diplomacy’, which will have a significant
impact on the values of development aid.
Chapter 5: The Potential Impact of Trumponomics on Development Aid
The main discussion in this chapter focusses on megatrends and scenarios. The
former are the overarching tendencies in social, political, and economic environ-
ments, which may affect development aid in a context of donor and recipient
countries. The latter provide an outline of potential actions that the Trump
administration will implement. The megatrends refer to (1) transition from glob-
alisation to de-globalisation and (2) transition from neoliberal ‘Aid for Trade’ to
mercantilist‘TradenotAid’.Thescenariosprovideanoutlineof(1)Trumponomics
andthedevelopmentaiddiplomacyand(2)Trumponomics,theBeijingConsensus,
and the future of development aid.
Potsdam, Germany Viktor Jakupec
References
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London:ChicagoUniversityPress.
OECD (Organisation of Economic Cooperation and Development). 1972. Official development
assistance—definitionsandcoverage.Paris:OECD.
Radelet, S.2006.APrimeronForeignAid—WorkingPaperNo.92.Washington,DC:TheCenter
forGlobalDevelopment.