[UN] Aid is not the answer, says UN agency

from The Guardian

Angela Balakrishnan

While foreign governments and charities focus on aid in their fight against poverty, a United Nations agency is urging developing countries to look to their own regional trade and manufacturing to improve their quality of life.

In a new report, the UN Conference on Trade and Development (Unctad) says that aid money and trade policies from foreign governments have created uneven and fragile growth in the world's 50 least developed countries (LDCs). Instead, the UN body sees job creation and full use of resources as the key to reducing poverty and delivering long-term, stable growth.

During 2004, many LDCs, including Bangladesh and Mozambique, recorded economic growth of around 5%. But Unctad says much of this had little impact in improving the quality of life for the poor.

"LDCs are growing and this is encouraging, but it is not enough to meet the millennium development goals," said Zeljka Kozul-Wright, one of the report's authors.

The difference between developed nations and poor countries is highlighted by the sharp contrast in productivity levels, a root cause of persistent mass poverty, the report says. From 2000-2003, it took 94 LDC workers to match the productivity of one worker in a developed country.

"Poor countries have been slow to tap into their traditional knowledge and vast pool of female and young workers. There are plenty of resources that can be unleashed, and we can achieve high, sustained growth through that," said Ms Kozul-Wright.

The author stressed that employment, especially outside the agricultural sector, should be the focus along with encouraging innovation to stimulate poor economies.

Emphasis also needed to be shifted towards urbanisation rather than agriculture, which still employed 70% of the labour force in LDCs in 2000-2003. The report predicts that by 2010, the growth of the workforce outside agriculture will be far greater than that within it, yet there is an inadequate number of jobs being generated in the industrial and service sector.

"A country that succeeds at this process will reduce poverty for itself," the report says , "[It] will no longer need periodic doses of humanitarian aid, will keep its best-educated citizens at home [instead of losing them to jobs overseas] and will reduce the floods of desperate migrants who now seek to enter western Europe and north America."

While increasing levels of aid have helped eliminate some poverty, Unctad says LDCs should not rely too much on volatile external sources.

"Aid should not be looked at as charity, but needs to used as a tool to accelerate growth rather than just create it," said Ms Kozul-Wright.