Chinese and European Development Programs

¶ … Chinese and European development programs benefit the political and economic development in Ghana? Today, given the Millennium Development Goals and the overall general movement on development, there is a constant tendency of the developed countries to provide increased attention and assistance to the African continent. In this sense, the U.S. launched its Africa Development Foundation, China, in its turn established its China-Africa Development Fund, whereas the European Commission established a large part of its strategic partnerships with African states. However, these initiatives are not without criticism.

Thus, it is considered by analysts that the new development programs established by the developed countries sometimes seem to be more beneficial for the donors, rather than for the direct beneficiaries, the African continent. The majority of African countries may benefit from oil and mineral resources that have the potential of transforming economies. but, the general opinion among scholars is that these resources represent more a curse than a blessing.

The opponents of the foreign development programs in Africa believe that the world's developed countries are more concerned with the potential economic benefit from African oil, copper and cobalt sources rather than with the sound end sustainable development of the African countries, in all of their economic, political, and most importantly social perspectives. Given the nature of the debate raised by this constant discussion over development theories, its benefits and shortcomings, my thesis will analyse the way in which the development programs underway in Africa benefited sustainable development.

More precisely, the analysis points out whether the new development programs encourage the transformation of the potential of natural resources into resources for human development, economic and political construction or, on the contrary, only foster the political and economic instability within some African states. Given the wide variety of characteristics inside the African continent, the thesis focuses on the example of Ghana and its relation with two of its most important donors, the EU and China.

More precisely, the focus is on the development programs undergone by the two donors and there impact on the future development programs for Ghana. Ghana is a peaceful and stable democracy, which makes good progress toward its goal of becoming a middle-income country by 2020. In 2008 it was revealed that Ghana has substantial oil reserves which will become available in 2010.Ghana's government anticipates that oil and gas will generate about $500 million in revenues in 2011.

With economic growth rates even as high as 6 per cent over recent years, Ghana is "an emerging African economic success story" (CIDA 2010). However, even though this country is moving fast towards its economic development, Ghana ranks 130 out of 169 countries on the United Nations Development Programme's 2010 human development index (UNDP 2010). Therefore, there is no doubt that Ghana still needs some innovative development programs, which will let its Development indicators increase in the nearest future. Both the EU and China promise to do that with the help of their development aid programs.

Even though Ghana is known for its stability and democratic government, the country has a poor record of managing finances transparently. Therefore, there are not only doubts concerning the hidden motives of the economic powers which are conducting their development programs in Ghana, but there are also some doubts about who in Ghana will benefit from such programs. In this sense, my thesis also aims to identify whether the aid from the Chinese and European development programs benefits the Ghanaian power holders, or the people of Ghana.

Thus, both of the above mentioned issues, of Ghana's 'external' and 'internal' benefit from the EU and Chinese development programs are discussed. It is rather hard to determine the extent to which development programs reach their aim in a short period of time. Development theories consider long periods of time for impact assessment (Chachage, 1987). This is one of the most important aspects for which a research paper in the field cannot be considered comprehensive enough without a fifty-year background for analysis.

However, partial results may show that both China and the European Union are faced with the stringencies of the market economy and globalization and are therefore more oriented towards emerging countries that in turn can become equal trade partners especially in the natural resources area. On the other hand, development programs do benefit the population of Ghana especially given the specificities of the donors. In this sense, China for instance is a project-oriented donor that implies the existence of an idea based on government initiatives (Mohan, 2010).

Overall, it can be argued that a clear-cut answer to the research question is both difficult to provide and is not advisable, given the fact that a statement one way or another would limit the possibilities and directions for further research. Literature Review: Give the narrow path of the research question, the public popular information on the subject is relatively scarce.

However, international organizations such as the UN with its development agency, the UNDP, as well as the European Union provide extensive information on the evaluation of the development programs in Africa in general, and in Ghana in particular, as well as on the overall political and economic situation in Ghana. One of the most important documents in the field of development is considered to be the Human Development Report issues annually by the United Nations.

The UN represents in this sense one of the most accredited and useful resource for research largely because in its status as an international organization and development agent, it has provided extensive knowledge and experience in development aid and assistance. For the purpose of the research the latest HDR is used extensively to offer a starting point for the analysis on the situation in Ghana. Currently, according to the 2010 HDR, Ghana is on the 130th position, in the category of low human development index (UNDP, 2010).

