A century ago the US entered the First World War. There had long been great resistance to America joining the conflict. One diplomat who had earlier attempted to avoid the outbreak of war was Colonel Edward House, President Woodrow Wilson’s chief political advisor.
House was one of the first advocates of international development. In 1913, he recognised the rising power and ambition of Imperial Germany. He suggested to Wilson that German business interests should expand overseas and over lunch with the German ambassador, Count von Bernstorff, proposed that ‘it would be a great thing if there was a sympathetic understanding between England, Germany, Japan, and the United States. Together I thought they would be able to wield an influence for good throughout the world. They could ensure peace and the proper development of the waste places, besides maintaining an open door and equal opportunity to every one everywhere.’ A peaceful solution was not found. His proposal for overseas development to resolve Germany’s expansionist urges fell on deaf ears and soon after guns thundered across Europe.
House wanted to promote globalisation through international development assistance, although it would take several decades for policy to catch up with his ideas. After the Second World War, territories that had been exploited through colonialism in Asia, South America and especially Africa, began to receive foreign aid and more commercial investment.
This started the era of international development and many countries in sub-Sharan Africa became heavily dependent on financial assistance. Some aid has alleviated pressing social needs, but money often arrives with conditions attached. One of the main impacts of development grants, loans and debt relief has been to encourage economic liberalisation by the removal of barriers to trade and investment, enabling further integration of the world economy.
International development facilitated globalisation, which has had many effects. Firstly, it has become easier for companies to invest overseas and the type of imperial ambitions that fuelled conflict in the first half of the 20th century have been tempered. Secondly, globalisation has made some places wealthy, but has also led to rising inequality. The economies of the West grew tremendously after 1945, but progress in Africa has disappointed, despite billions of dollars of aid.
China, which was poorer than Africa in 1950, has moved out of extreme poverty, and achieved phenomenal economic and social progress. This is a great global success story, notwithstanding the many political and environmental problems that persist. Beijing’s achievements were not due to foreign aid or an ‘open door’ to international business. China did not trade money for control of economic policy. Rather than unbridled globalisation, Chinese leaders first prioritised health and education, then gradually opened their economy to international competition, which set them on the road to prosperity.
Globalisation has recently encountered resistance in the developed world. On the surface, the UK and US remain affluent, but the economic structures of both are becoming unequal. Globalisation has led to the loss of manufacturing jobs in factories that could not compete with cheap imports, predominantly from China.
China increasingly leads the way, too, in extracting African natural resources and is now an important aid donor itself. State-backed banks are cutting new loan deals that have conditions attached that further promote Chinese business interests. Globalisation is set to continue in Africa independent of Western international development assistance.
Colonel House promoted the idea of international development to help globalise the world economy and resolve international tensions between powerful nations. Globalisation has helped forestall international conflict, but has amplified the disparities between rich and poor. People in the global South have paid the price for the free movement of money, goods and services. Impoverished Africans and poor people elsewhere need to own their own development. This means protecting their economies, and nurturing sectors that provide meaningful jobs with living wages in industry and service sectors. In tandem, there is an urgent need for financial support to address the social and environmental concerns of everyone.
The growth of economic nationalism in the US and the UK poses a threat to the future financing of the International Development sector. Furthermore, world leaders need to be attentive to the lessons of the First World War and not kettle China’s international ambitions. Isolationism is not the answer, but ensuring economic independence can provide the foundation for prosperity. Policy makers who want to address the deep-seated poverty in Africa need to resist bad deals and renegotiate terms of trade to relieve some of the pressures of globalisation. This task looks harder than ever as China’s financial influence replaces Western development assistance in determining economic policy in Africa.
This was published in the July 2017 edition of Geographical magazine.