Amid the lingering effects of the global financial crisis, there has been an ongoing debate regarding the strategy behind international aid. The question is whether to continue with traditional projects that seek to alleviate poverty through the provision of basic human needs such as health care, education, and food security, or to refocus efforts on building the capacity of local governance thereby making developing countries capable of addressing these issues on their own. While this debate has been around for at least two decades, current budgetary constraints in donor countries have brought the conversation back into focus.
Speaking in terms of policy, there has long been consensus on the fact that better governance leads to more vigorous economic growth. Regardless of rhetoric, however, donor agencies have continued to channel the majority of their resources toward areas like infrastructure, agricultural development, and education. This must change if the development community wants to meet its goals.
On a panel at the Center for Strategic International Studies, Executive Director of the Center for International Private Enterprise (CIPE) John Sullivan joined three other discussants – including a World Bank VP and U.S. Ambassador – to talk about the nexus between governance and growth. The panelists unanimously agreed that governance, specifically democratic governance, is a crucial element of moving developing countries off of foreign aid. Good governance is an enabler that allows developing countries to better utilize donor funding and develop sustainable, local solutions to challenges.