More precisely, it is considered that Ghana is still an underdeveloped country. Even so, the UN Report on Least Developed Countries does not make reference to Ghana, a fact that is encouraging for the African state (United Nations Conference on Trade and Development, 2010). The Human Development Index is crucial because it represents a composite index taking into account several aspects of life, from infant mortality to the level of literacy among adults.

However, the value for Ghana is 0.467 whereas Cambodia for instance (a country which has constantly experienced historical, political, economic, and social unrest) is above Ghana, a well-balanced emerging economy. This aspect alone reflects the need for time in order to ensure the visibility of development benefits. The shortcomings of the HDR consist mainly, as presented in the preface of the document, in the complete reliance on national statistics. In this sense, the facts and classifications are established according to national information sources that may be out-dated or may lack credibility.

Similar resources are available throughout the UN system, from the HDR to the Least Developed Countries Report that combine the theory of sustainable development with the facts and figures from the countries around the world. These include the official internet sources of UNDP Ghana, which is the representative of the United Nations Development Program in the country as well as other UN sources related to development reports on Ghana.

A good source for the theory of development in the Cold War period is Chachage's "Towards a critique of development theories in Africa" of 1987. The author offers a comprehensive overview on development theories from the end of the Second World War to 1987. In his perspective, "The post-World War period witnessed, in Europe and USA, the emergence of studies dealing with "social change"; "patterns of development and "development strategies" which promote economic prosperity.

At the same time politicians and institutions such as the World Bank, International Labour Organization, and major commercial banks became involved in promoting "economic growth" spending (and still spend) large amounts of money." (Chachage, 1987) More precisely, his input is important because he offers an important perspective on the way in which development transformed during the Cold War in the context of the emergence of donor countries on the one hand, and the Bretton Woods institutions on the other. His insight provides the background for development analysis.

The shortcoming of his perspective is related in particular to the limited time under analysis as well as the extensive theoretical perspective it provides to the subject. On a more applied note, Robert P. Amstrong's book, "Ghana Country Assistance Review: A Study in Development Effectiveness" represents a valuable source for information particularly because it is a World Bank publication. This can have its benefits and shortcomings. The 1996 publication offers a perspective from the WB on how development impacted Ghana at that moment.

Indeed, the research and information are extensive and is a trustworthy source of data. At the same time though, its shortcomings, aside from its lack of actuality, is the potentially bias nature of the information.

In this sense, "the review finds that WB loans of more than $2 billion since 1984, including more than $1 billion for adjustment operations have contributed to Ghana's progress (…) Poverty in Ghana has decreased and the gross domestic product (GDP) growth rate has averaged nearly 5% over the past decade -- higher than in any other African country except Botswana and Mauritius" (Armstrong, 1996). The analysis provided is thorough and bias at the same time. However, Armstrong provides a valuable background and policy analysis.

In terms of the relations between Ghana and its major donors, China and the EU, Giles Mohan writes a comprehensive overview of the relations Ghana has with China and the potential political and economic interests that may drive China to indeed become a crucial donor for Ghana. More precisely, the author connects the new found Chinese desire to invest in the African country to the new found oil reserves in Ghana.

Furthermore, he contents that given the past nature of the relations between China and the rest of the world (such as the EU for instance), the presence of China in Ghana is also geopolitically related and not necessarily humanitarian and development related. The perspective is valuable because the author points out potential political linkages between the resources found in Ghana and the sudden desire of China to invest in Africa.

In order to understand the evolution and future of EU -- Ghana relations an important analysis is to be made on the current EU development policies. The European Commission "European Union development policy in support of inclusive growth and sustainable development. Increasing the impact of EU development policy" is one of the most recent documents that offers a clear image of where the development policies of EU are heading in what regards sustainable development.

Taking the Millennium Development Goals as a guideline in creating developmental assistance the EU, 2010 saw the adoption of an important document that affirms 2015 will be the year when a collective target of devoting 0,7% of the Union's GNI will go to the Official Development Assistance. (European Commission, 2010) This initiative will offer not only more funds for countries in need, but also a higher responsibility for recipient countries that will move from a donor-beneficiary relation towards a partnership in development one.

The report will be used briefly to sum up the key areas where the EU aims at investing this funds and what are the steps of the EU's development policy modernization to address the world's changes in financial, political and basic economic challenges. Extensive material on the EU-Ghana relation can be found in the official documents signed between the two entities.

A very strong and efficient development agenda has been put in place in the last decade with strong results as the Country Strategy Paper and National Indicative Programme (NIP) for the period 2008-2013 shows as well as the 2004 Mid Review on Ghana points out. It is important to use these 2 documents of the European Union, DG Development as they show the current status of EU funds allocation in Ghana. The 2004 Mid Review offers a comprehensive analysis of the state of implementation of the EC cooperation for the 2002-2007 financial packages.

