The effect of foreign aid from developed countries to developing ones has been a recurring topic of discussion among scholars regarding whether it results on mostly positive or negative outcomes. However, this issue has gained further complexity in the past two decades due to the upsurge of emerging countries as new donors under the banner of South-South cooperation. With that in mind Ricardo Bustillo and Mubinzhon Abduvaliev aim, in their article “Patterns of Official Development Assistance in Tajikistan: effects on growth and poverty reduction,” (Vol. 63, n. 2) to investigate the results of development assistance directed towards Tajikistan on its economic growth and poverty reduction. More specifically, the research assesses the role of South-South cooperation, particularly that of China. The authors were interviewed by Sara Domingos Rodrigues, member of the promotion staff of RBPI, regarding their views on topics related to their research
One remarkably interesting aspect of your study about development aid and Tajikistan is that it shows how important a country’s institutions are in the efficient allocation of resources. Because of that, corruption can significantly harm the development of a state. Having that in mind, what would be some recommendations that you could think of which could be used to make institutions more efficient when applying the resources obtained from foreign aid?
It is obvious that corruption undermines investor confidence, reduces aid effectiveness, and tends to reduce the much needed political support for donor assistance. Based on current Tajik’s situation I would suggest the following recommendations. The Tajik governments need to be held accountable for the use of aid. Additionally, given the present aid architecture in Tajikistan and its current stage of development, it should be necessary to create a separate and specialized agency or structure to deal with foreign aid coordination. Moreover, donor countries can also create a mechanism to encourage the recipient countries to be more accountable and responsive, However, some measure should be taken to give recipient countries an incentive to be less dependent on aid and donors’ technical assistance, donors need to set deadlines for aid phase-out. It could be interesting as well to introduce a system of personal responsibility for using foreign aid resources within particular projects and programs and this project should be monitored by the Agency. Finally, governments ought to focus on the results of funded projects instead of on the amounts and volume of aid provided.
One discussion that you present in your article is to what extent South-South cooperation creates a win-win scenario vis-à-vis how dependent Tajikistan is of Chinese imports, the impact of Chinese industries on the local economy, Tajik public debt and the extraction of national resources. With that in mind, do you believe that there are measures that could make this type of cooperation more equally beneficial to both investors and recipients of such investments?
The relationship between China and Tajikistan in the sphere of development assistance appears to show the features of win-win cooperation widely promoted by China within the framework of South-South Cooperation. China as the main partner for Tajikistan provides the country with cheap finance in the form of concessional loans, grants and investment. Moreover, China also provides Tajikistan with needed non-monetary means such as equipment, goods and services. As the result, Tajikistan gets feasible infrastructure to improve their trade and attract more investment. It should also be mentioned that there are other factors that accelerate the relationship between China and Tajikistan. For instance, the present relationship between China and Tajikistan is defined mostly by geographic and economic factors. In terms of geography, China and Tajikistan are neighbours. For China, the energy resources, metals, cotton, and other commodities, as well as the raw materials and markets of Tajikistan, are very important. At the same time, China’s industrial, consumer and agricultural products and markets hold a strong attraction for Tajikistan. However, some of the recent features of Chinese assistance, together with the economic dependence of Tajikistan from China’s aid have made us think that the donor is obtaining more benefits than the recipient country. Measures aimed at creating jobs inside Tajikistan should be applied to reduce the huge Tajik immigration rate.
Bilateral aid in Tajikistan, which is majorly Chinese, surpasses multilateral aid by a considerable difference. Furthermore, China invests heavily not only in Asia but also in Africa. Is it possible to affirm that South-South cooperation might become one of the main tools for developing countries to achieve economic growth and reduce poverty?
South-South Cooperation is often considered as a continuation of the global dialogue on development and establishment of a fairer and more equal relation between countries. South-South Cooperation has received lately more attention as developing countries gain increasing weight in the world economy. China’s huge foreign exchange reserves has become the second largest economy in the world. Its economic power opens enormous opportunities for China not only to further develop its economy but also to expand its political influence and ODA has become one of the main tools of China to pursue its interests abroad. Furthermore, China by now is the largest South-South cooperation provider covering foreign assistance and other development financing, trade and investments, people-to-people exchanges, building capacities, and sharing experience and technological solutions that might become one of the main tools for recipient countries to achieve economic growth as well as reduce poverty. Despite the increased relevance of South-South Cooperation in Tajikistan, the current bilateral cooperation pattern does not allow us to think South-South aid will favour employment creation opportunities.
In your study, you show that official development assistance directed to Tajikistan has increased the per capita GNP while decreasing the levels of poverty. At the same time, you point out the fact that such assistance has not necessarily created employment or growth opportunities. From your experience, do you believe that there are ways to ensure that development assistance improves the quality of life of the people in the recipient country?
Indeed, the purpose of official development assistance is to address on poverty alleviating, enhancing living standards and quality of life for people in the developing countries. We should take into account that the effect of official development assistance depend on the institutional level of recipient countries, since better policies together with rationally improved allocation of aid make aid more effective today at reducing poverty. Moreover, although official development assistance has increased per capita GNP and decreased the levels of poverty in recipient countries, official development assistance cannot be the main source aimed at improving the quality of life of the people among recipient countries. Furthermore, official development assistance may have detrimental effects, such as less government spending on welfare or fewer or no institutional reforms. Governments in official development assistance receiving countries should seek to break the vicious cycle of foreign aid dependency by ensuring good welfare coverage and a secure investment climate. The promotion of official development assistance should only be one part of any country’s development strategy.
Read the article
Abduvaliev, Mubinzhon, & Bustillo, Ricardo. (2020). Patterns of Official Development Assistance in Tajikistan: effects on growth and poverty reduction. Revista Brasileira de Política Internacional, 63(2), e006. Epub August 07, 2020.https://dx.doi.org/10.1590/0034-7329202000206
About the authors
Mubinzhon Abduvaliev, University of the Basque Country UPV/EHU, Applied Economics V, Bilbao, Spain
Ricardo Bustillo, University of the Basque Country UPV/EHU,Applied Economics V, Bilbao, Spain
Sara Rodrigues, University of Brasilia, Institute of International Relations, Brasília, Brazil
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