Digging Out the Roots of Poverty

The United Nations Development Fund, the world’s biggest aid agency, has taken a fresh look at poverty in the developing world and found that a lot of it can be blamed on bad governments. This conclusion comes as no surprise to those who have argued that societies governed by law are richer than those that are not. But it is a welcome change from the long-held view among development agencies that poverty can be eradicated if the governments and rich outsiders just put enough money into the right projects.

It took some guts for the fund’s new administrator, Mark Malloch Brown, to point the finger at the governments of the poor countries themselves, and not surprisingly his study, “Poverty Report 2000,” drew fire from some of them. “Effective governance,” the report said, “is often the ‘missing link’ between national poverty efforts and poverty reduction.” Accordingly, it shifts much of the focus of development from the donors to the domestic policies and practices of the recipients.

That is not to say that outsiders, especially the rich members of the Organization for Economic Cooperation and Development, should not lend a hand. There are several immediate steps they should take to help relieve grinding poverty in the poorest countries, most of which are in sub-Saharan Africa. One of them is to go forward quickly with forgiveness of the poor countries’ crushing external debt.

Africa owes the creditor nations more than $375 billion, which is roughly the value of two-thirds of everything the continent produces in one year. Some African countries pay more in interest on those loans than they spend on health and education at home. A debt-relief program that rewards countries for increasing spending on education and social programs is just the type of “development” that encourages better governance.

Moreover, the developed countries must be much more generous in opening their markets to the poor nations’ exports. Preaching market economics to Africans will not help half as much as enabling them to practice it. In the United States, this means passing Rep. Edward R. Royce’s (R-Fullerton) proposed African Growth and Opportunities Act, which is awaiting conference committee action. It would admit unrestricted American imports from the poorest countries. Other developed nations should do the same.

External financial aid also is needed to reduce poverty in Africa. But, as the U.N. Development Fund report points out, much of the anti-poverty effort can be wiped out by misallocation of resources, poor organization and government corruption. Moreover, aid mismanagement by unelected and unaccountable governments is in large part responsible for the donor fatigue that stalls credit from Western Europe and the United States.

The message is clear. The flow of financial aid, which has been drying up over the last decade, will not resume until the recipient countries create the right conditions for it. To begin with, governments must be elected and held accountable to their people. Local governments, which often do not even exist, should be developed to play a key role in administering programs for their poor. After years of developing imaginative ways of giving, development should zoom in on the more effective way of taking.