Aid policy – the subject of the Monterrey summit – is an interesting study in hypocrisy. Leaders of the rich world tell poor countries they must liberalize their trade policies, pursue rational economic strategies, end corruption, defend the rule of law and invest more in health and education. Few would argue with that.
But what about the rich countries? They have cynically abused bilateral aid to further their political and trade aims in the developing world. Multilateral assistance through the International Monetary Fund, World Bank and, in the case of Latin America, the Inter-American Development Bank tends to reflect the policy du jour of the US Treasury.
Sadly, developing countries do not have much leverage over the United States or the European Union to stop them pursuing these policies. If the world’s richest nations really cared that much about eradicating poverty, they would stop supporting their farmers and ignore lobbyists for rust belt industries. Farm support policies and import barriers that defend the steel and textile industries in the US and EU undo all the good work the World Bank and IDB have ever done. The same applies to energy policy. Waste in the rich countries – especially the in the US – limits the ability of poor countries to increase emissions as they develop.
Of course, the developing world, especially the middle-income countries of Latin America, could do more to help themselves. They need to end corruption and lunatic economic policies. Governments need to encourage companies to export more non-traditional and value added products that are less vulnerable to rich country protectionism. Better still, these goods help create more wealth than low-grade agricultural, mineral and industrial commodities both for the exporting and importing countries.