What can you say about good governance

European Union - The shirt is closer than the skirt

11 December 2020

The newly negotiated EU budget has a record volume, also to cover the costs of the Covid-19 crisis. But funds for development aid fall by the wayside.

A contribution by Prof. Gertrud Buchenrieder, Professor of Development Economics and Policy

In the second half of 2020, during the German Presidency of the European Union (EU), the budget for 2021-27 was negotiated. At 1,703.4 billion euros, this budget is a new record. This also includes a 750 billion euro economic stimulus package (Next Generation Europe) to overcome the Covid-19-related socio-economic crisis in the European internal market.

Despite all solidarity for the European economy and health, humanitarian and development-policy aspects, the EU budget fell by the wayside. That is why Federal Development Minister Gerd Müller (CSU) never tires of criticizing the cut in the EU budget in the categories of development, humanitarian aid, Africa policy and causes of displacement. The EU budget cuts for humanitarian aid and development cooperation combined with a record budget with a gigantic economic stimulus package confirms once again the saying: the shirt is closer to me than the skirt.

Covid-19 crisis, climate change and poverty are mutually reinforcing

The EU budget cut for humanitarian aid and development cooperation comes at an inopportune time because the Covid-19 crisis, poverty and climate change are three global crises that are mutually reinforcing. Despite the legitimate hope of having effective vaccines against Covid-19 available very soon, developing countries will certainly be among the last to get sufficient access to vaccines. In addition, the Covid 19 crisis seems to have pushed the climate crisis backwards in political perception. Measures to keep the Covid-19 pandemic under control are exacerbating poverty. Exit restrictions deprive people of the opportunity to generate income. In many cases, the pandemic also had a negative impact on foreign trade. Climate change is also exacerbating poverty. B. by the more frequent extreme weather events such as droughts and floods due to heavy rain. In Africa in particular, droughts and floods have had the greatest humanitarian impact in the last 30 years. For the next 80 years, extreme weather events in the form of heavy rain are increasingly forecast across Africa, which will result in devastating floods with loss of property and life, displacement and disruption of agricultural production bases.

More development aid or better governance?1

Some will now say that development cooperation over the last few decades has failed anyway. This debate is also prominently carried out in science by Jeffrey D. Sachs and William Easterly. Sachs argues - admittedly in a somewhat abbreviated form - with the vicious circle of poverty. Poverty is often linked to a person's income. People who earn little or nothing cannot save - they need their income to meet their basic needs. If there is no national saving, less investment can be made, there are hardly any productivity impulses and income remains low - a vicious circle. Economic growth can break this vicious circle; development cooperation can provide impetus. For Sachs it is clear: “If the foreign aid has a sufficient volume and is granted long enough, then the capital stock grows so far that it raises the households above the subsistence level. At that moment the poverty trap broke out [...] ”.

Like Sachs, Easterly states that poverty is currently one of the greatest global problems. However, he argues that the persistently high level of income poverty is not due to a lack of funds, e.g. in the form of development aid, but rather the poor governance of the countries concerned on the one hand and the alleged predictability of the achievement of goals in development cooperation on the other. The goals are also utopian when there is talk of a complete fight against poverty (Easterly, W. 2006. We save the world to death. For professional management in the fight against poverty. Frankfurt am Main: campus).

Goal 1 of the Global Agenda 2030 for Sustainable Development is currently entitled as follows: End poverty in all forms and everywhere. Easterly is convinced that developing countries are able to overcome their poverty on their own. The basic prerequisites for this are good governance. He does not plead for an end to development cooperation. For him, however, "[...] meeting the obvious needs of the poor through vaccines, antibiotics, nutritional supplements, improved seeds, fertilizers, roads, boreholes, water pipes, school books and nurses" is the focus.

This closes the line of argument. The governments in developing countries in particular have so far shown a great deal of caution in the Covid 19 crisis. Many developing country governments have demonstrated good governance. They have slowed the Covid-19 pandemic in their countries for the benefit of the global community and in doing so have accepted socio-economic hardship for their citizens and economies. The EU is not honoring this in its new budget, on the contrary.

Does charity end with the Covid-19 vaccine?

The COVAX initiative launched by the World Health Organization (WHO) (Covid-19 Vaccines Global Access) works to make vaccines accessible and affordable for all countries. The COVAX initiative aims to provide one billion vaccine doses to over six billion people in developing countries by the end of 2021 (world population approx. 7.8 billion people). Since two vaccinations will probably be necessary to build up immunity to Covid-19, the vaccine doses previously provided for developing countries from the COVAX initiative are sufficient for around 500 million people. The COVAX initiative will include supported by the EU with 500 million euros. The World Bank is also helping developing countries vaccinate up to a billion people against Covid-19. But while the governments of high-income countries, for example in the EU, have already concluded supply contracts with companies in the pharmaceutical industry for a comprehensive supply of the future, safe Covid-19 vaccines, developing countries are on the financial edge and can hardly help themselves. The COVAX initiative also complains about a funding gap. For this reason, among other things, the UN Secretary General António Guterres appealed for fair access to vaccines worldwide during the virtual UN special summit on the Covid 19 crisis (03-04.12.2020). The citizens of developing countries also need sufficient access to safe and effective Covid-19 vaccinations, because the Covid-19 pandemic will only be over when all countries have overcome the crisis.

You can find references to the work of Prof. Buchenrieder here >>

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Cover photo: © iStockphoto / Zerbor

1) Prof. Buchenrieder thanks Mr. Felix Wodtke for the inspiring impulses that he gave in his summer modular work 2020 on the subject of “More development aid or good governance? An Analysis of the Controversial Sachs-Easterly Debate ”.