via europa


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Crucial Other Causes I acknowledge that the scarcity of capital in DCs is partly due to the outflow of debt service payments. But a mayor cause for the lack of finance is a massive capital flight out of the developing countries. The UN Economic Commission for Africa (ECA) estimates that the deposits owned by Africans overseas amount to close to 30 percent of the GNP of the continent, and we find the corresponding syndrome in Asia and Latin America. A large amount of such money does not come from commercial earnings but from “diverted” public funds, exactly those which should be used for development purposes. But there is more. A mayor cause for slow development in very many DCs is related to a large variety of internal factors. They include – to start with the most obvious ones – ethnical, religious and/or political conflicts which more often than not result in open wars, both internally and between countries, and in a disregard of human rights. I cannot list those conflicts here since this paper must not be that long. In any case, they absorb enormous amounts of money, and they impede development. Tanzania has not really reduced it’s military expenses after having benefited from the HIPC initiative, and it has not been able to develop an investment climate which would attract foreign (private) investments. Bureaucracy, corruption, open criminality, and lack of infrastructure are no favorable frame conditions. Transparency International estimates that one third of public debts relate to corruption – e.g. credit financed projects which favor certain groups but do not have any positive impact on development

Lack of Dedication and Commitment
Furtheron, also in very many peaceable countries we have to observe a considerable lack of dedication, commitment, and ownership on the side of the governments and the powerful classes for development initiatives. What is referred to as Good Governance is more often than not very little developed, and there is usually a large gap between the ruling groups and the poor population. What we call a middle class is barely well developed. Politicians in the field of development cooperation may tend to object, but reality points the other way. (I am actively engaged in development cooperation since thirty years, and my firm opinion is based on experience.) This is why debt relief is not a sustainable solution as long as the underlying causes are not eliminated. As long as this is not the case, debt relief by one or some creditor countries is usually counterbalanced by debts raised in other countries, and the process starts from scratch. Debt relief will deflagrate unless this vicious circle of poverty can be broken through by a combined effort of improving the unfavorable external structural conditions on the world markets for the developing countries (admitted) plus – and this is the real crucial issue – by making very much better use of the existing internal resources. There is no need to look for new concepts.