Britain and other imperial powers exported capital and manufactured goods to colonised countries in return for substantial imports of raw materials. This set up trading relationships that persist through to this day.
Aid money from the colonisers to their colonial governments, usually in the form of loans, was never enough for genuine economic development, instead it usually benefitted urban elites and colonial business interests.
1944-46 Post-war development
The United Nations was established along with international financial institutions (IFIs): International Bank for Reconstruction and Development (IBRD or World Bank) & the International Monetary Fund (IMF).
World Bank founded to raise capital for the reconstruction of Europe and Japan; original aim of the IMF was to promote international monetary stability.
Aid was viewed as a way of supporting ‘developing’ country economies to industrialise, attracting large scale investments of capital and technical expertise that would lead to western style industrial development.
While this process was successful for many European countries, the power imbalance between the (primarily Western controlled) International Financial Institutions and the recipient countries in Africa, Asia and the Pacific meant that industrialisation attempts largely proved disastrous for communities and environments in countries mandated for ‘development’.
1949 Modernisation and industrialisation
Development aid focused on the dominant economic and political theories of the time.
[i] US President Harry Truman stated that ‘underdeveloped’ countries had to modernise and industrialise if they wanted to tackle poverty and economic problems.
Industrialisation proved largely disastrous for communities and environments mandated for development largely due to the power imbalance between the IFI’s and recipient countries in Africa, Asia and the Pacific.
Notions of the ‘developed’ and ‘developing world’ emerge out of decolonisation and the lack of industrialisation in many newly formed independent states.
What happended next is up for debate; certainly
Tthe idea of tackling poverty took hold and the UN and Bretton Woods Institutions (originally formed for post-war reconstruction) became mechanisms for action on development, although many would argue that the institutionisation of aid programs amounted to neo-colonialism.
1970s A more human approach
Development focused more on social considerations such as health (life expectancy, infant mortality rates and disease), education, income distribution, and gender equality, rather than simply macroeconomic growth.
The UN family of organisations and the World Bank conceded that, whilst the old model of development aid led to some significant economic growth, it had made little impact on social indicators of poverty such as life expectancy, infant mortality rates, income distribution and education levels.
1980s The Lost Decade of Development
Recession in the industrialised world and debt crisis in developing countries ensues. The structural adjustment policies of the World Bank and regional development banks force major economic reforms through privatisation and deregulation in the developing world.
2000 Millennium Development Goals
Partly as a response to the failure of explicitly growth-focused aid in alleviating poverty, governments come together to form an international action plan to increase the amount of aid by 2015 to 0.7% of GNI and to target poverty reduction in eight areas.
2005 The Paris Declaration
91 countries make a joint agreement on aid effectiveness. The Declaration sidelines growth as the foundation of aid effectiveness, instead focussing the principles of recipient ownership, alignment, harmonisation, managing for results, and mutual accountability.
[i] For more, see Hunt J., ‘Aid in an era of globalisation’, Dialogue: Journal of the Academy of the Social Sciences in Australia, 22:3/2003, pp 4-11.(9) Louis Emmerij, 2002, “Aid as a flight forward”, Development and Change, 33(2), pp. 247-260.
[ii] Louis Emmerij, 2002, ‘Aid as a flight forward’, Development and Change, 33(2), p.239-246.
[i] The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action, OECD, 2008 http://www.oecd.org/dataoecd/11/41/34428351.pdf
Resources for research on the history of foreign aid