U.N. Development Disasters

Since it first entered the development assistance business in 1950, the United Nations has helped to secure worldwide acceptance for the proposition that massive state-to-state resource transfers in the name of growth and progress for low-income areas should be a regular feature of the modern international order. So it’s fair to ask: Have U.N. development efforts really accomplished their aims? What has the impact of development assistance been in low-income regions--the so-called Third World?

To begin, one should recognize the obvious: the era of the development assistance policy has in fact been a time of tremendous worldwide economic development. But despite such general progress, all has been far from well in economies distinguished by long-term recipience of official development assistance (ODA). In many of them, anomalous but common patterns of severe structural distortions have emerged, the symptoms of which may be described as industrialization without prosperity and investment without growth. Economies afflicted by these syndromes appear strangely incapable of responding to the needs of their own consumers or of arranging for their own sustained growth. How such perverse and intrinsically unsustainable patterns should have arisen, spread and (in some places) continued for decades is one of the great puzzles facing modern development economics. Part of the answer to the puzzle, sadly, may lie in development assistance policy itself--more specifically, in the workings of those long-term transfer programs in actual practice. For ironically, the prospect of substantial and steady flows of money from developed countries has permitted Third World governments (and not just a few of them) to pursue development policies that have been expensive, ill-conceived and unproductive--in some instances, even so positively destructive that they probably could not have been sustained without outside support.

To be sure, worthwhile, commendable, even outstanding development-related initiatives under the U.N. imprimatur can be identified. But on the whole, the quality and effectiveness of the United Nations’ development activities is not very high.

In U.N. development agencies, lack of transparency and accountability have predictably encouraged wastefulness, and perhaps corruption. Yet unattractive as such practices may be, they are, in a sense, self-limiting. Under the very worst of circumstances, after all, development officials could only squander as much--or steal as much--as their development program had allotted in funding, leaving recipient countries no worse off than they would have been in the absence of such “assistance.”

In other ways, however, the damage can be much worse. Adverse policies and malign practices by a recipient can waste or destroy vast amounts of local wealth and prevent productive domestic enterprise from being undertaken. By contributing to the corruption of the local policy climate, aid transfers can pervert development, slowing the pace of economic growth or derailing growth altogether. In this manner, in extremis, development assistance can actually impoverish its intended beneficiaries.

It is precisely the pernicious effect of so many U.N. development activities on policy formation in poor countries that is cause for the greatest concern. Even a summary review of the United Nations record in development assistance will illustrate the disturbing degree to which the U.N. systems function in the postwar development process to offer unsound advice (sometimes spectacularly unsound advice) to low-income countries--and to make such unwise counsel respectable, authoritative and financially enticing.

Consider:

  • The Food and Agriculture Organization (FAO). For more than a generation, a succession of methodologically flawed FAO World Food Surveys seriously overstated the prevalence of malnutrition in developing countries; by so doing, FAO arguably impeded the advance against hunger, discouraging action by depicting the problem as almost insurmountably large and misdirecting available international resources away from the places where they might have made the most difference.

Since its inception, the FAO has harbored deep institutional suspicions about relying on markets and marketing to enhance food security in poor countries; FAO’s clear policy sympathies have lain instead with parastatal and state-owned food boards and with the stockpiling of state grain reserves. Almost everywhere these preferred FAO strategies have been implemented, unfortunately, they have proved to be both inefficient and unnecessarily expensive.

  • The World Health Organization (WHO). WHO’s reputation today draws upon its earlier initiatives against communicable and tropical diseases--most famously, its role in the eradication of smallpox. Unfortunately, WHO today looks to be an agency determined to re-fight the last war.

Although worldwide improvements in life expectancy and attendant changes in health patterns have shifted the global burden of disease from the communicable toward the chronic, WHO has largely neglected the critical implications of this transition. Instead WHO has opted, somewhat nostalgically, to concentrate upon the re-emergence of traditional diseases. It has also harnessed its energy behind a drive to codify and enforce an international Essential Drug List, the inevitable consequences of which have been to restrict the choice and limit the quality of medicines now available to patients.

