Official development assistance and poverty reduction strategies : a critical examination of the "New Poverty Agenda" : a research report presented in partial fulfilment of the requirements for the MPhil in Development Studies, Massey University

Abstract

Development assistance or aid as we know today was created in the post-war years. During the 1950s and 1960s three main factors contributed to the expansion of development assistance to developing countries. They are cold war rivalry between the Soviet Union and United States which led to the expansion of bilateral aid, the wave of independence from mid 1940s onwards that created a need and demand for aid, and the formation of multilateral organizations such as the United Nations' Agencies and the World Bank. Over the years donors have provided a number of justifications for providing development assistance. They include economic reasons, political v strategic or security reasons, and humanitarian reasons including poverty reduction.

Poverty reduction as an objective of development assistance, has received varying levels of importance in the history of development assistance. Poverty reduction was the main focus of development assistance in the 1970s. This focus was soon overtaken by the 'oil crises' and the mounting debt problems of poor countries. In the 1990s, poverty reduction re-emerged as the main focus of development assistance. This study had generally focused on tracing the place of poverty reduction in development assistance and assessing the degree of change and continuity in development practice. More specifically, this study examined the 'new poverty agenda' with the aim of comparing and contrasting it with past development strategies.

The historical review of development assistance and poverty reduction revealed that development practice had mostly been based on the dominant theories and ideologies in donor countries, as opposed to ideas and needs of the recipients. Even though poverty reduction has often been quoted as one of the important objectives of development assistance, in practice it has always been dominated by objectives such as increasing economic growth, debt repayment or promotion of macroeconomic reform. The historical review of the effectiveness of development assistance also revealed that it has not been very successful in reducing poverty in poor countries. While at times it had been successful in helping the poor, this was often at the expense of the 'other' poor. Similarly, development practice had not been very successful in reaching the 'poorest of the poor' in recipient countries.

The study reviewed 'new poverty agenda' through the World Development Reports (1990-200/2001), the International Development Targets and key concepts of the agenda. The review of the 'new poverty reduction' agenda was mixed. From a purely theoretical basis the 'new poverty agenda' have many positive points including the consensus on the multi-dimensional nature of poverty, country 'ownership' of development strategies and partnership with recipient countries. The multi-dimensional view poverty and the International Development Targets for achieving poverty reduction has raised the issues previously neglected such as social security and empowerment. On the other hand, the 'new poverty agenda' was found to be built around some of the main elements of the neo-liberal ideology of the past few decades. The importance attached to income-based approaches and the emphasis on economic growth and other related aspects such as making markets work for the poor and expanding people's productive assets in the World Development Report 2000/2001 showed that economic development is still given priority over all other dimensions of poverty. In spite of the recognition of the multi-dimensional nature of poverty it was not matched by a multi-dimensional approach to poverty reduction in its policy prescriptions. At the same time the practice of poverty reduction in the 1990s points to the gap between the rhetoric and reality.