Problems With The Current Development Paradigm And Why It Needs Modification: An Empirical Case Of Australia Aid To Indonesia

Weber highlights the point that the dominant global development paradigm assumes the primacy of the nation-state. There are many nations that receive aid, and development problems remain. Identify the problems of the current development paradigm in helping developing countries, and argue why the paradigm should be changed, modified and/or stay the same. Use a specific empirical case to support your arguments.                                      

The current development paradigm has failed because of the following reasons:

Emerging issues of global development, for example, climate change, excessive use of exhaustible resources, political instability and recurrent food crisis, food insecurity, and poverty hinder the assessment of the past and current development processes that are important to the nations (Quinn et al. 2018 p.102).  A comprehensive discussion on failure and achievement could assist not only to update the new understanding of these issues but also to redesign or design ways forward for future and ongoing processes of development. Whereas immediate actions may reduce the severe and direct magnitudes of contingent crisis, the process of development requires lasting policy actions and long-term visions to be sustainable and effective. This paper helps in identifying the problems associated with the current development paradigm in assisting developing countries. Paradigms are the name given to the collection of concepts and beliefs. It also represents a set of ideas, assumptions, and theories that contribute to the worldview. It may also refer to the system of thought, values in any society that are widely held and most standard at a given period. There is also a discussion on whether the paradigm should be modified, changed or stay the same. The paper also employs the use of the empirical case to give additional support to the argument (Flynn and Pearcy 2001 p.78).

First, it tends to treat growth as its main objective neglecting social objectives, for example, the right to health and eradication of poverty. The focus is put on growth was due to a simplification inherent in mainstream economic. This in the world of inequality is wholly inappropriate and unrealistic. By focusing on economic growth and aggregate income, mainstream economics illogically consider that the benefits to pauper and billionaire as the same. Faster growth is mostly argued to be compulsory to offer more resources (Pintér et al. 2018 p.66). The available resources are to being allocated to the people according to their social needs. However, this all process requires suitable mechanisms that will ensure that the available resources are apportioned according to the social needs of the people (Gibson 2018 p. 105). Such mechanisms are mostly weak in countries that are rich. Generally, they are much in active in LMIC, and dysfunctional or non-existent at a universal level.

Additionally, the current paradigm particularly militates against such resources distributions, by arguing for explicit redistributive measures and low tax rates because they hinder economic growth (Ferguson 2018 p.58). This argument that explicit redistributive measures would hinder economic is extremely questionable. But even if the argument is true, it would be both necessary and sensible to describe some cutoff point in which reallocation takes priority over further growth. If not resources would often be apportioned to increase growth rather than in agreement with social priorities (Choi and Kim 2018 p. 93).

Development Paradigm requires replacement:

The 2nd flaw is the predominant dependent on increasing export as the main source of economic growth, as well as the requirement that global consumption has to grow for the extra exports to be absorbed. There exist two challenges with this, first of all, the existence of real environmental restrictions to total global consumption (Flentø and Ponte 2017 p.167). The second problem is that excess inequality of global economy suggests that most of the extra consumption mainly concentrate among the small minority that is wealthy in the world’s population, rather than among those who are poor (the poor majority). The current development paradigm requires those who are rich to get much richer and the poor to remain poorer, this will, in turn, destroy the environment where both the poor and the rich ultimately depend.

The 3rd flaw is that the current development paradigm is based on competition nations in global markets to attract foreign investment and to secure export markets. There is also competition between organizations within a nationwide market to enhance the efficiency of production. In this kind of competition, there must be losers and winners. Those nations which succeed, for example, East Asian countries, concentrate on the virtuous circle of increasing success and competitiveness. But those that are not able to compete found themselves with a lot of economic problems and failure. The losers are also affected by human and financial capital.

Nevertheless, unlike an uncompetitive organization, a nation cannot come to an end. Neither can it be taken over by another country. The loser will then face some problems like social and economic collapse (Takayama, Sriprakash and Connell 2017 p.54).

Lastly, the current development paradigm, based on commercial globalization and market liberalization, has failed to deliver to all people the services related to Health. The rate at which the health sector improves in middle and low-income nations has reduced dramatically over the last few years (Buchholz 2016 p. 77).

Today, challenges of development in the developing countries remain similar as they were in the 1980s. Most of the people are still hungry and poor today, and the entire world is in greater environmental problems (Khalili et al. 2015 p.92) Western aid and governments’ establishment has had the opportunity of helping and has mostly failed to improve conditions of the developing countries. Debt burden is rampant in the developing countries as it was in the last ten years back, and net financial flows continue. To facilitate economic development, doing things right is not enough, but also to the right things. Trying harder should not be enough. Development practitioners should act and think differently (Martínez et al. 2010 p.45). Old development prescriptions and conceptual clarities are breaking down. The truth is that even after receiving support from the Western aid, the problems of the developing countries remains. These problems still exist because the international communities have the poor record of follow up and a faint memory, so they are unable to keep track; on how the western aids are being used by developing countries. Developing counties need to set straight the myth that state that the cause of malnutrition, ill health, poverty, environmental degradation illiteracy are all independent (Broad and Fischer 2017 p.45) The challenge is to create bridges between all the people and find ways of solving our issues. There should also be a launch of a progressive movement that includes institution, civil society, agencies, and individuals (Forsyth 2018 p.86).

