TCS Daily


So What Actually Happened at the G8?

By John McKay - July 21, 2005 12:00 AM

Although the deliberations of the leaders of the G8 were somewhat overshadowed by the terrorist attacks in London, it is important to evaluate the development package for Africa that finally emerged. Is aid the most important way to improve the lot of the poor in Africa? If not, what is? Helpful examples of constructive ways forward might be taken from faster growing regions, notably East Asia.

What was agreed?

The Gleneagles meeting endorsed the debt forgiveness agreement that had already been negotiated by the finance ministers of the G8, and pledged a further $US 48 billion in development assistance.

While the leaders themselves hailed the agreement as a major contribution to the needs of Africa, development agencies and other commentators have been somewhat more critical.

They point out that much of this aid was already in the pipeline, and the new funds may not really amount to more than $US 20 billion. The new aid will not be available until 2010, but the needs are urgent.

Also, there is the problem of what is now becoming known as "compliance deficit" -- leaders make grand promises but in the end deliver only a small proportion of what was pledged. Perhaps Mr. Blair had this in his mind when he insisted that each leader must personally sign the pledge made by the G8 to Africa.

More than aid is needed

The problems of Africa will not be solved by aid alone, although it can play a contributing role. Nor is the developed world solely responsible for the plight of African nations. Rather, Africans must be responsible for their own development and fashion their own strategies.

Many would argue that the current gloomy prospects for success in the WTO Doha Development round -- the result of intransigence among WTO members, including some of the members of the G8 -- is much more important than any marginal increase in aid.

In this context, the trade policies of the developed nations are particularly important. African developing nations are adversely affected by the large volumes of subsidies being paid to farmers in both the United States and in Europe. The offer made by President Bush to phase out these distorting subsidies if the Europeans would do the same is to be welcomed, and every effort must now be made to pressure the EU to match this. Until then, the incentives for African nations to liberalise their own trade regimes are simply not there, and more importantly there will be very little in the way of foreign exchange to pay for increased imports.

Most African leaders are adamant they must look at their own performance, a view that was strongly supported at the African Union meeting held just before the G8 summit. Others, notably Robert Mugabe, see all the fault lying with Western nations, but thankfully this is now very much a minority view. Most African leaders now realise that the continent must rid itself of the problems of corruption and bad governance that have for so long inhibited growth.

Look east

As the debate both in the rich countries and in Africa has moved on, to some extent, from the sum of aid needed in Africa, some commentators have begun to ask what lessons Africa can glean from the successes (and from some of the failures) of the nations of East Asia.

While it is never easy to simply transfer experiences from one region to another with a very different history, culture and set of institutions, I would suggest that a number of key lessons from the Asian experience could usefully be absorbed.

        First, good leadership is certainly important, and this means rather more than 
        efficient and transparent governance, although, this, too is essential. 
        Asian success was built upon a vision of the future that leaders successfully 
        transmitted to the rest of the nation. Good leadership is not easy to find and 
        develop in Africa especially in the short term, especially since so many 
        traditional models of leadership inherited from the pre-colonial period tend 
        to result in autocratic "big man" behaviour. Education and role modelling are 
        the keys here, but this will take time.

        Secondly, the introduction of markets and democratic institutions does not 
        guarantee success by itself. What is needed is an integrated plan that links 
        economic transformation to key areas such as education, health and 
        infrastructure.

        Thirdly, Africa needs to consider how Korea and other Asian nations 
        absorbed and used foreign aid when they themselves were in a similar position 
        of trying to initiate growth. Aid in the immediate post-Korean War situation was 
        largely responsible for financing the rebuilding of infrastructure, housing and 
        productive capacity. After the early 1960s, investment was generated 
        increasingly from domestic savings, but this initial help from overseas 
        was an indispensable first step.

        Finally, and as a direct consequence of these three lessons, the role of an 
        effective and competent government cannot be overstated.

We need to look carefully at these and other lessons from Asia and consider the problems of transferring this experience to Africa. In the long run this can be much more constructive and relevant than what was achieved this week at the G8.

Professor John McKay is a Partner with Analysis International, a research institute and think tank based in Melbourne Australia, and is Director of the Australian APEC Study Centre. He is one of the authors of Key Issues in Development recently published in London and New York by Palgrave Macmillan.

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