A New Agenda for Aid, Trade and Investment

On June 25, 2013, Global Economy and Development at Brookings hosted Liliane Ploumen, the Dutch minister for Foreign Trade and Development Cooperation, with panelists David Roodman and Joshua Meltzer to discuss the Netherlands’ new agenda for aid, trade and investment.

Ploumen began her remarks by noting that when an “exemplary global citizen” makes a fundamental change in the way it approaches its international partners, the international community must take note. She said the Netherlands was such an “exemplary global citizen” because the country has been at the forefront of international cooperation due to its extremely open economy.

“[The Netherlands] has been innovative in the ways it is looking at international relations,” Ploumen noted.

She emphasized the fact that the world is now in a “new era” in terms of a rapidly changing global economy. Ploumen used as an example that 10 years ago, economists frequently portrayed Africa as a “lost continent,” citing wars, economic grievances, governance crises and violence as plaguing many nations across the region. However, for the next decade, seven out of 10 of the world’s fastest growing economies will be in Africa. In addition, countries like Brazil, India, Turkey and South Africa—which many considered to be developing countries 15 years ago—have drastically improved their economies. Finally, the dynamics of European politics have changed, as many countries in Europe no longer have double digit growth numbers.

Ploumen said these recent developments are forcing international actors to adapt their economic policies. The Dutch are no exception as they attempt to link up with these developments, which must cater to a new agenda for development aid. She discussed the Dutch goal of “inclusive economic growth” as her country looks away from traditional aid mechanisms. The Netherlands are attempting to cooperate to create an environment for entrepreneurial interests. Enabling a stronger environment for the private sector includes a broad range of activities, such as supporting an international land coalition that can assist people in their negotiating power with multinational companies and will help prevent company “land-grabbing.” Ploumen added that this new agenda has been welcomed by African politicians, and has been a “game-changer” in the type of dialogue that the Netherlands engages in with many African countries.

Mr. Roodman, the first panelist and Senior Fellow at the Center for Global Development, said he found himself asking critical questions about the theory and evidence behind the Netherlands’ recent policy choices. He said helping the developing world consists of more than a policy focusing primarily on foreign aid. Roodman also questioned the concept of providing aid to “fragile” nations and trading with medium-income nations—such as Brazil—as he noted that perhaps this phenomenon should be reversed. Finally, Roodman expressed his concern about the Dutch’s “mercantilist” attitude, by noting that it is critical to value imports as well as Dutch exports.

Josh Meltzer, a fellow in Global Economy and Development at Brookings, then examined the framework of the World Trade Organization in terms of both the link between development and trade and its connection to the new Dutch policy that Ploumen outlined. He discussed the “aid for trade” agenda, which refers to increasing the capacity for developing countries to take advantage of trade liberalization.

Finally, Meltzer noted that the Dutch policy builds upon this “aid for trade” framework by encompassing a more “tailored and nuanced approach” to the way that the developed world—and the Netherlands in particular—is going to engage with the developing world, using trade as a vehicle to promote development.