The 9th Country Strategy Paper and NIP for Ghana, signed in 2002, offered an overall allocation of over 310 million Euro for the 2002-2007 period focusing on rural development, transport infrastructure and macro-economic support, similar to the 8th Program. The 2004 report shows, in general terms, that "good progress has been observed in the area of macro-economic performance, favored by high world market prices for key export commodities (gold, cocoa), prudent policies and coordinated donor support." (European Commission, 2004,-page 2).

The focal points that the EU, in conjunction with its Ghanese, took into analysis and funding offered rather good results at the 2004 report: rural development showed satisfactory results overall, significant progress was made in the macro-economic issues yet poor transport infrastructure evolution was noticed. The report offers valuable insights also in the results on the social and educational matters of Ghanese rural and urban communities.

It is important to have a clearer image so more data is necessary for this assessment with a significant correlation-based statistical analysis on rural development, transport infrastructure and on the other hand social effects of these. The Country Strategy Paper for the 2008-2013 periods is an invaluable document for the analysis of European Union's impact on Ghana's development.

According to the CSP's Overview of Cooperation and Political Dialogue "the Commission's strategy was appropriately designed to contribute to government's objectives of sustainable growth and poverty reduction (…) budget support interventions contributed to improving the country's macroeconomic situation (European Commission, 2007, p26). What the Report shows is that important setbacks are to be seen in the administrative sector of spending the funds allocated by the EU effectively and correctly.

Although it might be considered subjective, the CSP chapter on evaluating the EU's presence in Ghana, shows also the serious flaws in its implementation: a low pro-poor spending, transport infrastructure and the socio-political sphere with a clear emphasis on poverty reduction, gender issues, as well as environmental issues.

It is important to understand when using such documents that due to the complexity of the report and the fact that in many African countries it is almost impossible to have a clear image of funding effects, some of the areas in sight still miss important indicators.

As the Report shows, "it has been difficult to assess the exact contribution of EC interventions in the absence of reliable baseline studies" (European Commission, 2007, p26) Such studies are crucial to understanding the real effect of such funding mechanisms and, as development is a long-term process, it will take some time until these will be finalized. The political and economic areas of Ghana have obviously been influenced by the involvement of the European Union in the last decades.

The 2 reports that will be used in detailed form present an important image of the level of these involvements and some effects in the social and economical areas of Ghana, with somehow little perceived effects on the political arena. Effects of democratization as a result of EU intervention are still hard to asses having in view the complexity of such a correlation.

One important critical analysis is to be found in Gordon Crawford's "The European Union and Democracy Promotion in Africa: The Case of Ghana" (Crawford, 2004) where the author argues that, up to 2004, the level of effect on the political scene was low and implementing democratization processes was weak. As the aforementioned recent report of the EU shows, this is still the case in many aspects of the public administration sector. Whether this is a fault of the EU or the Ghanese authorities, it is difficult to asses at this point.

Other valuable resources for analysis and background are Boafo-Arthur and Essuman-Johnson "Ghana, Some Foreign Aid issues" as well as D. Moyo, "Dead Aid: Why Aid is Not Working and How There Is a Better Way for Africa." Methodology: As the thesis aims to demonstrate the real-life data on the current development of the country, the United Nations Development Programme's 2010 human development index is used as a tool to evaluate the effectiveness of one or another development program.

Moreover, the official internet resources developing the statistics for Ghana are used to process information from previous years and decades which in turn enables a comparative analysis for development. In this sense for instance, given the fact that the international development strategy for Africa is known since the late 1970s, it is important to assess the way in which the impact of this initiative is reflected in the fluctuation of the HDI (Human Development Index).

As an example, the index has slowly improved since the 80s, from 0.363 to 0.431 in 2000 to 0.467 in 2010. This improvement, by applying the cause-effect analysis method, can be viewed as a direct effect of international aid, including China and the EU, or, on the other hand, as a natural development of the economic cycle. However, by providing input from research, scholars, and primary sources (development reports), this development will be proven to have been a natural consequence of international assistance for development.

The GNI Coefficient is used to assess the sustainability of the development process and its inequality. In this sense, by comparison, the research points out that there is indeed a gap between the economic growth that is statistically visible and the social impact it has on the population. Better said, "despite favorable economic conditions job creation has not matched economic growth, particularly in rural areas" (UNDP Ghana, 2010). Similar analysis is made for other areas of the social and economic development with precise attention provided.