Empirical case of Australia aid to Indonesia

The current development paradigm should also be changed because foreign aid is being viewed as a form of self-enrichment and exploitation. Only those who are educated (elites) become beneficiaries of the proclaimed fund. On the donor’s side, neoliberals saw it as a form of extortion of resources and wrong spending of long earned assets to countries that are incapable of using their available resource to move out of poverty. These views on the foreign aid call for the change of the paradigm. Transition of change should then be put in place that allows suitable policies and strategies capable of promoting economic growth, alleviating poverty and promoting education for all people in the developing countries. The developing countries should learn to apply foreign aid as a last resort and they should not depend on the foreign assistance to the survival of the country (Fine and Pollen 2018 p.48).

I will use empirical case of Australia aid to Indonesia to help in supporting my argument:  The case will analyze major issues and trend in Indonesia-Australia economic relations. Specific part will focus on trade issues and aid. The emphasis will also be put on the effect of the bilateral relationship on economic development. The issues that both the recipient and donor need to address is also has to be discussed in this case to explain the factors that can promote economic development but are not being addressed by the two parties that are in the trading relationship (Brand 2012 p.112).

 Foreign aid becomes an important issue for Indonesia. In the early 1970s, there was a stiff rule that regulates the terms of trade, and this made Indonesia remove its balance of payments constraint. Much of the development budget of Indonesia is being financed through development assistance. One of the problems that affect the bilateral trade between Japan and Indonesia is that the IGGI meeting provides a wrong value of the actual net flow of aid to the country (Ercan et al. 2017 p.75). For example, the aid from Japan who is the leading donor to Indonesia diminished in value due to the rapid increase in the yen as well as rupiah and dollar. This wrong impression of the true value of the aid may affect the overall performance of the foreign aid. This is because it may limit Japan from participating in trade due to the fluctuation in the trading currency in the market. There may also be misunderstanding on how the money should be spent as some Citizen may demand that the money to be spent on development should be provided by the government and not from the foreign aid and this may even lead to strike and tension in the country and all these lead to poverty and economic depression of the country.

Conclusion

 It is also important to understand the motives behind this foreign aid and the role of foreign aid to developing countries. The debate of the economic development recognized that foreign aid to developing countries is not the only way in which the countries that are developed can provide aid. It is also true that Donor countries provide foreign aid to some nations and not to others (Popescu et al. 2018 p.125). Then the question is that what are the motivations of them giving some countries and not to others? For example in this our case Australia aid to Indonesia,  Australia has three objectives in place, to promote social and economic progress, commercial interest and the last objective is political interest. The recipient country of which in this case is Indonesia also has different motives such as Indonesia need political, commercial, as well as the strategic interest of the donor, but on the part of the donors, the motives are to alleviate poverty, reduce the income inequalities, and to promote development. Instead, donor motivation is described as the hunt of self-interest, regarding overseas security, economic and political power including democracy interests and political instability. The motive of both the recipient and the donor like, in this case, Indonesia and Australia may be to promote economic development, but the result is that Australia will continue to be at higher level regarding development as compared to Indonesia. In another word, Australia will be more developed than Indonesia. This is because if there is inclusive and sustainable growth in Indonesia then Australia will receive benefits and this will contribute to their regional stability and growth (Bracken et al. 2012 p.102).   

We found out that Indonesia received foreign aid from Australia, but the development across the entire country is uneven, the rate of poverty is still higher in some places than others. Though the foreign aid made some contributions to the progress of Indonesia, the inequalities are still rising, and economic growth is also slowing (Fine and Pollen 2018 p.97). This slowing growth may hinder Indonesia to progressing from the status of the middle class and increase inequality and tackle poverty. There is also a reduction in productivity because of the skill deficit, infrastructure deficit, and corruption.     

Conclusion:

This paper discusses the problems that the current development paradigms are facing with the intention of helping the developing countries. It also presents the factors that affect developing countries like poverty, health, education, and climate change. All these factors can be put under control if there is genuine political will in the developing countries. The paper also presents what can happen if the developing countries are willing to change the current development paradigm (Ribeiro et al. 2018 p. 45). It discusses the reasons as to why the current paradigm should be replaced. This is because of the continuous problems that the developing countries are facing. When the developing countries change the model that they are using then the world could be run in a fair manner, and there will be eradication of poverty, all people will get good health, and the climate change will be under full control.  The transition process of getting from the old Paradigm to the required paradigm will depend on the interactions of ethics, ideology, politics, and science in the evolving processes. Therefore, the developing countries must develop concrete strategies that can easily fit in the local realities.  

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