not to go on about this but this whole issue is so misunderstood it could use a little more attention and clarity...
More Money Is Transferred From Poor Countries to Rich, Than From Rich To Poor
For the OECD countries to meet their obligations for aid to the poorer countries is not an economic problem. It is a political one. This can be seen in the context of other spending. For example,
* The US recently increased its military budget by some $100 billion dollars alone
* Europe subsidizes its agriculture to the tune of some $35-40 billion per year, even while it demands other nations to liberalize their markets to foreign competition.
* The US also introduced a $190 billion dollar subsidy to its farms through the US Farm Bill, also criticized as a protectionist measure.
* While aid amounts to around $50 to 55 billion per year, the poor countries pay some $200 billion to the rich each year.
* There are many more (some mentioned below too).
In effect then, there is more aid to the rich than to the poor.
link
Aid Amounts Dwarfed by Effects of First World Subsidies, Third World Debt, Unequal Trade, etc
Combining the above mentioned reversal of flows with the subsidies and other distorting mechanisms, this all amounts to a lot of money being transferred to the richer countries (also known as the global North), compared to the total aid amounts that goes to the poor (or South).
As well as having a direct impact on poorer nations, it also affects smaller farmers in rich nations. For example, Oxfam, criticizing EU double standards, highlights the following:
Latin America is the worst-affected region, losing $4bn annually from EU farm policies. EU support to agriculture is equivalent to double the combined aid budgets of the European Commission and all 15 member states. Half the spending goes to the biggest 17 per cent of farm enterprises, belying the manufactured myth that the CAP [Common Agriculture Policy] is all about keeping small farmers in jobs.
— Europe’s Double Standards. How the EU should reform its trade policies with the developing world, Oxfam Policy Paper, April 2002, p.18 (Link is to the press release, which includes a link to the actual Microsoft Word document from which the above is cited.)
The double standards that Oxfam mentions above, and that countless others have highlighted has a huge impact on poor countries, who are pressured to follow liberalization and reducing government “interference” while rich nations are able to subsidize some of their industries. Poor countries therefore have an even tougher time competing. IPS captures this well:
“On the one hand, OECD countries such as the US, Germany or France continue through the ECAs [export credit agencies] to subsidise exports with taxpayers' money, often in detriment to the competitiveness of the poorest countries of the world,” says [NGO Environment Defence representative, Aaron] Goldzimmer. “On the other hand, the official development assistance which is one way to support the countries of the South to find a sustainable path to development and progress is being reduced.”
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As well as agriculture, textiles and clothing is another mainstay of many poor countries. But, as with agriculture, the wealthier countries have long held up barriers to prevent being out-competed by poorer country products. This has been achieved through things like subsidies and various “agreements”. The impact to the poor has been far-reaching, as Friends of the Earth highlights:
Despite the obvious importance of the textile and clothing sectors in terms of development opportunities, the North has consistently and systematically repressed developing country production to protect its own domestic clothing industries.
Since the 1970s the textile and clothing trade has been controlled through the Multi-Fibre Arrangement (MFA) which sets bilateral quotas between importing and exporting countries. This was supposedly to protect the clothing industries of the industrialised world while they adapted to competition from developing countries. While there are cases where such protection may be warranted, especially for transitionary periods, the MFA has been in place since 1974 and has been extended five times. According to Oxfam, the MFA is,
“...the most significant..[non tariff barrier to trade]..which has faced the world’s poorest countries for over 20 years”.
Although the MFA has been replaced by the Agreement on Textiles and Clothing (ATC) which phases out support over a further ten year period — albeit through a process which in itself is highly inequitable — developing countries are still suffering the consequences. The total cost to developing countries of restrictions on textile imports into the developed world has been estimated to be some $50 billion a year. This is more or less equivalent to the total amount of annual development assistance provided by Northern governments to the Third World.
— Clothes, The Citizens' Guide to Trade, Environment and Sustainability, Friends of the Earth International, January 24, 2001
There is often much talk of trade rather than aid, of development, of opening markets etc. But, when at the same time some of the important markets of the US, EU and Japan appear to be no-go areas for the poorer nations, then such talk has been criticized by some as being hollow. The New York Times is worth quoting at length:
Our compassion [at the 2002 G8 Summit talking of the desire to help Africa] may be well meant, but it is also hypocritical. The US, Europe and Japan spend $350 billion each year on agricultural subsidies (seven times as much as global aid to poor countries), and this money creates gluts that lower commodity prices and erode the living standard of the world’s poorest people.
“These subsidies are crippling Africa’s chance to export its way out of poverty,” said James Wolfensohn, the World Bank president, in a speech last month.
Mark Malloch Brown, the head of the United Nations Development Program, estimates that these farm subsidies cost poor countries about $50 billion a year in lost agricultural exports. By coincidence, that’s about the same as the total of rich countries' aid to poor countries, so we take back with our left hand every cent we give with our right.
“It’s holding down the prosperity of very poor people in Africa and elsewhere for very narrow, selfish interests of their own,” Mr. Malloch Brown says of the rich world’s agricultural policy.
It also seems a tad hypocritical of us to complain about governance in third-world countries when we allow tiny groups of farmers to hijack billion of dollars out of our taxes.
— Nicholas D. Kristof, Farm Subsidies That Kill, New York Times, 5 July 2002
In fact, J. Brian Atwood, stepped down in 1999 as head of the US foreign aid agency, USAID. He was very critical of US policies, and vented his frustration that “despite many well-publicized trade missions, we saw virtually no increase of trade with the poorest nations. These nations could not engage in trade because they could not afford to buy anything.” (Quoted from a speech that he delivered to the Overseas Development Council.)[/url]