  • The United Nations Population Fund (UNFPA). Fortified by the sectarian conviction that uncontrolled population growth poses the greatest danger to well-being and development in the world’s poorer countries, UNFPAs leadership has tolerated, and indeed financed, population activities that expose prospective parents to anti-natal exhortation, pressure and even coercion. In the real world, involuntarily limiting personal choices about family size automatically reduces the living standards of those concerned. To the extent that UNFPAs overpopulationist dogma has diverted attention from remediable, but non-demographic, causes of poor economic performance in low-income countries, UNFPA’s international proselytic efforts have served to dissipate the pressure for Third World economic reform.
  • The United Nations Children’s Fund (UNICEF). UNICEF transformed itself in the 1980s into an activist agency focused on advocacy of an international development agenda. In UNICEF’s view, market-oriented reforms, privatization of state-owned enterprises, liberalized trade arrangements and smaller, more limited government are, on the whole, hazardous to children. By contrast, reduced defense spending, augmented social welfare budgets, enhanced state control over local economic activity, greater state-to-state aid flows, and a more overarching restructuring of international trade and finance for low-income areas are generally described as children-friendly.

During the Third World debt crisis, UNICEF devoted much of its energy to arguing that debt repayment on terms originally contracted would be strongly against the interest of children. In the 1990s, UNICEF has applied its special approach to development debate to the post-communist region, where it has discovered that: An overly rapid transition from central planning to market systems is likely to threaten the prospects of children.

  • The United Nations Development Program (UNDP). This traditional funding agency (underwriting FAO, WHO, etc.) has in recent years developed its own high-profile capacity for policy recommendation. UNDP’s development advice is encapsulated in its annual “Human Development Report,” first published in 1990. The 1994 report states that it is possible--indeed mandatory--to engineer change, and proposes to do so through a new design of development cooperation. Features of this new design include a “North-to-South transfer mechanism for payment for services rendered and compensation for damages suffered and new sources of international [aid] funding that do not rely entirely on the fluctuating political will of the rich nations”--that is, global taxation to finance development assistance.
  • The U.N. Economic Commission on Latin America (ECLA). ECLA’s influence on policy circles in Latin America has been profound. ECLA championed the argument that Latin American economies could not prosper through a trade-led development strategy and advised countries to throw themselves instead into import substitution and promotion of infant industries.

To an arresting degree, Latin America has reaped what ECLA has sown. As economic reformers in the region are now ruefully realizing, the continent today is littered with infant industries that have never grown up. By the 1980s--when the debt crisis struck in Latin America--no amount of erudite structuralist analysis could obscure the fact that borrowed money is more difficult to repay if it has been used for unproductive purposes.

  • The U.N. Conference on Trade and Development (UNCTAD). Over the past generation, UNCTAD has been closely involved in shaping the policies of the Group of 77. Since 1964, this continuing conference has steadfastly lobbied for increased unconditional ODA transfers to governments of Third World countries; restrictions on transnational corporate enterprise and direct private foreign investment in Third World countries; international commodity agreements that would raise export prices for, and facilitate formation of cartels by, Third World producers of primary products; and non-reciprocity in trade. For the governments that have taken its advice to heart, UNCTAD has in effect offered a formula for achieving economic slowdown.
  • The U.N. Economic Commission on Africa (ECA). Pride of place for malign development advice probably goes to the ECA, whose assessments and recommendations are closely followed at the Organization of African Unity (OAU). By the start of the 1980s, when the dire economic trends in the sub-Sahara could no longer be denied, the ECA’s proposed remedies included policy emphases on comprehensive planning, large parastatal firm expansion, capital-goods and heavy industry development, increased state intervention in peasant price-setting, and an introverted development strategy. And in the late 1980s, when sheer financial exigence seemed to be creating pressure for far-reaching reform of governmental policies and practices in the sub-Sahara, ECA went on record as opposing even the relatively buffered structural adjustments the World Bank then favored, arguing instead that Africa’s fundamental need was actually for debt relief.

Let us set an exceedingly modest criterion for development assistance. Is there reason to believe that the tens of billions of dollars--perhaps hundreds of billions of dollars--that the U.N. system has spent on development over the postwar period have on balance made a positive contribution to material advance in the poorer regions of the world? As this thumbnail history indicates, the argument that U.N. development activities have in fact met this minimum specification for performance is neither self-evident nor even strongly persuasive.

In the final analysis, the most crucial development resource the U.N. has transmitted to low-income areas may not have been money, but rather ideas and advice about policy. It is in this realm that the United Nations’ failures appear most profound. All too often, the development doctrines that have evolved under the aegis of the U.N. system have played to the worst instincts of ruling circles and opinion shapers in low-income areas, reinforcing the temptations of willful dirigisme while distracting attention from the mundane but necessary tasks of governance and market-building.

Nicholas Eberstadt is a visiting scholar at AEI. This piece is adapted from a chapter in Delusions of Grandeur: The United Nations and Global Intervention which is to be published today by the Cato Institute.

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